Bill Summary for H 704 (2019-2020)

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Summary date: 

Aug 22 2019

Bill Information:

View NCGA Bill Details2019-2020 Session
House Bill 704 (Public) Filed Wednesday, April 10, 2019
Intro. by Lewis, Murphy, Dobson, Wray.

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Bill summary

Senate committee substitute deletes the provisions of the 2nd edition and now provides the following.

Changes the act's titles.

Designates GS 131A-1 through GS 131A-25 as Article 1 of GS Chapter 135, the Health Care Facility Finances Act. Directs the Revisor of Statutes to make necessary changes to statutory cross-references. Makes conforming changes to GS 113A-12 (environmental document exemption) and GS 142-15.16 (defining State-supported financing arrangement). 

Enacts new Article 2, Rural Health Care Stabilization Program, to GS Chapter 131A. Sets forth nine defined terms. Establishes the Rural Health Care Stabilization Program (Program) to provide loans for the support of eligible hospitals located in rural areas that are in financial crisis due to operation of oversized and outdated facilities and recent changes to the viability of health care delivery in their communities, with loans to be used to finance construction of new health care facilities or to provide for operational costs during the transition period, or both, including while the construction of new facilities is undertaken. Requires UNC Health Care to administer the Program. Sets out specific UNC Health Care responsibilities, including assessing Plans submitted by loan applicants, evaluating the applicant's ability to repay the loan under the proposed Plan, determining the security interests necessary to enforce repayment, and implementing approved loan agreements. Excludes UNC Health Care from applying for a loan or being a partner in a partnership that applies for a loan under the Program. Specifies that the Local Government Commission (Commission) cannot approve a loan application if the issuance of the loan would result in a material, direct benefit to UNC Health Care at the time the application and Plan are submitted for approval. Grants UNC Health care rulemaking authority necessary for the Program's implementation.

Establishes the Rural Health Care Stabilization Fund (Fund) as a nonreverting special fund in the Office of State Budget and Management. Directs that the Fund operate as a revolving fund under the custody of the State Treasurer, with funds restricted to use pursuant to the Article. The Fund consists of funds appropriated to or received by the Program and funds received as repayment of the principal of or interest on Fund loans.

Sets out the loan application process. Deems a public agency, an owner of a health care facility, or a partnership of one or more of those entities eligible to apply for a loan under the Program. Requires applicants to develop and submit a hospital stabilization plan for an eligible hospital to UNC Health Care during the application period, as established by UNC Health Care. Requires UNC Health Care to evaluate each Plan submitted to determine whether the applicant's Plan demonstrates a financially sustainable health care service model for the community in which the eligible hospital is located. Also allows UNC Health Care to assist an applicant with revisions to its Plan. Requires UNC Health Care to notify the applicant and the Commission of its recommendation on whether to approve or disapprove a loan application. Allows UNC Health Care to assign priority in the event of more than one application during the application period. Allows, when a loan application is disapproved, for an applicant to engage a disinterested and qualified third party approved by the Commission to evaluate the applicant's Plan to determine if the applicant demonstrates the required financial sustainability, and permits the applicant to seek Commission approval of the loan based on the third party's written evaluation of the Plan.

Requires the Commission to approve all loans under the Program prior to UNC Health Care's awarding the loan. Explicitly states that if the Commission enters an order denying the loan, the proceedings under new Article 2 are at an end. Requires UNC Health Care to disclose to the Commission any potential conflict of interest in its review of an application and Plan. Prohibits the Commission from approving an eligible applicant if the issuance of a loan would result in a material, direct financial benefit to UNC Health Care at the time the application and Plan are submitted to the Commission for its approval. Requires the Commission to review UNC Health Care's recommendations, an applicant's Plan and any other relevant information, as well as the third party evaluation, if applicable. Sets forth additional information the Commission can require the applicant and eligible hospital (if different) to provide for consideration. Establishes the following four findings that must be satisfied for the Commission to approve a loan application: (1) that the loan is necessary or expedient; (2) that the amount proposed is adequate and not excessive for the proposed purpose of the loan; (3) that the Plan demonstrates a financially sustainable health care service model for the community in which the eligible hospital is located; and (4) that the applicant's debt management procedures and policies are good, or that reasonable assurances have been given that the debt will be repaid.

Requires UNC Health Care to execute the terms of the loan agreement upon approval of the loan by the Commission. Authorizes UNC Health Care to require changes to the governance structure of the eligible hospital. Limits the loan interest rate at the interest rate obtained by the State in its most recent general obligation bond offering, and sets the maximum maturity at 20 years. Requires execution of a debt instrument to evidence the obligation. Requires UNC Health Care to annually publish a report on the Fund by November 1 to cover the preceding year. Requires the report to be publicly available as well as a copy submitted to the specified NCGA committee and division. Details required content of the report, including the Fund balance at the beginning and end of the fiscal year, the amount of revenue and its source credited to the Fund during the fiscal year, the total amount of loans awarded from the Fund, and specified information regarding each loan awarded.

Amends GS 116-37 to require General Fund appropriations for the Program to be deposited in the Fund, with use restricted to the purposes set forth in new Article 2 of GS Chapter 131A. Requires the UNC Health Care System to administer the Program pursuant to new Article 2 in order to further its mission.