1. Background

The National Health Planning and Resources Development Act of 1974 (PL 93-641) added two new titles to the Public Health Service Act which enable the Secretary of Health, Education, and Welfare to finance state and local health planning efforts. PL 93-641 renewed the debate over the appropriate roles for the public and private sectors in the nation's medical care delivery system. In addition, it stimulated a debate over the most effective division of responsibility among local, state and federal governments in planning, regulating and developing resources for medical care.

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The Governors have recognized the need for an improved health resource allocation mechanism for some time. The major initiative in PL 93-641- the requirement for certificate of need regulation --was a mechanism designed by one state and adopted by almost half the states before the national statue was enacted. A number of states had been able to integrate programs which received federal financial assistance (such as Comprehensive Health Planning and Hill-Burton) into their broader health policymaking system. In 1975, the National Health Planning and Resources Development Act focused the efforts of the federal government on questions which had been raised somewhat earlier in the states. concern of the Governors, then, is not with the imposition of new requirements by our federal partners. Rather, the concern is with the way in which PL 93-641 makes the imposition. There are four major aspects of this statute to which the amendments proposed by the National Governors' Association are addressed.

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First, those states which had made the greatest progress toward integration of state and federal policy tools were required to readjust their systems once again. The Statewide Health Coordinating Council · (SHCC) could not be viewed as an agency of state government but neither could it be viewed as an advisory body since PL 93-641 gave it the authority to approve certain state expenditures of federal funds. Those states which had given planning and regulatory powers to the statewide advisory body created under PL 89-749 (the comprehensive health planning law) now had to revise their statutes and practices or establish a separate, parallel policy advisory system. In addition, those states which had gone through the often painful process of designating substate planning regions had to re-open the process to delineate the health service areas in which the Secretary of HEW would designate health systems agencies.

Second, the federal law focuses too heavily on acceptable health planning processes rather than on desired outcomes in the health of our citizens. While they agree with the goals of the national health planning law, the Governors feel that there is no single "best" health policymaking structure. There are a number of ways to organize for health planning, and the federal purposes are more likely to be served if each state and territory is allowed to find its "best" way.

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Third, the federal law establishes a chain of accountability which is, in may respects, separate from the existing constitutional authority of state and local government In essence, the statute establishes a network of local planning agencies funded by, and accountable to, the Secretary of HEW. Each Secretary who has held office since the law was enacted has tried to balance the legitimate needs of the federal government with the patterns of authority which exist within the states. changes in the law are required if that balance is to be achieved.

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Finally, the cursory attention paid in the statute to the role of agencies of state government is likely to stimulate some duplication of effort and the potential for conflict between those agencies and the ones created by the federal law. The formulation and implementation of health policy is a basic function of state government and is of specific concern to the Governors. The policymaking system within state government will draw the primary attention of the Governor. Το the extent that the system proposed by the federal health planning statute cannot be reconciled with the existing system, the federally created agencies will experience unnecessary difficulties during their crucial developmental phase.

The National Governors' Association (NGA) proposed twenty-two amendments to the national health planning statute. If these amendments are adopted, we will have made significant progress toward the creation of a workable health planning system. In the remainder of this statement, the reasons for, and the intent of, these amendments are outlined. The text of each of the amendments is included as an appendix as is the policy statement on health planning which was adopted by the National Governors' Association at their annual meeting in September, 1977.

2. NGA Proposed Amendments

The amendments which are proposed by the National Governors' Association are the product of three years of experience in the implementation of Titles XV and XVI of the Public Health Service Act. At some time during those three years, health policymakers from almost every state and territory have contributed substantively to the discussion of these issues by the NGA.

For clarity and ease of reference, this discussion classifies the NGA proposals according to the agency upon which the amendment would have its greatest impact. The numbers used in reference to the proposed amendments are those assigned in the complete listing of the amendments included as an appendix to this statement.

a. Amendments Relating to Statewide Health Coordinating Councils (SHCC)

The statute, as presently written, requires the development of a state health plan by the SHCC. The statute does not require that anything be done with the plan after it is prepared by the SICC. The NGA proposal (amendment #1) would allow the development of a "final" state health plan amended and approved by the Governor on the advice of the SHCC. While the state health plan now required by federal statute has a somewhat tenuous existence, the final plan permitted under the NGA

proposal could easily become a major policy document for state government.

Under present federal law, the SHCC is asked to approve applications by state government agencies for funds allocated to the states through formulas in a number of federal health statutes. Governors are accustomed to considering the advice of citizen advisory groups on any number of issues including the submission of formula grant plans. Under the health planning law, however, the Governor is asked to delegate the authority to approve grant applications to an agency which is not part of state government. In many states, the Governor must budget, and the Legislature must appropriate, the funds subject to SHCC approval. The NGA proposal (amendment #3) would require the SHCC to advise the Governor on the submission of formula grant applications. This amendment would honor the spirit of the health planning law while precluding ineffective and undesirable involvement of the SHCC in existing state budgeting and appropriations processes.

The major problem preventing the closer integration of the SHCC into state health policymaking is the tenure of the council's membership and chairperson. Presently, a majority of the membership of the SHCC (60 percent) must be drawn from nominees of the health systems agencies within the state. The autonomy of the SHCC is further defined by the requirement that the chairperson be chosen by the members from among their number. The NGA proposals would allow the Governor to appoint a majority of the members of the SHCC directly (amendment #7) and to appoint the council's chairperson (amendment #4). If a Governor chose to exercise the options presented by these two amendments the .. SHCC could become more closely integrated into a state's policymaking system.

