State Actions Summary
In the past several years, many states have introduced or enacted legislation to modify their CON programs. Changes range from fully repealing an existing CON program to creating a new CON program. However, most state legislation makes targeted changes to CON oversight, such as excluding specific facilities from CON review.
- Currently, 35 states and D.C. maintain some form of CON program. States with CON laws most often regulate hospitals, outpatient facilities and long-term care facilities.
- As of 2021, 12 states have fully repealed their CON programs or allowed the program to expire. New Hampshire was the most recent state to repeal its CON program in 2016.
- Three states—Arizona, Minnesota and Wisconsin—do not officially operate a CON program, but they maintain several approval processes that function similarly to CON.
- In 2020, at least six states—Michigan, New Jersey, Vermont, Virginia, Washington, and West Virginia—enacted legislation to modify their CON laws in some capacity. Additionally, at least six states—Michigan, Montana, New York, North Carolina, Tennessee and Washington—and Washington, D.C. enacted CON legislation in 2021. Montana’s legislation was the most sweeping of these bills, exempting all facilities except long-term care facilities from CON review.
- Related to CON, at least 13 states have a moratorium on certain health care activities and capital expenditures, meaning they will not grant CON or state approval for a specific activity. Moratoria are most common for long-term care related activities, such as expanding the number of long-term care beds in a facility.
Intent and Structure of CON
A primary objective of state CON laws is to control health care costs by avoiding unnecessary expansion or duplicative services within an area. Proponents of CON laws contend that if excess health care service capacity exists, price inflation may occur to compensate for new, underused health care services or empty beds. Some states also require CON approval for health facility mergers, acquisitions or changes in ownership, which many researchers say contributes to higher health care costs and prices.
Beyond cost containment efforts, CON laws aim to ensure access to services for historically underserved communities, such as rural areas, and meet the health care needs of indigent patients. For example, some states require health facilities to establish financial assistance policies and provide discounted care to low-income patients as a condition for CON approval.
While proponents of CON argue the state laws achieve these aims, many opponents argue CON laws have the opposite effect on health care costs and access to quality health services. Opponents believe CON laws stifle competition by protecting incumbent providers and creating a burdensome approval process for establishing new facilities and services. Additionally, many maintain there is little to no evidence that CON laws deliver on controlling health care costs, improving quality or ensuring access to health care services for patients.
The structure of CON review and approval varies state to state, but generally a health care facility must seek state approval—through a state health planning agency, department of health or a CON council appointed by the governor or legislature—based on a set of criteria and community need. These state entities often look at criteria such as:
- The projected need for the health care service within the area.
- Whether a facility has the staff capacity or financing for a proposed activity.
- The effects of a proposed project on specific populations (e.g., rural communities).
- The effects of a proposed project on health care costs.
Once a health facility has applied for state approval, the state may approve, deny or set certain limitations on a health care project.
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 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, with some form of a CON program by 1982. This meant states had broad regulatory oversight over 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.