Potential Changes in the South Carolina Certificate of Need Application and Review Process

After Governor Haley vetoed funding for the Certificate of Need (CON) program, the Department of Health and Environmental Control stopped administering the program, resulting in months of confusion in the regulated community.  In April of this year, the S.C. Supreme Court ruled that the Department is statutorily obligated to administer the program regardless of the Governor’s veto, and now the CON program is back up and running.

Efforts at CON reform continue in the S.C. House of Representatives, and on November 13, 2014, the Department presented proposed revisions to the CON regulations to the Department Board.  In addition to reducing the length of the regulations by removing language duplicated from the CON statutes, the revisions potentially would limit the scope and effectiveness of the CON program itself.  Several changes of significance have some providers questioning whether the Department is attempting to accomplish through regulation what could not be accomplished through eliminating the program’s funding.

For example, the revisions significantly raise the monetary threshold for projects to trigger the requirement to obtain a CON to $50 million for a capital expenditure and to $10 million for medical equipment.  These much higher limits mean that very few, if any, capital projects that are not services referenced in the State Health Plan and equipment projects would require  CONs.  Certain providers would welcome these changes, while others, especially rural facilities that rely on ancillary service reimbursements to fund operations, will not.  The new regulations would also create an online CON application.

On November 14, the day after the Board meeting, the Department issued an emergency regulation to create the online application process.  The new, online application is different from the previous application and requires less information about proposed projects.  For example, in the previous application format, an applicant would have to demonstrate that the project was needed, that it improved accessibility, and that it did not unnecessarily duplicate existing services or facilities.  In the new application format, an applicant need only affirm that its project meets these, and other, criteria.  This new approach raises the question of how the Department will be able to conduct an analysis of proposed projects to determine if they meet the necessary criteria and standards, in addition to how the Department will evaluate competing applications.  The online application conforms to the existing regulations as to applicability and does not incorporate the proposed revisions.

At the November 13 Board meeting, the Board granted initial approval to publish the proposed revisions in the State Register and provide for a period of public comment.

Amber Carter

Amber Carter

Amber Carter practices in the areas of health care and administrative law. Prior to joining Parker Poe, Ms. Carter had the honor of serving for two years as a law clerk to Chief Justice Jean H. Toal of the South Carolina Supreme Court. While in law school, Ms. Carter was an articles editor for the ABA Real Property, Trust and Estate Law Journal and held several positions within the Student Bar Association.

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