The present language of Title XV is somewhat vague concerning the responsibilities of the HSA to supply nominees for the seats to which it is entitled on the SHCC. An NGA proposal (amendment #5) would allow the Governor to clarify the HSA's responsiblility by requiring up to five nominees for each seat.

Presently, an interstate HSA with a very small population within a state is entitled to the same number of representatives on the SHCC as an HSA serving a much larger population totally within the state. Another NGA proposal (amendment #6) would entitle an interstate HSA to representation on the SHCC in proportion to its population within the state.

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Amendments Relating to Health Systems Agencies (HSA)

In some areas, the statute makes similar assignments to health planning agencies at both the state and local levels. The potential for duplication, overlap and conflict is heightened significantly in states which have a single statewide health service area. In these states, the HSA has the same jurisdiction and functions as the state health planning and development agency (SHPDA). In addition, the HSA nominates 60 percent of the membership of the SHCC which then reviews the agency's budget and work plans. The NGA proposals would allow states in this situation two additional options. One (amendment #15) would allow more states to be granted status under section 1536 of the federal statute.

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Since the whole area of such states would otherwise be defined as a single health service area, this amendment would obviate a great deal of confusion by requiring the SHPDA to perform the unduplicated functions of the HSA. Another proposal (amendment #14) would make it easier for the Secretary, on the Governor's advice, to define more than one health service area within such states. The exercise of this option would preclude the domination of the SHCC by a single local planning agency and would facilitate broader citizen participation in the health planning process.

The statute makes it difficult for agencies of local government to become health systems agencies. The law further requires a public agency, if it is designated as an HSA, to delegate many of its basic functions to a separate governing body for health planning. The Governors feel that agencies of state and local government are, by definition, accountable to the public which they serve and that their accountability should not be compromised by a requirement that they delegate basic policymaking functions to non-governmental bodies. An NGA proposal (amendment #10) would allow a local government or regional planning agency which is an HSA to appoint the staff of the agency, to approve its plans, to establish review criteria and to review decisions appealed from the separate governing body. Another proposal (amendment #11) would make it clear that the public agency has the power to appoint the separate governing body for health planning.

Many of the difficult negotiations between HSA's and state government would be eased if the HSA's could become full partners in the state's health policymaking system. Under the present statute, HSA's depend for their funds and policy direction upon the Secretary. It is reasonable to assume that these agencies will be accountable priImarily to the Secretary. Under the present law, the Secretary has no alternative to holding the more than 200 HSA's responsible for the successful operation of the health planning system. An NGA proposal (amendment #8) would allow the Secretary to delegate many of his oversight functions to the Governor. Under this option, the Governor would assume responsibility for the achievement of the goals of Title XV and Title XVI within the state.

Under several federal statutes, the Congress has made funds available to the states for a variety of health programs. Once these funds reach state government, they are appropriated by the state legislature (or combined with state funds) and spent for local projects. Under the present federal health planning law, HSA's are required to approve the expenditure of these state funds. The HSA is further required to communicate its approval or disapproval to the Secretary. It is the feeling of the Governors that the HSA's recommendation on the expenditure of state funds should be expressed to the appropriate state official rather than to the Secretary. A proposal included in the NGA recommendations (amendment #9) would make this change.

HSA's which serve interstate health service areas find themselves in a rather delicate situation. They must be able to participate in at least two separate state planning and regulatory systems. addition, they must be able to establish their jurisdiction in one

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state when their offices and most of the people they serve are in another state. Presently, the law requires that interstate health service areas must be established in interstate standard metropolitan statistical areas (SMSA) unless every Governor whose state is affected agrees to split the SMSA. It is conceivable that an HSA can be asked to serve an area which is not agreed to by the officials of at least one of the States in which the agency must operate. An NGA proposal (amendment #13) would remove this problem for interstate HSA's by requiring that each Governor agree to keep the SMSA intact rather than the contrary. An HSA in this situation, then, would begin its operations with the knowledge that each state was prepared to work with it toward the goals of the health planning law.

The accomplishment of the planning functions of HSA's would be somewhat eased by two additional NGA proposals. Under present law, the HSA is required to develop a health systems plan (HSP) on an annual basis. It is clear from our experience to date that the HSA's are taking this function seriously and that the planning cycle should be somewhat longer than one year. The NGA proposal (amendment#21) would establish a three year planning cycle. The statute is not clear in specifying the basis for the annual implementation plans (AIP's) of the HSA's. Presently, the AIP must relate to the HSP which may be revised by the SHCC for inclusion in the state health plan. Any potential confusion on this critical relationship would be removed by requiring the AIP to be based upon the approved state health plan (amendment #22).

The statute now requires an HSA to spend all of the funds allocated to it for a specific year during that year. For a variety of legitimate reasons, it may not be possible for an agency to comply with this requirement. Under the present law, any unspent funds must be returned to the Department at the end of the agency's contract year. The NGA proposal (amendment #16) would permit the HSA to spend funds allocated to it during any year in which it has a designation agreement in effect. c. Amendments Relating to State Health Planning and Development Agencies (SHPDA)

In most estimates, the key to the success of the health planning system envisioned by the federal statute is the action of state government through the SHPDA. Several minor amendments are required to allow the SHPDA to assume its appropriate role.

First, it should be made clear that the SHPDA is not required to act contrary to state law when it attempts to implement the plans of the HSA's. The law now requires the SHPDA to implement these plans and an NGA proposal (amendment #2) would clarify the requirement.

Among the more important functions of the SHPDA is the control of resource development through certificate of need regulation. In several respects, the existing statute unnecessarily impedes the efficient operation of such regulatory programs. For example, the statute has been interpreted to limit any review of a proposed medical care service to 90 days which is insufficient for major proposals. An NGA recommendation (amendment #18) would allow a 180 day review cycle.