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NYS Department of Health Proposes Changes to Certificate of Need Process

Written by:  Nili S. Yolin

On October 15, 2014, the New York State Department of Health (DOH) released proposed changes that will simplify the certificate of need (CON) process. Specifically, the Department is proposing to require prior notice, rather than a CON application, for certain construction projects involving non-clinical infrastructure, the replacement of medical equipment, and facility repair and maintenance.

Health care facilities licensed pursuant to Article 28 of the Public Health Law are required to submit a CON application for everything from establishing or constructing new facilities to renovating existing facilities, from acquiring major medical equipment to adding or removing inpatient beds or services.  Construction projects subject to CON review can fall under one of three categories of review:

  • Full CON review (for proposals with a cost in excess of $25 million ($50 million for hospitals)), which involves the submission of detailed forms and schedules that include, among other things, the project’s financial feasibility and public need.  These CON applications are subject to review and approval by DOH’s Public Health and Health Planning Council (PHHPC), which makes a recommendation to the Commissioner.
  • Administrative Review (for proposals that have total project costs of up to $15 million), which also requires a CON application but does not require the recommendation of the PHHPC; and
  • Limited Review (for proposals with a total project cost of up to $6 million), which requires only the submission of a narrative description, cost, and if necessary, architectural engineering drawings or certification of the project.

Under the proposed rules, the following would no longer require prior approval, regardless of cost:

  • Correction of cited deficiencies, provided that the construction is limited to the correction;
  • Projects for repair or maintenance;
  • One-for-one replacement of any type of equipment, medical or non-medical; and
  • Non-clinical infrastructure projects.

The facility will be required to submit, as applicable, written certification by an architect, engineer and/or physicist, stating that the project had been completed in compliance with all applicable codes and regulations.

The impact of the proposed rules is that applicants will no longer have to wait for DOH approval of the project prior to commencement. Instead, applicants will be able to proceed with their projects as soon as their notices are submitted and acknowledgment of receipt by DOH is received.  These changes, according to DOH, will “enable hospitals, nursing homes and diagnostic and treatment centers to take prompt advantage of changes in equipment and technology,” while at the same time allow the Department “to focus more fully on larger-scale CON projects that warrant in-depth review and analysis.”

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Theresa advises clients on all aspects of the pharmaceutical supply chain, including counseling industry stakeholders on a range of business, legal, transactional, and compliance matters. She provides clients with strategic counseling and creative business modeling that considers legal restrictions and regulatory risk in light of innovation and business goals.