Michigan Office of Administrative Hearings and Rules  
Administrative Rules Division (ARD)  
MOAHR-Rules@michigan.gov  
REGULATORY IMPACT STATEMENT  
and COST-BENEFIT ANALYSIS (RIS)  
AGENCY INFORMATION:  
Department name:  
Licensing and Regulatory Affairs  
Bureau name:  
Bureau of Community and Health Systems  
Name of person filling out RIS:  
Kyle Neff  
Phone number of person filling out RIS:  
517-241-0274  
Email of person filling out RIS:  
NeffK2@michigan.gov  
RULE SET INFORMATION:  
ARD assigned rule set number:  
2025-32 LR  
Title of proposed rule set:  
Licensing of Facilities Psychiatric Hospital/Units  
COMPARISON OF RULE(S) TO FEDERAL/STATE/ASSOCIATION STANDARDS  
1. Compare the proposed rules to parallel federal rules or standards set by a state or national licensing agency  
or accreditation association, if any exist.  
The Licensing of Facilities (Psychiatric Hospital/Unit) rules, R 330.1201-R 330.1299, are being rescinded and will be  
replaced by a proposed new rule set (Licensing Psychiatric Hospitals and Units. (See 2025-33 LR). There are  
comparable federal certification standards for participating in the Medicare and Medicaid programs and other  
neighboring states’ licensing standards. The proposed rules are like these other national and state standards and do  
not exceed these standards.  
A. Are these rules required by state law or federal mandate?  
The proposed rules are required under section 136 of 1974 PA 258, MCL 330.1136, the mental health code.  
There is no federal mandate.  
B. If these rules exceed a federal standard, please identify the federal standard or citation, describe why it  
is necessary that the proposed rules exceed the federal standard or law, and specify the costs and  
benefits arising out of the deviation.  
These rules are being rescinded and replaced by a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The proposed rules do not exceed federal standards.  
2. Compare the proposed rules to standards in similarly situated states, based on geographic location,  
topography, natural resources, commonalities, or economic similarities.  
The proposed rules are like neighboring states’ standards with requirements for staffing, care planning, ancillary care  
services, record keeping, physical plant safety, and patient rights. These rules are being rescinded and replaced by a  
proposed rule set, Licensing Psychiatric Hospitals and Units .  
A. If the rules exceed standards in those states, please explain why and specify the costs and benefits  
arising out of the deviation.  
MCL 24.245(3)  
RIS-Page 2  
The proposed rules do not exceed standards in other like states. These rules are being rescinded and replaced  
by a proposed rule set, Licensing Psychiatric Hospitals and Units.  
3. Identify any laws, rules, and other legal requirements that may duplicate, overlap, or conflict with the  
proposed rules.  
These rules are being rescinded and replaced by a proposed rule set, Licensing Psychiatric Hospitals and Units. The  
proposed rules harmonize with federal certification standards and do not exceed duplicate, overlap, or conflict with  
these federal standards for participating in the Medicare and Medicaid programs.  
A. Explain how the rules have been coordinated, to the extent practicable, with other federal, state, and  
local laws applicable to the same activity or subject matter. This section should include a discussion of  
the efforts undertaken by the agency to avoid or minimize duplication.  
These rules are being rescinded and replaced by a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The proposed rules were shared with the Michigan Department of Health and Human Services to  
minimize duplication or conflict with reimbursement.  
PURPOSE AND OBJECTIVES OF THE RULE(S)  
4. Identify the behavior and frequency of behavior that the proposed rules are designed to alter.  
The bureau is rescinding this rule set and promulgating a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The proposed rules are designed to ensure uniform standards to provide quality services and maintain a safe  
environment to protect the health, safety, and welfare of patients. The proposed rules comport with today’s practice  
standards, harmonize with current federal standards and regulations, and reflect the current organization of state  
licensing functions. The proposed rules set a minimum standard for licensed facilities that serve patients often paid for  
with state and federal funding sources such as Medicaid and Medicare.  
A. Estimate the change in the frequency of the targeted behavior expected from the proposed rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The proposed rules won’t change the frequency of the targeted behavior because the department already  
has a comprehensive system of licensure of psychiatric hospitals and units.  
B. Describe the difference between current behavior/practice and desired behavior/practice.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units (2025-33 LR). The proposed rules will comport with today’s practice standards, comply with current  
related law, and reflect the current organization of state licensing functions.  
C. What is the desired outcome?  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The desired outcome is an improved system of licensure of psychiatric hospitals and units and ensure  
alignment with current practice standards for improving patient care and safety.  
5. Identify the harm resulting from the behavior that the proposed rules are designed to alter and the likelihood  
that the harm will occur in the absence of the rule.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
Rules for licensing psychiatric hospitals and units are essential for protecting public health and safety. They are also  
required for providers to qualify for Medicare and Medicaid funding. Without these standards, both patient safety and  
public health could be at risk.  
