On March 23, 2023, North Carolina passed Session Law 2023-7 into law. While the law primarily aims to expand Medicaid coverage across the state, it also institutes significant reforms for the state’s Certificate of Need (“CON”) Program. CON Law requires health care providers to apply to the program and obtain a certificate in order to develop or offer a “new institutional health service,” such as hospitals, or diagnostic centers. CONs must also be obtained before adding beds, operating rooms or expanding to offer certain additional services at an existing healthcare facility. CON reform has been long awaited and aims to loosen restrictions on providers. 

Changes Effective Immediately: 

• A CON will no longer be necessary to develop or offer psychiatric and chemical dependency treatment beds and facilities; 

• Screening, diagnosis, and treatment services provided by a licensed home care agency to children under age 21 will be exempt from CON review under certain circumstances; 

• Monetary thresholds have been increased for capital expenditures for nursing homes, adult care homes, and ICFs, for replacement equipment, and for diagnostic centers. The expansion of these thresholds will give providers more latitude. Additionally, for replacement equipment, monetary thresholds will be adjusted using the Medical Care Index component of the Consumer Price Index published by the U.S. Department of Labor for the prior year. 

Changes Effective Over Time: 

• Ambulatory Surgical Facilities licensed by DHHS, with a single- or multi-specialty ambulatory surgical program and located in a county with a population greater than 125,000 (“Qualified Urban Ambulatory Surgical Facilities”) will be exempt from CON review and will be required to commit 4% of their total revenue to charity care. These changes take effect two years after DHHS issues the first payment to hospitals in accordance with the Healthcare Access and Stabilization Program (“HASP”). 

• Purchasing, donating, leasing, or transferring MRI scanners located in counties with a population greater than 125,000 will no longer require CON review. These changes will take effect three years after the first HASP payment. 

HASP payments are issued to hospitals as part of Medicaid expansion. North Carolina hospitals are expected to receive their first payments in 2023, which would make the previously mentioned provisions effective in 2025 and 2026, respectively. 

The changes to CON law will likely have a large impact on healthcare facilities and providers across the state.

If you have questions about the CON law and its impact on your practice, equipment, or facility, please reach out to any member of  Gardner Skelton’s healthcare team.