Tenn. Comp. R. & Regs. 1200-38-01-.02 - APPLICATION PROCESS

(1) Letter of Intent. At least forty-five (45) days prior to filing an Application, the parties to the proposed Cooperative Agreement shall file a letter of intent.
(a) Contents. A letter of intent shall contain the following:
1. A brief description of the proposed Cooperative Agreement, including the location of the entities and parties to the Cooperative Agreement;
2. A list that includes all assets, ownership interests, subsidiaries and affiliated businesses currently owned or operated, in whole or in part, by any party to the Cooperative Agreement that the parties propose to be included in the COPA or any assets, ownership interests, subsidiaries and affiliated businesses currently owned or operated, in whole or part, by any party to the Cooperative Agreement that will be divested, sold or affected as a result of the Cooperative Agreement;
3. A list of all business interests or units for which each party to the Cooperative Agreement has any ownership interest or a management contract that is not proposed to be included in the Cooperative Agreement;
4. The name, address and contact information of the parties to the proposed Cooperative Agreement including the executive officers, each party's respective board members and each party's general counsel;
5. A description of the entities' governing structure under the Cooperative Agreement;
6. The anticipated date of submission of the Application; and the anticipated effective date of the proposed Cooperative Agreement; and
7. The geographic service area and Population covered by the Cooperative Agreement.
(b) Amendment. The parties shall amend the letter of intent if material changes occur prior to submission of the parties' Application.
(c) Expiration. A letter of intent expires six (6) months after the date of receipt by the Department, if no Application was timely filed with the Department.
(d) Public Record. The Department shall post letters of intent on the Department's website until an Application is filed or until the letter of intent expires.
(2) Application.
(a) Parties seeking a COPA shall apply to the Department in writing. Parties shall submit the following information in the Application:
1. A descriptive title;
2. A table of contents;
3. An executive summary which includes:
(i) Goals for change to be achieved by the Cooperative Agreement;
(ii) Benefits and advantages to parties and the public including but not limited to:
(I) Population health;
(II) Access to health care and prevention services; and
(III) Healthcare operating costs, including avoidance of capital expenditures, and reduction in operating expenditures that will result in lower costs for the parties and to the public; and
(IV) Improvements in patient outcomes.
(iii) Description of how the Cooperative Agreement better prepares and positions the parties to address anticipated future changes in health care financing, organization and accountability initiatives; and
(iv) Potential disadvantages of the Cooperative Agreement, including but not limited to:
(I) Closure or consolidation of programs and facilities and the potential impact on access to services;
(II) Reducing selected administrative and clinical functions and loss of jobs;
(III) Narrowing of traditional payer networks leading to reduction of patient choice in choosing physicians and other services; and
(IV) Negative impact on Independent Providers due to the anticipated increased market concentration in physician and health care services controlled by the Applicants.
4. The names of each party to the Application and the address of the principal business office of each party;
5. A verified statement signed by the Chairperson of the Board of Directors and Chief Executive Officer of each party to the Application; or, if one or more of the Applicants is an individual, signed by the individual Applicant; attesting to the accuracy and completeness of the enclosed information;
6. A description of the prior history of dealings between the parties to the Application, including, but not limited to, their relationship as competitors and any prior joint ventures or other collaborative arrangements between the parties. If the parties have engaged in prior joint ventures, the parties should describe why they believe such efforts would not be successful in achieving the goals they seek through a Cooperative Agreement. If the parties have not engaged in any joint ventures or collaborative arrangements, the parties should describe why alternative arrangements were not attempted to achieve the goals they seek through a Cooperative Agreement;
7. A detailed description of the proposed geographic service area, not limited to the boundaries of the State of Tennessee. If the proposed geographic service area differs from the geographic service areas where the parties have conducted business over the five (5) years preceding the Application, a description of how and why the proposed geographic service area differs and why changes are proposed;
8. Identification of whether any services or products of the proposed Cooperative Agreement are currently being offered or capable of being offered by other providers or purchasers in the geographic service area described in the Application;
9. Explanation of how the Cooperative Agreement will assure continued competitive and independent operation of the services or products of entities not a party to the Cooperative Agreement, including the potential for new entry;
10. A statement of whether there will be a Public Advantage or adverse impact on population health, quality, access, availability or cost of health care to patients and payers as a result of the Cooperative Agreement;
11. A statement of whether the projected levels of cost, access to health care or quality of health care could be achieved in the existing market without the granting of a COPA; and, for each of the above, an explanation of why or why not;
12. A report used for public information and education that is documented to have been disseminated prior to submission of the Application and submitted as part of the Application. The report must include the following:
(i) A description of the proposed geographic service area, services and facilities to be included in the Cooperative Agreement;
(ii) A description of how health services will change if the Application is accepted;
(iii) A description of improvements in patient access to health care including prevention services for all categories of payers and advantages patients will experience across the entire geographic service area regarding costs, availability or accessibility upon initiation of the Cooperative Agreement and/or findings from studies conducted by hospitals and other external entities, including health economists, clinical services and population health experts, that describe how proposed Cooperative Agreement plans are: effective with respect to resource allocation implications; efficient with respect to fostering cost containment, including, but not limited to, eliminating duplicate services and future service and facility plans; and equitable with respect to maintaining quality and competition in health services within the geographic service area, assuring patient access to and choice of insurers and providers within the health care system;
(iv) Findings from geographic service area assessments that describe major health issues and trends, specific population health disparities and comparisons to state and other similar regional areas proposed to be addressed;
(v) Impact on the health professions workforce including long-term employment and wage levels and recruitment and retention of health professionals; and
(vi) A record of community stakeholder and consumer views of the proposed Cooperative Agreement collected through a public participatory process including meetings and correspondence in which this report or its components were used. Applicants should also provide a summary of the number and location of events organized by the Applicants; number of speakers; the name, title, and affiliated organization of the speakers and whether the speaker is speaking on behalf of the organization or in the speaker's personal capacity; and communications used by the Applicants to maximize public involvement in the process. Transcripts or minutes of any meetings held during these public forums shall be included in the report.
