Several Southeastern states seek to eliminate or relax Certificate of Need laws

Philip FitzGerald, Class of 2019; Kim Harvey Looney, Partner at Waller; Zachary D. Trotter, Associate at Waller

State certificate of need (“CON”) programs regulate the building and expansion of health care facilities and the acquisition of health care equipment. In our region, the states of Tennessee, Georgia, South Carolina, and North Carolina have bills working their way through the legislative process that would amend, limit or repeal CON laws.

Tennessee’s Legislature is currently considering a bill (SB 1291/HB 1085) to repeal the CON requirement for healthcare facilities and to terminate the Tennessee Health Services and Development Agency, the agency responsible for administering the CON program. The bill has passed on second consideration and both the House and Senate bills have been referred to their respective Government Operations Committees. A second bill (SB 0547/HB 0672) would eliminate the CON requirement for home care organizations or satellite emergency departments. That bill also passed on second consideration in the Senate and has been referred to the Senate Commerce and Labor Committee. In the House, this second bill has been assigned to the Facilities, Licensure & Regulations Subcommittee.

Georgia’s Legislature has introduced a bill (HB 198) which proposes to revise the CON program by the following:

  • Increase the amount existing healthcare facilities can spend on expansion and equipment acquisition without requiring a CON.
  • Eliminate the health strategies council, which advises Georgia’s Department of Community Health on the CON program.
  • Allow destination cancer hospitals granted CONs prior to July 1, 2019, to convert to a hospital without obtaining any additional CON.
  • Ease restrictions on CON exemptions for continuing care retirement communities.
  • Add CON exemptions for private psychiatric hospitals, mental health or substance abuse facilities or programs, or mental health or substance abuse services.
  • Add CON exemptions for freestanding ambulatory surgical centers.
  • Add requirements for modifying or acquiring a CON that includes providing indigent care, and participating as a provider for Medicaid and PeachCare for Kids beneficiaries.
  • Limit which providers may oppose a CON application to existing health care facilities of the same type proposed, or which offer substantially similar services located within a 35-mile radius of the proposed project.

This bill was favorably reported by the House Special Committee on Access to Quality Health Care on March 1.

In South Carolina, a bill (H 3823) proposes eliminating the CON program completely, which would leave licensure approval as the only requirement for building or modifying medical facilities or acquiring medical equipment. The bill was referred for review to the Committee on Ways and Means on January 31.

Although in previous years North Carolina has considered bills proposed to completely repeal its CON program, the only CON bill presented so far this year proposes to exempt ocular surgery from CON laws (H173).

It is too soon to tell whether any or all of these bills will be passed, however, their passage could have a substantial impact on the healthcare landscape throughout the Southeast. We will provide updates as these bills progress through the legislative process in each state.

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