CON-Certificate of Need State Laws

12/1/2019

Certificate of Need (CON) laws are state regulatory mechanisms for establishing or expanding health care facilities and services in a given area. In a state with a CON program, a state health planning agency must approve major capital expenditures for certain health care facilities. CON programs aim to control health care costs by restricting duplicative services and determining whether new capital expenditures meet a community need.

Interactive Map of State CON Laws

Currently, 36 states and Washington, D.C. operate a CON program with wide variation state-to-state. The following 50-state map lists the health care facilities and capital expenditures covered under the CON law for each state.

Legend

 

CON program in place

 

Variation on CON program* (click on map for details)

 

No CON program 

 

No data

Click on a state to see detailed information about its certificate of need program.

 

Intent and Structure of CON

The basic assumption underlying CON regulation is that excess health care facility capacity results in health care price inflation. Price inflation can occur when a hospital cannot fill its beds and fixed costs must be met through higher charges for the beds that are used. Larger institutions generally have larger costs, so hospitals and other health facilities may raise prices in order to pay for new, underused medical services or empty beds. CON programs require a health care facility to seek a health planning agency’s approval based on a set of criteria and community need. Once a health facility has applied for state approval, the health planning agency may approve, deny or set certain limitations on a health care project. 

While the effectiveness of CON programs continues to be a heavily debated topic, many states consider CON programs as one way to control health care costs and increase access to care. Below is a list of both arguments in favor and against CON laws.

Arguments In Favor and Against CON Laws
Proponents of CON Laws Argue: Opponents of CON Laws Argue:
  • Health care cannot be considered as a “typical” economic product. Most health services (like lab tests) are ordered by physicians, not patients. Patients do not shop around as they do for other goods and services.
  • CON programs limit health care spending. 
  • CON programs help distribute care to disadvantaged populations or geographic areas that new and existing medical centers may not serve. Removal of CON will favor for-profit hospitals which may be less willing to provide indigent care. 
  • Removal of CON will lead to a proliferation of “low-volume” facilities, which some view as providing lower quality care.  
  • CON requirements do not block change, they mainly provide for an evaluation, and often include public or stakeholder input.
  • By restricting new construction, CON programs may reduce price competition between facilities and keep prices high.
  • Some changes in the Medicare payment system (such as paying hospitals according to Diagnostic Related Groups – “DRGs”) may make external regulatory controls unnecessary by sensitizing health care organizations to market pressures. 
  • CON programs vary state to state, with inconsistent metrics and management. 
  • CON programs allow for political influence in deciding whether facilities will be built, which can invite manipulation and abuse. 
  • Some evidence suggests that lack of competition encourages construction and additional spending.
  • Identifying the “best interests” of a community isn’t always clear; decisions ostensibly made for the greater good could have unintended consequences in the long-term, particularly in an unsteady economy or, for example, in a rapidly-gentrifying community. 

History

New York was the first state to enact a CON law in 1964; 26 states enacted CON laws throughout the following decade. Early CON programs typically regulated capital expenditures greater than $100,000, facilities expanding their bed capacity and facilities establishing or expanding health care services.

In 1972, several states adopted Section 1122 waivers, which provided federal funding to states regulating new health care services receiving Medicare and Medicaid dollars. Congress then passed the National Health Planning and Resources Development Act of 1974 bolstering federal funding for state and local health planning regulations. The federal law required states to adopt CON laws similar to the federal model resulting in all states, except Louisiana, maintaining some form of a CON program by 1982. This meant states had broad regulatory oversight of several facilities—including hospitals, nursing and intermediate care facilities and ambulatory surgery centers—as well as the expansion or development of a facility’s service capacity. 

The federal mandate was repealed in 1987, along with the associated federal funding. Subsequently, several states repealed or modified their CON laws.

