Demonstration of Need for Acute Inpatient Beds and Psychiatric Hospitals (Certificate of Need)
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Rules governing Certificate of Need applications for new psychiatric hospitals and psychiatric units, including definitions, application completeness, need estimation methodology, and criteria for approval; applies to applicants to the Oregon Health Authority Public Health Division.
OAR chapter 333, division 590 methodology is excluded for freestanding psychiatric hospitals and psychiatric units meeting the 'new hospital' definition; those are subject to division 615 methodology instead.
New criteria (OAR 333-615-0025) establish access, equity, and analyses of need, quality, cost, and alternatives as conditions for granting a CN for a psychiatric hospital.
Detailed, multi-step estimate-of-need methodology (OAR 333-615-0030) specifies population forecasting, use-rate calculations, data sources, migration adjustments, Medicaid/IMD considerations, and statistical modeling requirements.
Definitions updated to adopt Trauma System Areas as Health Service Areas and to define alternatives, dual diagnosis, psychiatric admissions/discharges, and subspecialty beds.
OAR 333-615-0020 (Principles) is repealed as outdated.
Adopts OAR 333-615-0035 establishing criteria for Alternate Health Service Areas for psychiatric hospital CN applications.
Amends OAR 333-615-0040 to modify required documentation about availability of alternatives in the Health Service Area, including inventory and evaluation order.
Amends OAR 333-615-0050 to modify quality-related criteria applicants must demonstrate, including triage criteria consistency, staffing, licensing and program certification, access for Medicaid/Medicare/uninsured, readmission rates, charity care, and assessment of prior adverse actions.
Adopts OAR 333-615-0060 establishing cost criteria for CN applications, including construction standards, impact on public costs, and expectations for rates and cost-containment.
Adopts OAR 333-615-0070 clarifying other sources the Authority may use when CN rules lack sufficient detail, such as national and state professional standards and federal certification requirements.
Specifies project-level requirements including 10-year utilization projections, analysis of whether utilization is new or shifted, and consideration of psychiatric bed availability and alternatives.
Certificate of Need Approval Criteria
CN approval criteria and analytic requirements
Criteria and analytic requirements the Oregon Health Authority will use to grant a Certificate of Need for a new psychiatric hospital.
ALL of the following
- Access and equity: Proposal must describe how the project will improve access to care for all individuals in the Health Service Area, with particular attention to vulnerable populations (uninsured, underinsured, high-deductible, or enrolled in Medicaid) and accessibility to other care providers; include transportation and disability access considerations.
See rule text on accessibility and vulnerable populations.
- Application completeness: Applicant must submit a complete CN application organized per division 615 sections and conforming with Certificate of Need Application Instructions (division 580), and include the applicable fee per OAR 333-565-0000 Table 4.
- Estimate of need / need analysis: Applicant must perform the detailed need-estimation methodology including: 5- and 10-year population forecasts (age- and sex-specific); historic population counts for prior 10 years; calculation of historical and current Health Service Area population-based discharge and patient-day use-rates using psychiatric DRGs and ICD-10 F-chapter codes; separate reporting of dual-diagnosis episodes; and justification where alternate data sources are used.
- Data and reproducibility requirements: Applicants must provide reproducible tabulations, and where proprietary hospital data are used provide a detailed methodology, de-identified dataset sufficient to replicate utilization calculations, and third-party certification by an independent auditor that the proprietary data are complete, accurate, unbiased, and consistent with APAC/statutory definitions.
- Utilization projections and statistical requirements: Using 5- and 10-year forecasts and the preceding steps, compute ranges of future patient days and convert to average daily census (ADC); estimate statistically expected peak daily census and the statistical variability (standard deviation) of daily census and provide supporting methodology and validation.
- Migration and payer analysis: Present a patient migration adjustment factor (in-migration, out-migration, net migration index) with reproducible tabulations; evaluate age-range and payer implications including IMD exclusion for ages 21–64, document how capacity will serve Medicaid-eligible individuals, and identify funding strategies for non-covered stays.
