Opinion No. (1979)

REQUESTED BY: Dear Senator Cullan:

Your committee has been asked to sponsor a bill which would authorize the Department of Health to conduct section 1122 reviews. You wonder whether it is necessary to have state enabling legislation in order for such reviews to continue.

As you know, the department has been conducting such reviews for several years. It has done so on the basis of a contract it made on behalf of the State of Nebraska with the Secretary of Health, Education and Welfare. The terms of section 1122 of the Social Security Act (42 U.S.C. § 1320 a-1) are restated in that contract. The contract also requires the state to comply with the federal rules and regulations for implementing that section. It requires the department itself to make rules governing certain aspects of the program.

The Secretary is authorized by section 1122 to make such a contract with any state which is ``able and willing' to agree that a designated planning agency will conduct reviews of proposed capital expenditures by certain health care facilities and health maintenance organizations and make recommendations on whether they are needed. If so, the facility making the expenditure may get reimbursements under several federal programs, including Medicare.

There is no corresponding state legislation expressly authorizing the department to enter into such a contract or to conduct such reviews. The department did so because the Governor named the Section of Hospital and Medical Facilities of the department as the designated planning agency to conduct section 1122 reviews and the Board of Health as the appeal board for such reviews.

In making those appointments, the Governor relied on section 84-109, R.R.S. 1943. It provides in part:

"Wherever statewide projects contributed to by any federal agency are initiated within the state, and there is no state agency which is authorized by law to sponsor the same, the same may be sponsored by the Governor. . . . [T]he Governor may delegate actual performance of such duties as may be necessary to any department or agency of the state. . . ."

Judge Urbom in a recent federal case found the department had authority to make the rules and regulations required by the contract with the Secretary of HEW. He did so by inferring that section 1122 was incorporated by reference in section 71-2002(2), R.R.S. 1943. We based our approval of such rules and regulations on Judge Urbom's opinion.

However, we find problems with both section 84-109 and section 71-2002 (2) as sources of authority for the department to conduct section 1122 reviews and to make rules to facilitate them. Both laws were enacted prior to section 1122. If they are interpreted as authorizing such reviews and rules, then the making of Nebraska law has been delegated to Congress and the determination of which federal laws are to operate in Nebraska has been delegated to the Governor. Neither the Congress nor the Governor should be deciding whether Nebraska is ``able and willing' to make section 1122 reviews because under the Nebraska Constitution all legislative power is vested in the Legislature except that which is reserved to the people.

So far the Secretary of HEW has continued to require such reviews as a condition for federal reimbursements under certain programs to health care facilities or health maintenance organizations making capital expenditures as defined in section 1122. However, it is questionable whether the State of Nebraska is ``able and willing' to conduct such reviews at the present time. If the Legislature wants to assure the continuation of such reviews, it should enact enabling state legislation.