A. What is the rationale for changing the rules instead of leaving them as currently written?  
These rules have not been updated since 1990 and no longer align with current practice of standards. These  
rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units that  
will comport with today’s practice standards, comply with current law and regulations, and reflect the current  
organization of state licensing functions.  
6. Describe how the proposed rules protect the health, safety, and welfare of Michigan citizens while promoting  
a regulatory environment in Michigan that is the least burdensome alternative for those required to comply.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The proposed rules set minimum standards for staff, administration, ancillary services, care planning and treatment,  
physical plant safety and environment, and patients’ rights.  
7. Describe any rules in the affected rule set that are obsolete or unnecessary and can be rescinded.  
MCL 24.245(3)  
RIS-Page 3  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
FISCAL IMPACT ON THE AGENCY  
Fiscal impact is an increase or decrease in expenditures from the current level of expenditures, i.e., hiring  
additional staff, higher contract costs, programming costs, changes in reimbursements rates, etc. over and  
above what is currently expended for that function. It does not include more intangible costs for benefits, such  
as opportunity costs, the value of time saved or lost, etc., unless those issues result in a measurable impact on  
expenditures.  
8. Please provide the fiscal impact on the agency (an estimate of the cost of rule imposition or potential savings  
for the agency promulgating the rule).  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
There is no fiscal impact on the agency.  
9. Describe whether or not an agency appropriation has been made or a funding source provided for any  
expenditures associated with the proposed rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
10. Describe how the proposed rules are necessary and suitable to accomplish their purpose, in relationship to  
the burden(s) the rules place on individuals. Burdens may include fiscal or administrative burdens, or  
duplicative acts.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
A. Despite the identified burden(s), identify how the requirements in the rules are still needed and  
reasonable compared to the burdens.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units.  
IMPACT ON OTHER STATE OR LOCAL GOVERNMENTAL UNITS  
11. Estimate any increase or decrease in revenues to other state or local governmental units (i.e., cities,  
counties, school districts) as a result of the rule. Estimate the cost increases or reductions for other state or  
local governmental units (i.e., cities, counties, school districts) as a result of the rule. Include the cost of  
equipment, supplies, labor, and increased administrative costs in both the initial imposition of the rule and  
any ongoing monitoring.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
12. Discuss any program, service, duty, or responsibility imposed upon any city, county, town, village, or school  
district by the rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
A. Describe any actions that governmental units must take to be in compliance with the rules. This section  
should include items such as record keeping and reporting requirements or changing operational  
practices.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units.  
13. Describe whether or not an appropriation to state or local governmental units has been made or a funding  
source provided for any additional expenditures associated with the proposed rules.  
No appropriation or other funding source is provided to state or local government units as there are no related  
expenditures. These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals  
and Units.  
RURAL IMPACT  
MCL 24.245(3)  
RIS-Page 4  
14. In general, what impact will the rules have on rural areas?  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
A. Describe the types of public or private interests in rural areas that will be affected by the rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The RIS for the proposed new rule set will address the impact of the proposed rules.  
ENVIRONMENTAL IMPACT  
15. Do the proposed rules have any impact on the environment? If yes, please explain.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
SMALL BUSINESS IMPACT STATEMENT  
16. Describe whether and how the agency considered exempting small businesses from the proposed rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
17. If small businesses are not exempt, describe (a) the manner in which the agency reduced the economic  
impact of the proposed rules on small businesses, including a detailed recitation of the efforts of the agency  
to comply with the mandate to reduce the disproportionate impact of the rules upon small businesses as  
described below (in accordance with MCL 24.240(1)(a-d)), or (b) the reasons such a reduction was not lawful  
or feasible.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
A. Identify and estimate the number of small businesses affected by the proposed rules and the probable  
effect on small businesses.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The RIS for the proposed new rule set will address the impact of the proposed rules.  
B. Describe how the agency established differing compliance or reporting requirements or timetables for  
small businesses under the rules after projecting the required reporting, record-keeping, and other  
administrative costs.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The RIS for the proposed new rule set will address the impact of the proposed rules.  
C. Describe how the agency consolidated or simplified the compliance and reporting requirements for  
small businesses and identify the skills necessary to comply with the reporting requirements.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The RIS for the proposed new rule set will address the impact of the proposed rules.  
D. Describe how the agency established performance standards to replace design or operation standards  
required by the proposed rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The RIS for the proposed new rule set will address the impact of the proposed rules.  
18. Identify any disproportionate impact the proposed rules may have on small businesses because of their size  
or geographic location.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
19. Identify the nature of any report and the estimated cost of its preparation by small businesses required to  
comply with the proposed rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
MCL 24.245(3)  
RIS-Page 5  
20. Analyze the costs of compliance for all small businesses affected by the proposed rules, including costs of  
equipment, supplies, labor, and increased administrative costs.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
21. Identify the nature and estimated cost of any legal, consulting, or accounting services that small businesses  
would incur in complying with the proposed rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
22. Estimate the ability of small businesses to absorb the costs without suffering economic harm and without  
adversely affecting competition in the marketplace.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
23. Estimate the cost, if any, to the agency of administering or enforcing a rule that exempts or sets lesser  
standards for compliance by small businesses.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
24. Identify the impact on the public interest of exempting or setting lesser standards of compliance for small  
businesses.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
25. Describe whether and how the agency has involved small businesses in the development of the proposed  
rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The proposed rules received input from large and small health systems.  
