Fla., Ga. changes to CON laws are biggest in Southeast

The 2019 legislative sessions in Florida and Georgia resulted in significant changes to the certificate of need (“CON”) laws in each state. Other southeastern states, including North Carolina, South Carolina, and Tennessee, considered bills to substantially change their respective CON laws, but the bills either failed to pass prior to adjournment or were amended to remove any significant changes to the CON statutes. This client alert updates our previous blog post with the current status of the various legislative proposals related to CON in these states.

On April 29, the Florida legislature passed a bill (CS/SB 21) that removes the requirement to obtain a CON before establishing a new general hospital or tertiary service (such as organ transplants, pediatric open-heart surgery, and neonatal intensive care units, i.e., services with a high level of intensity, complexity, and cost) and removes the CON requirement for inpatient diagnostic services and curative or comprehensive medical rehabilitative services. In late June, after months of delay, Governor Ron DeSantis signed the legislation, allowing the new provisions to go into effect on July 1, 2019. The bill also allows specialty hospitals to convert to general hospitals without seeking a CON, and this provision goes into effect in July of 2021. The bill leaves in place CON requirements for nursing homes, hospices, and intermediate care facilities for the developmentally disabled.

Georgia’s original House bill to repeal CON requirements entirely (HB 198) was later modified to relax requirements for certain services only, but was voted down on March 7. Upon its failure, the Georgia Senate revived another CON-related bill (HB 186) that included similar provisions as the House bill, which was approved by both the Senate and the House. Georgia Governor Brian Kemp signed the bill into law on April 25. The new law keeps some of the changes proposed in HB 198, such as permitting destination cancer hospitals to convert to general cancer hospitals without seeking a CON, increasing threshold amounts for capital expenditures and limiting CON application objections to those within a 35-mile radius of the proposed project. However, the new law does not allow for hospital organizations to establish standalone emergency departments or allow for cardiology ambulatory surgery centers.

The Tennessee legislature adjourned on May 2^nd without any significant progress made on CON legislation. Both the House and Senate versions of the bill to repeal CON requirements (SB 1291/ HB 1085) never made it out of committee, with the House version failing to leave the Finance, Ways and Means Subcommittee, and the Senate version failing to get past the Government Operations Committee. Additionally, bills which would remove CON requirements for home care organizations and satellite emergency departments (SB 0547/ HB 0672) also never left committee. The legislature will reconvene in January 2020, and it is unclear whether these bills will be reintroduced during the next legislative session.

On May 9, the South Carolina legislature adjourned, leaving in committee a bill to eliminate CON requirements entirely (H 3823). Similarly, a bill that proposed to eliminate CON requirements for substance abuse treatment facilities established and operating on the grounds of certain closed rural hospitals (S 494) died in committee.

In North Carolina, another attempt to repeal the state’s CON requirements was initially included as part of a bill (S 361) that is being touted as an alternative to Medicaid expansion. An amendment was adopted on June 26 which removed the bill’s CON repeal language entirely, thus ending the effort to eliminate North Carolina’s CON law this legislative session. Another bill that provides CON exemptions for ocular surgery (H 173) has not advanced out of committee and has had no movement since February.

The 2019 legislative session for the southeastern states discussed above presented a mixed bag with regard to CON laws, with Florida and Georgia significantly reforming their CON programs and Tennessee, South Carolina, and North Carolina making no changes to their laws. It is unclear whether the failed bills to reform CON laws will be reintroduced in the next legislative session and whether other states in the southeast will similarly see legislation filed related to reforming CON laws.

Belmont Law student Phil FitzGerald contributed to this report.

Copyright 2019, American Health Law Association, Washington, DC. Reprint permission granted.