Important Changes to CON Laws in NC: What You Need to Know

CON/CHNA/Regulatory

On August 30, 2021, North Carolina Gov. Roy Cooper signed Senate Bill 462 into law. The bill, which amends the Certificate of Need (CON) law as summarized below, takes effect on October 1, 2021.

Increase in Three CON Cost Thresholds

The new CON law increases three cost thresholds above which CON review would be required. Notably, these thresholds have not been increased in decades.

• Diagnostic Centers:  the cost threshold will increase from $500,000 to $1,500,000;
• New Institutional Health Services:  the cost threshold will double from $2,000,000 to $4,000,000; and
• Major Medical Equipment:  the cost threshold will increase from $750,000 to $2,000,000.

The bill also accounts for inflation, so future adjustments won’t be left to politics or inertia. Beginning September 30, 2022, each of the cost thresholds noted above will be adjusted annually based on the consumer price index.

CON Project Implementation and Expiration of a CON

The bill also amends existing statutes to impose clear expiration deadlines for health service facility construction projects that fail to move ahead in a timely manner after a CON has been granted. Currently, under N.C. Gen. Stat. § 131E-189, the North Carolina Department of Health and Human Services has the authority to withdraw a CON if good faith efforts are not being made to develop a project; however, such authority is rarely exercised.

For a construction CON issued on or after Oct. 1, 2021, the new law sets forth the following expiration dates if the holder of the CON fails to execute or commit to a contract for design within:

• four years following the final approval date for a project with a capital expenditure exceeding $50,000,000; or
• two years following the final approval date for a project with a capital expenditure of $50,000,000 or less.

Relative to CONs for the construction of a health service facility issued prior to October 1, 2021, the bill provides for the expiration of the CON where the holder of the CON fails to execute or commit to a contract for design:

• by October 1, 2025, for a project with a capital expenditure exceeding $50,000,000; or
• by October 1, 2023, for a project with a capital expenditure of $50,000,000 or less.

Ascendient is one of the country’s leading CON firms, with more than 450 successful applications representing nearly $5.5 billion in capital investment. If you have questions about how changing CON laws might affect your current or future applications, please contact us for clarification.