Certificate of Need Streamlining Moves Forward

At a recent meeting, the Public Health and Health Planning Council (“PHHPC”) approved a preliminary plan to overhaul and streamline the Certificate of Need system in New York.  Previously, the plan was unanimously adopted by the Committee on Health Planning.  The plan is based on nine recommendations, which among other things, would reduce or eliminate the PHHPC’s role in many projects currently subject to CON review.  As discussed at the various PHHPC meetings, some of the recommendations can be implemented fairly quickly, while others will require regulatory and/or statutory changes prior to implementation. 

The proposals were as follows:

1. Eliminate Certificate of Need review of certain construction projects, while retaining oversight of compliance with construction standards for licensure purposes.

 The PHHPC proposed to limit CON review to a principal set of projects for which control of supply and distribution of health care is an accepted objective and for which a needs assessment is actually relevant.  Therefore, public need review and many financial reviews would only be required for construction projects that involve: 

• Additions, decertifications, or re-purposing of beds;
• New extension sites;
• Changes in surgery capacity;
• Major new medical equipment;
• Major new service;
• Facility replacement or relocation; or
• Closing facilities, extension sites, or services.

Examples of projects that would no longer require review include physical plant modernization and reconfiguration projects, such as renovations required to shift double rooms to single rooms or consolidating pediatric services into a single building or wing.  These types of projects, although exempt from requiring a CON, would still be subject to licensure reviews in the same way that such projects are reviewed in states that do not have a CON process, including reviews to ensure that projects are constructed in compliance with physical plant standards.

2.      Reduce the number of outpatient services subject to CON approval.

The PHHPC proposed eliminating CON review of almost two-thirds of the services eligible for outpatient certification.  The PHHPC cited the cost and time of reviewing dozens of applications each year to add or decertify services.  Currently, the services provided are listed on the facility’s operating certificate.  Instead, the PHHPC proposed that in order to track the availability of services that would no longer be listed on the operating certificate, the Department of Health would create an online registration process that would be completed by providers seeking to offer or discontinue services no longer subject to CON approval.

The following outpatient services would still be subject to licensure:

• Medical services (new category that replaces the outdated term “primary medical care”)
• Abortion
• AIDS adult day health care
• Ambulatory surgery – multi-specialty
• Ambulatory surgery – gastroenterology
• Ambulatory surgery – ophthalmology
• Ambulatory surgery – orthopedics
• Ambulatory surgery – pain management
• Birthing center
• Part-time clinic services
• School-based services
• School-based dental services
• Dental
• Home hemodialysis training and support
• Home peritoneal dialysis training and support
• Lithotripsy
• Therapeutic radiology
• MRI and CT scanner – D&TC only
• Podiatry
• Renal dialysis
• Upgraded D&TC services
• TBI program
• Methadone maintenance

The following services would now be tracked through the online registration process. 

• Audiology
• Certified mental health services
• Chemical dependence
• Clinical laboratory (licensure by the Wadsworth Laboratory would continue to be required)
• Family planning
• Hyperbaric chamber
• Nuclear medicine
• County public health nursing
• Ophthalmology
• Optometry
• Pediatrics
• Pharmacy
• Prenatal care
• Primary care
• Psychology
• Diagnostic radiology
• Physical therapy
• Occupational therapy
• Respiratory therapy
• Speech therapy
• Vocational rehabilitation
• Transfusion services – full and limited

The PHHPC noted that existing outpatient services that are neither licensed nor subject to registration would not be tracked.  Additionally, the PHHPC approved streamlining the process for single-specialty ambulatory surgery centers looking to add endoscopy or ophthalmology services.  No longer would DOH notify nearby hospitals of the proposed expansion and request that they comment on the addition of the proposed services.  The PHHPC said that these notices were unnecessary as hospitals hardly ever responded to the notice and request. 

3.      Streamline the process for adding outpatient behavioral health services and delivering integrated behavioral health and physical health service.

The PHHPC proposed that DOH work collaboratively with the Office of Mental Health (“OMH”) and Office of Alcoholism and Substance Abuse Services (“OASAS”) in licensing Article 28 facilities.  Article 28 providers that are not licensed by OMH or OASAS would be permitted to add outpatient behavioral health services by seeking certification from the relevant mental hygiene agency only and not also from DOH.   DOH would accept the decision made by OASAS and OMH on the Article 28’s application. 

