New York Legislature Passes Certificate of Need Reform Bill

On Friday, June 17, 2011, the New York State Assembly approved the Certificate of Need (“CON”) reform bill (A7665B), which already passed the Senate two weeks ago. The bill now rests on Governor Cuomo’s desk for signature.

The CON reform bill eliminates the requirement for prior approval of many categories of facility repair and maintenance construction projects, regardless of cost.  In certain circumstances, facilities will still be required to provide written notice to the Department of Health of the project, including a written certification from a licensed architect or engineer that the project meets all applicable statutes, codes, and regulations.

In Senator Kemp Hannon’s Memorandum in Support, the purpose of the bill was noted to be  “[t]o ensure the state’s [CON] processes are updated and streamlined to promote access to high quality, cost-effective health care services.”  Current CON laws and regulations create “unnecessary process steps” which overburden the CON process.  In removing these restrictions, “[t]he CON process can be an effective health planning tool to ensure a fair and cost-effective distribution of quality health care resources across New York.”  Moreover, the Senate noted that the projects exempted from the CON process “are projects that health facilities generally must undertake to maintain their physical plants and to ensure the safety of the patients they serve.”

Of particular note, the CON reform bill provides more detail to the already existing provision exempting construction limited to the correction of the deficiencies cited by the Department of Health.  There are similar exemptions related to the most common expenses like repair or maintenance, routine purchases, and the acquisition of minor equipment.  Additionally, there is a provision regarding “one for one” equipment replacements which permit facilities to replace old equipment with a new piece of equipment “used for similar purposes but employing current technology.”  Furthermore, exemptions extend to “non-clinic infrastructure projects” such as heating and air conditioning replacements, roofs, fire alarms, call bell systems, parking lots, and elevators.

The bill amends Public Health Law § 2802.  If Governor Cuomo signs the bill, it will go into effect in six months.

This post was contributed by Nancy Sciocchetti.