13. A signed copy of the Cooperative Agreement, including:
(i) A description of any consideration passing to any person under the Cooperative Agreement including the amount, nature, source and recipient;
(ii) A detailed description of any merger, lease, change of control or other acquisition or change in ownership of the assets of any party to the Cooperative Agreement;
(iii) A list of all services and products and all service locations that are the subject of the Cooperative Agreement, including those not occurring within the boundaries of the State of Tennessee, and including, but not limited to, hospitals or other inpatient facilities, insurance products, physician practices, pharmacies, accountable care organizations, psychiatric facilities, nursing homes, physical therapy and rehabilitation units, home care agencies, wellness centers or services, surgical centers or services, dialysis centers or services, cancer centers or services, imaging centers or services, support services or any other product, facility or service;
(iv) A description of each party's contribution of capital, equipment, labor, services or other value to the transaction;
(v) A description of the competitive environment in the parties' geographic service area, including:
(I) Identification of all services and products likely to be affected by the Cooperative Agreement and the locations of the affected services and products;
(II) The parties' estimate of their current market shares for services and products and the projected market shares if the COPA is granted;
(III) A statement of how competition among health care providers or health care facilities will be reduced for the services and products included in the Cooperative Agreement; and
(IV) A statement regarding the requirement(s) for any Certificate(s) of Need resulting from the Cooperative Agreement.
(vi) Impact on the geographic service area's health care industry workforce, including long-term employment and wage levels and recruitment and retention of health professionals;
(vii) Description of financial performance, including:
(I) A description and summary of all aspects of the financial performance of each party to the transaction for the preceding five (5) years including debt, bond rating and debt service and copies of external certified public accountants annual reports;
(II) A copy of the current annual budget for each party to the Cooperative Agreement and a three (3) year projected budget for all parties after the initiation of the Cooperative Agreement. The budgets must be in sufficient detail so as to determine the fiscal impact of the Cooperative Agreement on each party. The budgets must be prepared in conformity with generally accepted accounting principles (GAAP) and all assumptions used must be documented;
(III) A detailed explanation of the projected effects including expected change in volume, price and revenue as a result of the Cooperative Agreement, including;
I. Identification of all insurance contracts and payer agreements in place at the time of the Application and description of pending or anticipated changes that would require or enable the parties to amend their current insurance and payer agreements;
II. A description of how pricing for provider insurance contracts are calculated and the financial advantages or disadvantages impacting insurers, insured consumers and the parties of the Cooperative Agreement (including the Applicants' employed and contracted physicians, if any) if the COPA is granted including changes in percentage of risk-bearing contracts;
III. The following policies:
A. Policy that assures no restrictions to Medicare and/or Medicaid patients,
B. Policies for free or reduced fee care for uninsured and indigent,
C. Policies for bad debt write-off; and
D. Policies that assure parties to the Cooperative Agreement will maintain or exceed existing level of charitable programs and services.
(IV) Identification of existing or future business plans, reports, studies or other documents of each party that:
I. Discuss each party's projected performance in the market, business strategies, capital investment plans, competitive analyses and financial projections including any documents prepared in anticipation of the Cooperative Agreement; and
II. Identification of plans that will be altered, eliminated or combined under the Cooperative Agreement or subsequent COPA
(viii) A description of the plan to systematically integrate health care and preventive services among the parties of the Cooperative Agreement, in the proposed geographic service area, to address the following:
(I) A streamlined management structure to include a description of a single board of directors, centralized leadership and operating structure;
(II) Alignment of the care delivery decisions of the system with the interest of the community;
(III) Clinical standardization;
(IV) Alignment of cultural identities of the parties to the Cooperative Agreement;
(V) Implementation of risk-based payment models to include risk, a schedule of risk assumption and proposed performance metrics to demonstrate movement toward risk assumption and a proposed global spending cap for hospital services; and
(VI) Collaboration with Independent Providers in the geographic service area.