State Legislative Actions

In the past several years, many states have introduced or enacted legislation to change their CON program. Changes range from fully repealing an existing CON program to creating a new CON program. The following are state examples of legislative actions impacting CON programs:

  • 35 states currently maintain some form of CON program. Puerto Rico, the US Virgin Islands and the District of Columbia also have CON programs. States retaining CON laws often regulate outpatient facilities and long-term care. This is largely due to an increase in free-standing, physician-owned facilities.
  • Nine states—Florida, Georgia, Maryland, Ohio, Rhode Island, Tennessee, Vermont, Virginia and Washington—enacted legislation in 2019 to modify CON regulations for certain health facilities and services.  
  • Three states—Arizona, Minnesota and Wisconsin—do not officially operate a CON program, but they maintain several approval processes that function similarly to CON.
  • 12 states fully repealed their CON laws. New Hampshire was the most recent repeal, effective 2016.

Moratoria

As part of a CON program, some states may place certain health care facilities and facility beds on moratorium. This means a state planning agency will grant no CONs for certain facility capital expenditures. Moratorium regulations most often affect nursing facilities and other long-term care facilities.

Several states—including Arkansas, Florida, Georgia, Hawaii, Illinois and Virginia—have restrictions on the development or expansion of certain health care facilities and beds through a needs and utilization assessment process. While not an outright moratorium, a state planning agency may determine there is no need for additional health care facility beds or services in a particular county or district.

Certificate of Need (CON) Moratoria

STATE

MORATORIA?

FACILITIES COVERED UNDER MORATORIA

Alabama

No

 

Alaska

No

 

Arizona

No

 

Arkansas

Yes

Psychiatric residential facilities, intermediate care facilities for the intellecually disabled and residential care facilities.

California

No

 

Colorado

No

 

Connecticut

Yes

Nursing home beds. 

Delaware

Yes

Acute care hospitals. 

Florida

No

 

Georgia

No

 

Hawaii

No

 

Idaho

No

 

Illinois

No

 

Indiana

No

 

Iowa

No

 

Kansas

No

 

Kentucky

No

 

Louisiana

Yes

Intermediate care facilities for the developmentally delayed, nursing facilities, long-term care facilities and long-term care beds

Maine

No

 

Maryland

Yes

Acquisitions authorizing a general hospice to provide home-based hospice services on a statewide basis. 

Massachusetts

Yes

Long-term care beds. 

Michigan

No

 

Minnesota

Yes

Hospitals and hospital beds, nursing home beds, intermediate care facilities for persons with developmental disabilities and radiation therapy facilities in certain locations. 

Mississippi

Yes

Skilled nursing facilities; intermediate care facilities; intermediate care facilities for the mentally retarded; home health agencies; the conversion of hospitals beds to intermediate nursing home care; and Medicaid-certified child/adolescent psychiatric or chemical dependency beds

Missouri

No

 

Montana

No

 

Nebraska

Yes

Long-term care beds and rehabilitation beds. 

Nevada

No

 

New Hampshire

No

 

New Jersey

No

 

New Mexico

No

 

New York

Yes

Licensed home care service agencies. 

North Carolina

No

 

North Dakota

No

 

Ohio

Yes

Long-term care beds. 

Oklahoma

No

 

Oregon

No

 

Pennsylvania

No

 

Rhode Island

Yes

Nursing-facility licensed beds and increases to licensed capacity for existing nursing-facility licenses. 

South Carolina

No

 

South Dakota

No

 

Tennessee

No

 

Texas

No

 

Utah

No

 

Vermont

Yes

Home health agencies. 

Virginia

No

 

Washington

No

 

West Virginia

Yes

Opioid treatment programs, skilled nursing facilities, intermediate care beds, skilled nursing beds, intermediate care facilitiey beds for individuals with an intellectual disability. 

Wisconsin

Yes

Hospital beds, psychiatric/chemical dependency beds and nursing home beds. 

Wyoming

No

 

District of Columbia

No

 

Puerto Rico

No data

 

US Virgin Islands

No data

 

Additional Resources

NCSL Resources

Federal Resources

Other Resources