North Carolina Certificate of Need Process (CON)

North Carolina Certificate of Need Process (CON)

Certificate of Need (CON) Overview

seal-north-carolinaLike many other states, North Carolina has an extensive CON process in place for healthcare services and facilities. Winning approval for a CON application is often a time consuming and difficult undertaking. Working with RPC provides clients with a team of consultants with experience working with CON projects.

When working on a CON project, RPC can prepare the entire CON application or sections of the application as the client prefers. When the client is defining the project and deciding whether to file an application, RPC can help assess the market and regulatory situation to determine the relative likelihood of success for a project. RPC not only works to create a thorough market, need and financial analysis, but also works seamlessly with the client’s staff, architects, engineers and, other outside consultants to create a solid CON application.

RPC is lead by Ron Luke, JD, PhD, who has prepared CON applications and presented testimony in CON hearings since 1981 in more than 20 states.  RPC’s work on CON projects includes the opening of new acute care hospitals, hospices, physical rehabilitation and psychiatric specialty hospitals, and nursing homes, the relocation and addition of beds, and the acquisition of major medical equipment. Working with RPC during the CON process gives the applicant the advantage of a skilled expert team that can provide expert advice and produce an effective CON application.

State Agencies

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 North Carolina Division of Health Service Regulation (DHSR)
DHSR administers the CON program through its Certificate of Need Section. DHSR’s CON Section is also the party that reviews CON applications and issues the department Decision on CON applications. Appeals of the initial decision are to the Office of Administrative Hearings.An Administrative Law Judge (ALJ) will hear the CON case and make a decision on the case.

NC Division of Health Service Regulation
2704 Mail Service Center
Raleigh, NC 27696-2704
(919) 855-3873

North Carolina Court of Appeals Judge
An adversely affected party may request judicial review of the ALJ’s CON decision to the NC Court of Appeals, where the case is heard by a three-judge panel. Further appeal is the NC Supreme Court.

Facilities and Services that Require CON

North Carolina’s Certificate of Need program requires certain health care service providers to gain state approval through the CON application process before they are able to offer or expand certain services. North Carolina’s CON law is premised on the idea that increasing health care costs may be controlled by governmental restrictions on duplication of medical facilities.  The following services and facilities require CON approval:

  • Acute Care Hospitals
  • Inpatient Psychiatric Hospitals
  • Inpatient Rehabilitation Hospitals
  • Nursing Homes
  • End-Stage Renal Disease Facilities
  • Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF-IID)
  • Home Health Agency Offices
  • Chemical Dependency Treatment Facilities
  • Diagnostic Centers
  • Hospice Programs (Inpatient and Residential Facilities as well)
  • Inpatient and Outpatient Operating Rooms and Ambulatory Surgery Facilities
  • Adult Care Homes
  • Long-Term Care Hospitals
  • Capital expenditure in excess of $2 million
  • Change in bed capacity
  • Relocation of beds, operating rooms, or dialysis stations
  • Project cost overrun in excess of 15% of CON approved capital expenditure amount
  • Transplant services
  • Burn Services
  • NICU
  • Open Heart Surgery, Cardiac Catheterization
  • Major Medical Equipment (cardiac cath, gamma knife, heart-lung bypass machine, linear accelerator, MRI, Lithotriptor, PET, and any other medical equipment over $750,00 including associated costs)
  • Endoscopy suites

Certificate of Need Process Milestones

    1. Publication of State Medical Facilities Plan
      At the beginning of the calendar year DHSR publishes the State Medical Facilities Plan (SMFP) which contains the maximum number of health facility beds, operating rooms, and units of medical equipment, by category, which can be approved by the CON section. Consistency with the state health plan is required. The SMFP also contains the batching cycle dates for the year. Batching cycles allow the CON section to review all competing applications for the same service at the same time. The 2016 SMFP, effective January 1, 2016 shows a need determination for the following services. Refer to the SMFP for more information and additional restrictions on the need determinations. 

      Acute Care: 84 beds in Orange County  

      Operating Rooms: 13 total in various areas

      Fixed MRI: 1 in each of these counties: Brunswick, Guilford, Mecklenburg, Wake. 

      Fixed Cardiac Cath: 1 in Cumberland       

      Shared Cardiac Cath: 1 in Harnett, in response to a petition

      Nursing Care Beds: 40 in Nash (restricted to certain diagnoses)

      Adult Care Home Beds: 30 in Ashe, 20 in Graham, 30 in Jones, 50 in Perquimas, and 20 in Washington     

      Child Psych Beds: Several areas have need. Nash County has the greatest need at 29 beds.

      Adult Psych Beds: 32 in Durham, 4 in Guilford area. See SMFP for restrictions.    