- Analysis of new versus replacement utilization and impacts: Develop documented assumptions about the extent projected utilization will be new versus replacing existing utilization; analyze advantages/disadvantages of new and replacement components for the population and existing facilities; demonstrate how the project will avoid adverse financial impacts to existing psychiatric providers and alternatives.
- Alternatives and service-area considerations: Applicants must analyze availability of alternatives in the Health Service Area and include an inventory of alternatives; Health Service Area is the Trauma System Area (applicants may propose an Alternate Health Service Area under OAR 333-615-0035).
- Conversion presumption: Conversion of existing beds to psychiatric inpatient beds will be presumed infeasible where a general acute inpatient hospital in the proposed Health Service Area has not increased psychiatric inpatient bed capacity by 20% or greater over the prior three-year interval from the LOI date.
- Evidence standard and utilization expectations: Use a moderate standard of evidence when project results in up to 0.40 beds per 1,000 population by year three and a higher standard when exceeding 0.40 beds per 1,000; applicants should expect the majority of nonstate/nonfederal stays to be 12–15 days with ~10% potentially 30–40 days.
Evaluation criteria for psychiatric hospital CN applications — alternatives, quality, and cost evaluated in order
The Authority will evaluate proposed psychiatric hospital projects against alternatives, quality, and cost criteria in the following order and manner.
ALL of the following
- Preference order: Preference is given in the following order: (1) conversion of existing licensed hospital space for psychiatric treatment when feasible and less costly than new licensed space; (2) projects resulting in the smallest feasible net increase in acute licensed capacity within an existing hospital; (3) a separately licensed new psychiatric hospital only when it will provide psychiatric inpatient care at the most reasonable charges per day and per stay and meets quality and cost tests (consider market rates, patient outcomes/satisfaction, regulatory compliance, accreditation, and staff qualifications).
ALL of the following
- Alternatives evaluation: Projects must demonstrate alternatives have been evaluated and found infeasible before new inpatient capacity is favored. Preference is given to projects that: develop alternative care resources as part of the project; document formal arrangements and triage criteria/mechanisms for low-cost alternatives; or document triage criteria consistent with ORS 743A.168(2).
ALL of the following
- Quality requirements: Applicants must document triage criteria consistent with ORS 743A.168(2); demonstrate sufficient qualified staffing (clinical, administrative, operational, technical); show plans to meet state licensing and Medicaid/Medicare certification; accept Medicaid, Medicare, and uninsured patients; coordinate with alternatives and community resources; provide treatment goal-setting protocols; maintain readmission rates lower than or comparable to regional or national benchmarks; and offer charity care consistent with ORS 442.601(1).
ALL of the following
- Cost criteria: Project must show superior alternatives (cost, efficiency, effectiveness) are not available; construction must meet applicable healthcare construction and energy standards; project must not unduly increase public social or financial costs; and proposed rates should reflect reasonable capital and operating costs and justifiable return, demonstrating cost-efficiency without compromising quality.
ALL of the following
- Safety and history assessment: Authority will evaluate criminal convictions, license denials/revocations, revocations of professional licenses, civil penalties, exclusions, or Medicare/Medicaid decertifications related to operating healthcare facilities where the applicant had substantial ownership; assessment will consider nature, severity, timing, corrective measures, and allow applicant opportunity to submit mitigating information.
ALL of the following
- Service-area deviations: If proposing an Alternate Health Service Area based on an Area Trauma Advisory Board, applicant must provide evidence (e.g., referral patterns, demographic shifts) justifying deviation; Authority retains discretion and will describe its evaluation of factors.
ALL of the following
- Utilization projection and impact: Applicant must provide a 10-year utilization projection from anticipated opening explaining whether utilization will be new or shifted, whether analysis supports need, and document how the project will avoid adverse financial impact to existing providers; freestanding psychiatric hospitals must include transfer agreements specifying transfer reasons, medical records, medication lists, and commitment to return patients when medically cleared.