A. If small businesses were involved in the development of the rules, please identify the business(es).  
The licensed providers are currently part of large health systems and not considered small businesses.  
COST-BENEFIT ANALYSIS OF RULES (INDEPENDENT OF STATUTORY IMPACT)  
26. Estimate the actual statewide compliance costs of the rule amendments on businesses or groups.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
A. Identify the businesses or groups who will be directly affected by, bear the cost of, or directly benefit  
from the proposed rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The RIS for the proposed new rule set will address the impact of the proposed rules.  
B. What additional costs will be imposed on businesses and other groups as a result of these proposed  
rules (i.e., new equipment, supplies, labor, accounting, or recordkeeping)? Please identify the types and  
number of businesses and groups. Be sure to quantify how each entity will be affected.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The RIS for the proposed new rule set will address the impact of the proposed rules.  
27. Estimate the actual statewide compliance costs of the proposed rules on individuals (regulated individuals or  
the public). Include the costs of education, training, application fees, examination fees, license fees, new  
equipment, supplies, labor, accounting, or recordkeeping.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
A. How many and what category of individuals will be affected by the rules?  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The RIS for the proposed new rule set will address the impact of the proposed rules. The proposed rules  
cover 59 state licensed psychiatric hospitals and units.  
B. What qualitative and quantitative impact do the proposed changes in rules have on these individuals?  
MCL 24.245(3)  
RIS-Page 6  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. The qualitative impact is the proposed rules are updated to comport with current practice standards to  
ensure quality of care. The quantitative impact is 60 state licensed psychiatric hospitals and units with 3,091  
beds.  
28. Quantify any cost reductions to businesses, individuals, groups of individuals, or governmental units as a  
result of the proposed rules.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
29. Estimate the primary and direct benefits and any secondary or indirect benefits of the proposed rules. Please  
provide both quantitative and qualitative information, as well as any assumptions.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The primary benefit is updating the rules to comport with today’s practice standards. The secondary benefit is clearer  
language and risk reduction standards.  
30. Explain how the proposed rules will impact business growth and job creation (or elimination) in Michigan.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
31. Identify any individuals or businesses who will be disproportionately affected by the rules as a result of their  
industrial sector, segment of the public, business size, or geographic location.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The RIS for the proposed new rule set will address the impact of the proposed rules.  
32. Identify the sources the agency relied upon in compiling the regulatory impact statement, including the  
methodology utilized in determining the existence and extent of the impact of the proposed rules and a cost-  
benefit analysis of the proposed rules.  
Sources on regulatory impact were provided by providers and participants in the focus group and town hall meeting to  
formulate these proposed rules. The participants did not identify any adverse cost-benefit from the proposed rules.  
A. How were estimates made, and what assumptions were made? Include internal and external sources,  
published reports, information provided by associations or organizations, etc., that demonstrate a need  
for the proposed rules.  
Information was provided by state-licensed providers currently operating in Michigan and their respective  
professional associations.  
ALTERNATIVE TO REGULATION  
33. Identify any reasonable alternatives to the proposed rules that would achieve the same or similar goals.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
There are no reasonable alternatives that would achieve that same or similar goals.  
A. Please include any statutory amendments that may be necessary to achieve such alternatives.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and  
Units. There are no reasonable alternatives to the proposed rules so there are no necessary statutory  
amendments.  
34. Discuss the feasibility of establishing a regulatory program similar to that proposed in the rules that would  
operate through private market-based mechanisms. Please include a discussion of private market-based  
systems utilized by other states.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The proposed rules and licensure of this provider are required by statute. The department in its research did not  
identity a private market-based approach used by any other state for like provider types.  
35. Discuss all significant alternatives the agency considered during rule development and why they were not  
incorporated into the rules. This section should include ideas considered both during internal discussions  
and discussions with stakeholders, affected parties, or advisory groups.  
These rules are being rescinded and replaced with a proposed rule set, Licensing Psychiatric Hospitals and Units.  
The department incorporated as many recommendations as possible from stakeholders if the recommendation met  
MCL 24.245(3)  
RIS-Page 7  
statutory requirements. The proposed rules represent a consensus among those that participated in the development  
of these rules. During this discussion and research, no alternative models were suggested by the stakeholders.  
ADDITIONAL INFORMATION  
36. As required by MCL 24.245b(1)(c), please describe any instructions regarding the method of complying with  
the rules, if applicable.  
This is not applicable because the rules are being rescinded.  
MCL 24.245(3)  
;