4.      Architecture and Engineering.

Recognizing that DOH has a dearth of available resources (in fact, currently DOH has no engineers on staff), the PHHPC proposed that it reduce its oversight relating to architecture and engineering reviews of CON applications.  DOH would no longer provide an architectural review as part of their staff reports submitted to the PHHPC.  Instead, DOH would simply conduct a cursory architectural review of the application prior to approval to confirm that that the proposed building can be made compliant with the standards set forth in Article 28 of the Public Health Law.  DOH would strengthen the self-certification by architects and engineers currently permitted for certain projects by routinely auditing a percentage of self-certified projects and disqualifying from self-certification those architects and engineers who submit non-compliant projects.  Additionally, the PHHPC recommended that DOH contract directly with the Dormitory Authority (DASNY) to conduct reviews of a portion of the projects that are ineligible for self-certification. 

5.      Amendments to Approved CONs.

The PHHPC proposed that CON review would no longer be required for certain amendments to already-approved projects.  DOH would instead handle these matters administratively.  Amendments that involve an increase in the scope of a project, along with an increase in cost, a change in financing or a substantial change in an agreement, would continue to be subject to new, full review.

6.      Permit administrative conversions of operating certificates with a limited duration to an indefinite duration.

The PHHPC on occasion approves establishments of new operators on a time-limited basis (i.e., a “limited life”), typically ambulatory surgery centers and other diagnostic and treatment centers.  When issued, these CON approvals expire after a certain number of years.  The operator of the facility must file a report documenting compliance with various conditions of its CON approval and apply for renewal of its establishment. These renewal applications are submitted to the PHHPC.

The PHHPC proposed a change in this practice.  Instead of a temporary CON approval being issued, DOH would issue the facility an operating certificate with an expiration date.  If the operator complies with the conditions of its CON approval (including access by Medicaid beneficiaries) and shows a strong compliance record, the provider’s operating certificate could be renewed without PHHPC review.  An applicant that fails to satisfy its CON approval conditions would be required to be submitted to the PHHPC for approval.  DOH would retain the discretion to bring renewal applications to the PHHPC, and operators would have an opportunity to appeal a denial of renewal of their operating certificate to the PHHPC.  DOH would report at least annually to the PHHPC on their administrative conversions of temporary operating certificates to ones of indefinite duration.  During one PHHPC meeting, it was confirmed that this proposed change would not permit the facility to operate after its operating certificate expired even though its CON was of perpetual duration. 

7.      Streamline process for changes in ownership of less than 10% that amount to a 25% change over 5 years.

The PHHPC proposed  that Article 28 limited liability company and partnership operators that undergo several small changes in ownership over a 5-year period that amount a change of twenty-five (25%) percent or more of the ownership would no longer have to submit a full CON application, but would instead file an abbreviated application to DOH.  Currently, these types of ownership changes are required by statute to receive PHHPC approval.  As part of this proposal, DOH instead would periodically update the PHHPC regarding “significant” ownership changes that are processed administratively.

8.      Rationalize character and competence reviews of proposed new operators of health care facilities and home care agencies.

Presently, as required by statute, the PHHPC is required to evaluate proposed operators of health care facilities on based on their experience and record of compliance with various laws.  The Public Health Law requires a ten (10) year look-back period to ensure compliance.  Recognizing that this period may be too long and burdensome to both applicants and DOH, the PHHPC proposed that the “look-back” period be shortened to seven (7) years.  Furthermore, as DOH has had great difficulty receiving compliance information from applicants who have ownership interests in out-of-state facilities, the PHHPC has proposed that operators of hospitals and diagnostic and treatment centers be permitted to submit affidavits concerning out-of-state compliance record if the other states do not provide the requested information. 

9.      Continue implementation and enhancement of NYSE-CON, incorporating performance measures and timelines for review.

Currently, use of NYS-CON ends once an application as received final approval.  PHHPC proposed that use of NYSE-CON be expanded to cover the issuance of the applicant’s operating certificate and beyond, which will improve applicant interaction with DOH and streamline business processes.   Additionally, PHHPC proposed further enhancements to the public’s access to the system, including automated notification of status changes projects. 

The implementation of these changes will require additional regulatory and statutory amendments.  These initial steps are part of a larger review and redesign of the entire CON process.   The Committee on Health Planning will continue to meet over the next several months to move this overhaul forward.