Coding, Thresholds, and External Standards
| F01-F99 | Psychiatric ICD-10 chapter codes used to identify psychiatric admissions/discharges |
| DRGs 885-887, 894-896 | Examples of psychiatric DRGs used to identify psychiatric inpatient episodes |
| No codes listed |
Applicant Requirements and Actions
Submit a complete CN application organized to OAR 333-615-0000–333-615-0070
To be ruled complete, submit a narrative organized in accordance with each major section of OAR 333-615-0000 through 333-615-0070; satisfy the Certificate of Need Application Instructions in OAR chapter 333, division 580; and include the application fee specified in OAR 333-565-0000, Table 4. Use the Division 615 methodology (not division 590) for need analyses and provide reproducible tabulations supporting population and utilization estimates.
- Narrative organized per OAR 333-615-0000–333-615-0070 (complete application requirement).
- Conform to Certificate of Need Application Instructions (OAR chapter 333, division 580).
- Include application fee per OAR 333-565-0000 Table 4.
- Perform need analyses using division 615 methodology; provide reproducible tabulations for population apportionment and forecasts.
Document methodology and obtain third‑party certification for proprietary data
If you rely on proprietary hospital data, provide a detailed methodology describing data collection, case definitions, exclusions, and adjustments; supply the proprietary dataset in de‑identified form sufficient to replicate utilization calculations; and include a third‑party certification by an independent auditor stating the data are complete, accurate, unbiased, and consistent with APAC and statutory definitions.
- Detailed methodology explaining data collection, case definitions, exclusions, and adjustments.
- Third‑party certification by an independent auditor that the proprietary data are complete, accurate, unbiased, and aligned with APAC/statutory definitions.
- Provide the proprietary dataset in de‑identified format with reproducible tabulations to replicate utilization rate calculations.
Supply a complete inventory of alternatives in the Health Service Area
Provide a complete inventory of alternatives to inpatient psychiatric treatment in the Health Service Area including provider name, type of services, address, and, where available, bed capacity, occupancy, and five‑year utilization averages.
- Include provider name, type of mental health services provided, and address.
- If relevant and available, include bed capacity, occupancy, and utilization averages for each of the past five years.
- Demonstrate evaluation of alternatives and that alternatives were found infeasible before proposing new inpatient capacity.
Provide a 10‑year utilization projection and analysis of new vs. shifted patient days
Include a 10‑year utilization projection from the anticipated opening date with mathematical estimates of patient days and analysis explaining the degree to which projected days are new to the Health Service Area versus shifts from existing services; convert forecasts to ADC and estimate statistically expected peak daily census and variability.
- Produce 10‑year projections of patient days and explain whether utilization is new or shifted.
- Compute average daily census (ADC) from projected patient days and estimate peak daily census and standard deviation.
- Address availability of psychiatric inpatient beds and potential adverse financial impacts to existing providers.
Demonstrate quality, staffing, licensing, access, charity care, and readmission commitments
Demonstrate triage criteria and mechanisms consistent with ORS 743A.168(2); show sufficient qualified staffing and plans to meet state licensing and Medicare/Medicaid certification; commit to accept Medicaid, Medicare, and uninsured patients; provide a charity care policy per ORS 442.601(1); maintain readmission rates lower than or comparable to regional or national benchmarks; and document coordination with alternatives.
- Document triage criteria/mechanisms consistent with ORS 743A.168(2).
- Show availability or recruitment plan for qualified clinical, administrative, operational, and technical staff.
- Provide assurance of state licensing and Medicaid/Medicare certification and acceptance of Medicaid/Medicare/uninsured.
- Submit charity care policy and demonstrate ongoing compliance with federal and state law.
- Commit to maintaining readmission rates lower than or comparable to regional/national benchmarks and to coordination with alternatives.
Provide evidence to justify any Health Service Area deviation based on ATAB
If proposing a deviation from the Health Service Area based on the Area Trauma Advisory Board, provide evidence justifying the deviation (for example referral patterns, anticipated changes to historical use patterns, demographic shifts, or out‑of‑state use); the Authority retains discretion to permit or deny the deviation and will describe how it evaluated relevant factors.
- Provide evidence such as demonstrated referral patterns, formal ATAB changes, demographic shifts, or out‑of‑state/migration use.
- Explain methods and reproducible tabulations used to apportion population or justify alternate service area boundaries.
- Note that the Authority has discretion to permit deviations and will weigh relevant factors in its decision.
Defined Terms
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