(ix) A detailed description of each of the benefits the Applicants propose will be achieved through the Cooperative Agreement, and for each benefit described provide:
(I) A description specifically describing how the Applicants intend to achieve the benefit;
(II) A description of what the parties have done in the past with respect to achieving or attempting to achieve the benefits independently or through collaboration;
(III) An explanation of why the benefit can best be achieved through a Cooperative Agreement and not through other less anticompetitive arrangements;
(IV) A description of how the Applicants propose that the Commissioner measure and monitor achievement of the proposed benefit including:
I. Proposed measures and suggested baseline values with rationale for each measure to be considered by the Commissioner in developing a plan to monitor achievement of the benefit;
II. The projected levels and trajectory for each measure that would be achieved over the next five (5) years in the absence of the Cooperative Agreement.
III. The basis for the metrics proposed to measure the benefits; and
IV. A plan for how the requisite data for assessing the benefit will be identified and obtained.
(x) A description of the plan, including economic metrics, that details anticipated efficiencies in operational costs and shared services to be gained through the Cooperative Agreement including:
(I) Proposed use of any cost savings to reduce prices borne by insurers and consumers;
(II) Proposed use of cost savings to fund low or no-cost services such as immunizations, mammograms, chronic disease management and drug and alcohol abuse services to achieve long-term population health improvements; and
(III) Other proposed uses of savings to benefit advancement of health and quality of care and outcomes.
(xi) Proposed Measures and suggested baseline values with rationale for each Measure to be considered by the Department in development of an Index. Proposed Measures are to be used to continuously evaluate the Public Advantage of the results of actions approved in the COPA through the Cooperative Agreements under active supervision of the Department. Measures should include elements that reflect both the anticipated benefits and potential disadvantages if the COPA is approved, including measures detailed in item (2)(a)13.(ix)(IV) of this rule. They should include source and projected trajectory over each of the first five (5) years of the Cooperative Agreement and the trajectory if the COPA is not granted. Proposed Measures may include:
(I) Improvements in the geographic service area population's health that exceed Measures of national and state improvement;
(II) Continuity in availability of services throughout the geographic service area;
(III) Access and use of preventive and treatment health care services throughout the geographic service area;
(IV) Operational savings projected to lower health care costs to payers and consumers; and
(V) Improvements in quality of services as defined by surveys of the Joint Commission.
14. An explanation of the reasons for the exclusion of any information set forth in section 1200-38-01-.02, the Application Process, including an explanation of why the item is not applicable to the Cooperative Agreement or to the parties;
15. A detailed description of the total cost resulting from the Cooperative Agreement, including, but not limited to, new costs for consultants, capital costs and management costs. The description should identify costs associated with the implementation of the Cooperative Agreement, including documentation of the availability of the necessary funds. The description should identify which costs are borne by each party;
16. A timetable for implementing all components of the Cooperative Agreement;
17. The Department shall require a Plan of Separation be submitted with the Application. The Plan of Separation shall be updated annually by the parties to the Cooperative Agreement. The parties shall provide an independent opinion from a qualified organization verifying the Plan of Separation can be operationally implemented without undue disruption to essential health services provided by the parties; and
18. The name, address and telephone number of the person(s) authorized to receive notices, reports and communications with respect to the Application.
(3) Additional Department Requirements.
(a) The Department may request additional information from the parties prior to deeming the Application complete or issuing a final decision. The Application shall not be deemed complete nor shall the one hundred twenty (120) day review period commence until all information is received by the Department.
(b) The Department shall notify the parties in writing when the Application is deemed complete.
(c) The parties shall submit simultaneously a copy of the Application and copies of all additional related materials to the Attorney General and to the Department. The Department is entrusted with the active and continuing oversight of all Cooperative Agreements.
(d) The Department may waive any of the requirements or timeframes that it finds, at its sole discretion, due to the nature of a particular Cooperative Agreement, are inapplicable to its analysis of the Cooperative Agreement.
(e) The Application and accompanying documents are public records pursuant to T.C.A. § 10-7-503 and are subject to public inspection in accordance with § 10-7-503, except for records which are confidential pursuant to state or federal law. The parties shall specify any portion of the Application which the parties contend is exempt from the Public Records Act. The parties shall include the specific authority for said exemption. Applicants shall submit two (2) copies of the Application. The first copy shall include all requested information. The second copy shall contain all requested information; however, the parties shall redact confidential information wherever possible. Nothing in this subsection shall limit or deny access to otherwise public information because an Application or accompanying document contains confidential information.


Tenn. Comp. R. & Regs. 1200-38-01-.02
Emergency rule filed July 14, 2015; effective through January 10, 2016. New rule filed October 6, 2015; effective January 4, 2016. Amendments filed December 10, 2018; effective 3/10/2019.

Authority: T.C.A. § 68-11-1303.

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