      Adult Substance Abuse Beds: 23 in Eastern Region, 22 in Central               

      Child Substance Abuse Beds: 9 in Eastern Region, 19 in Central

    2. Letter of Intent (LOI)
      An LOI must be submitted to the CON Section no later than the date the application is due. However, most applicants submit their LOI as soon as possible. If an LOI is submitted before the beginning of a review period, the CON Section forwards a letter to the applicant indicating whether or not CON review is required. If review is required the letter will indicate the review dates and application forms necessary.
    3. Application Submission
      Applications and accompanying fees must be received by 5:30 p.m. on the 15th day of the month preceding the beginning of the review period (as published in the SMFP). An application may not be amended after it is submitted. If an application is deemed incomplete, the CON Section will notify the applicant within 5 days. An application is incomplete if an inadequate fee is paid, the wrong application form was used, or only one copy of the application is provided. The correct fee and application and copy must be received by the last business day before the review begins for the review to proceed.
    4. Public Comment Period
      During the first 30 days of the review period, any person may file written comments concerning the applications under review.
    5. Public Hearing
      Although a hearing is not required for all reviews, it is required for competitive reviews, any proposal over $5,000,000 and can also be requested by any affected parties. The public hearing will take place no more than 20 days after the conclusion of the comment period.
    6. CON Section Application Review
      The CON section has from 90 to 150 days to review an application. All written comments and public hearings are taken into consideration during the decision making process.
    7. Decision Appeals
      If an interested party wants to appeal the CON Section’s decision, they must file a petition for a contested case hearing with the Office of Administrative Hearings within 30 days of the date of the decision. The administrative law judge will make his/her decision within 270 days of the petition’s filing.
    8. Appealing Final Decision
      If a party wishes to appeal the final decision, they must file an appeal with the North Carolina Court of Appeals.
    9. Monitoring
      After a CON has been issued the CON Section will monitor the development of the project through required progress reports. The CON Section may withdraw a CON if the holder does not develop and operate services consistent with their CON application.

 What criteria are used to review a CON?

North Carolina’s General Statutes §131E-183 lists the following review criteria for CON matters:

  1. Consistency with State Medical Facilities Plan and need determination and policies published therein.
  2. Demonstrated need for the population who is to be served by the applicant with particular regard to low income persons, racial minorities, women, handicapped persons, and other underserved groups.
  3. For a reduction or elimination of service—proof that the population presently served will be adequately served after the reduction
  4. Demonstration that the proposed service/facility is the least costly or most effective method of service
  5. Availability of funds for capital and operating needs. Demonstration of the long-term financial feasibility of the project.
  6. Project will not result in unnecessary duplication of health services
  7. Availability of manpower and management personnel for project
  8. Demonstration of coordination of necessary ancillary and support services, as well as coordination with existing health care system
  9. Any applicant proposing to provide a large portion of its services to individuals outside of the health service area mustdemonstrate the special need for this
  10. Applicant must show that special needs of health maintenance organizations (HMOs) are met
  11. 15, 16, 17, and 19 Repealed.
  12. Any proposed construction must demonstrate that cost and means of design are most reasonable alternative and will not unduly increase cost of providing health services
  13. 13. Services address the health needs of the medically underserved including the elderly, Medicaid and Medicare recipients, women, handicapped and minority patients Health services accommodate health professional training programs in the area
  14. Health services accommodate health professional training programs in the area
  15. 14. Project has positive impact on competition, cost, and access.
  16. An applicant with existing facilities/services must demonstrate a history of quality care

Certain projects are also subject to conformity to rules that are codified in 10A NCAC 14C

Certificate of Need Application Filing Fee

Every CON applicant must submit a $5,000 application fee plus .3% of the amount of proposed capital expenditures over $1,000,000. The application fee can never exceed $50,000.  

Additional Sources

(links good as of January 2015)

North Carolina Division of Health Service Regulation
http://www.dhhs.state.nc.us/dhsr/coneed/index.html

CON Statute
http://www.dhhs.state.nc.us/dhsr/coneed/pdf/conlaw.pdf

CON Rules
http://reports.oah.state.nc.us/ncac/title%2010a%20-%20health%20and%20human%20services/chapter%2014%20-%20director,%20division%20of%20health%20service%20regulation/
subchapter%20c/subchapter%20c%20rules.pdf

North Carolina State Medical Facilities Plan
http://www.dhhs.state.nc.us/dhsr/ncsmfp/index.html

CON Application Forms
Certificate of Need Application Form for Acute Care Facilities, Services and Medical Equipment
Certificate of Need Application for Adult Care Homes
Certificate of Need Application Form for End Stage Renal Disease Treatment Services (Dialysis Stations and Facilities)
Certificate of Need Application Form for New Operating Room Projects, New Ambulatory Surgical Facilities and Gastrointestinal Endoscopy Procedure Room Projects

Contact RPC Consulting
Should you or your client need an expert team to help you with the
North Carolina Certificate of Need Process (CON)
please contact Dr. Ron Luke at 512-371-8166.

Disclaimer: The information on this page has been compiled by RPC in June 2010 and updated in February 2013 based on sources believed to be reliable. Where possible we have had the material reviewed by state CON officials or others knowledgeable of the state’s CON program. The information is not offered as legal advice. A state may change its rules, forms and procedures at any time and RPC offers no assurance that the information will be correct on the date it is viewed. Therefore the reader is urged to use this information only as a starting point for any CON application and to speak with state officials or seek legal or consulting advice early in the process.

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