First, Do No Harm: Analyzing the Certificate of Need Debate in North Carolina

From time to time the Parker Poe Health Care Blog will be asking experts in the health care field to serve as guest bloggers. Our first guest blogger is Daniel Carter from Ascendient. Ascendient is a Health Care Consulting firm located in Chapel Hill, North Carolina, that provides strategic health care planning and Certificate of Need advice and analysis. Ascendient has recently completed an in-depth analysis of the Certificate of Need (“CON”) law in North Carolina to determine how a potential repeal of the law would affect health care providers and consumers in the state. After reading it, we decided we should share this analysis with you. Here is a summary with a link to the full report.

Much of the debate over whether North Carolina’s Certificate of Need (“CON”) law should be repealed has focused on market theories without a great deal of focus on measurable realities. Ascendient decided to expand the perspective beyond the ideological arguments and review the data to see if it could draw some conclusions about how a potential repeal of the CON law in North Carolina would affect health care providers and consumers.

Based on an analysis of facts and objective data, we conclude that any move now to deregulate North Carolina’s healthcare system by reducing or eliminating the CON program would be premature and put already vulnerable hospitals at much greater risk as new entrants pick off their best patients without taking up the burden of indigent care.

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State Council Release Draft 2016 Certificate of Need Plan

There has been a lot of discussion about major changes to North Carolina’s Certificate of Need law.  As these legislative discussions continue, the State Health Coordinating Council continues its work on next year’s State Medical Facilities Plan (“SMFP”).  The draft plan is available on the N.C. Division of Health Service Regulation’s website.  Public hearings on this proposed SMFP were held in July.  Several petitions have been submitted seeking adjustments to the new determinations in the proposed 2016 SMFP.

A summary of the need determinations in the proposed 2016 SMFP is set forth below. Petitions submitted to adjust the need determinations also are listed.

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Renee Montgomery

Renee Montgomery

Renee Montgomery focuses her practice in the health law area and has extensive experience in regulatory and administrative law. For more than 25 years, Ms. Montgomery has represented health care providers and other organizations in administrative proceedings and litigation matters. Ms. Montgomery frequently lectures on health law and administrative law issues.

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Certificate of Need Opportunities in 2015

While many of us were shopping for last-minute gifts for our families, Governor McCrory was busy approving the 2015 State Medical Facilities Plan (“SMFP”). The SMFP is a document created annually by the State Health Coordinating Council that sets forth the methodology and allocations of available Certificates of Needs (“CON”) for the upcoming year.  Under North Carolina law, the SMFP must be approved by the Governor.  On December 22, 2015,  the Governor approved the need allocations that will be available for the award of CONs in 2015 by signing the SMFP.  Although the 2015 SMFP does not allocate a large number of potential CONs, there are some significant healthcare projects in the 2015 SMFP for which providers may wish to apply in the coming months.

In terms of technology and equipment, a CON for a fixed MRI scanner in Harnett County will be up for review in 2015.  Applications for the fixed MRI scanner are due on August 17, 2015.  Otherwise, 2015 looks to be a relatively quiet year for equipment applications.

Adult care home CONs provide one bright spot in the 2015 SMFP.  The 2015 SMFP allocated 340 beds to Brunswick County.  Applications for this allocation are due August 17, 2015.  Providers should be mindful that they can apply for all or part of the 340 available beds.  This allocation provides a good opportunity for adult care home providers to grow in a part of the state that is seeing an increased number of retirees.

On the home care and hospice front, the 2015 SMFP has no allocation for additional  home health offices.  However, the SMFP allocates one CON for a hospice home care Medicare-certified office in Cumberland County.  Applications for the Cumberland County hospice home care CON are due June 15, 2015.  Read More

Robb Leandro

Robb Leandro

Robb Leandro assists his client with a broad range of legal issues relating to health care, administrative law and public policy. His legal practice focuses on helping health care providers navigate the minefield of regulations that they face in their practices. Robb routinely assists his clients with issues including Medicaid and Medicare regulations; Medicaid and Medicare audits; Certificate of Need Applications and litigation; licensure, surveys, and certification issues; and HIPAA and privacy laws. Robb also provides counsel to health care providers with complex government contract procurement issues.

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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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