NASHVILLE — State Senator Todd Gardenhire (R-Chattanooga) won unanimous approval on Wednesday of legislation modernizing Tennessee’s Certificate of Need (CON) program. Senate Bill 1842 makes important changes, including removing several services from requiring certificates of need, as well as adding flexibility to the way that hospitals and physicians groups operate in the state.
“This legislation makes several reforms that will reduce the cost of healthcare and provide greater access to our citizens,” said Sen. Gardenhire, who chaired a study committee last summer which looked into the CON process. “The changes we have made in this legislation are reasonable, logical and key to removing costs from government intrusion that provides no benefit to our fellow citizens.”
CON is a legal document required in some states, including Tennessee, before proposed acquisitions, expansions, or creations of healthcare facilities are allowed. In short, if a hospital or healthcare facility wishes to expand its capacity, whether that is the number of hospital beds it makes available or the types of imaging it can conduct, the facility must apply to a state board for permission through the CON process.
Tennessee’s CON program started in 1974 as a result of the passage of the federal “Health Planning and Resources Development Act” which made federal funding contingent on having a process in place. That requirement was lifted in 1987 and while 14 states discontinued their programs, Tennessee decided to continue the CON process.
Key reforms in the bill, as amended by the Finance, Ways and Means Committee, include:
• Eliminates the CON for birthing centers, lithotripsy, rehabilitation services and hospital-based alcohol and drug treatment for adolescents;
• Eliminates the CON for discontinuation of obstetrician (OB) services and critical access hospital closures;
• Eliminates the CON requirement for important capital investments for modification or renovating existing health care institutions, as well as investments in medical equipment; and
• Recognizes the healthcare differences faced by rural communities by only eliminating the CON for initiation of MRI services or purchasing of additional MRI machines for counties having a population greater than 250,000 (Hamilton, Davidson, Shelby, Rutherford and Knox), except for those serving patients less than 14 years of age.
“There are significant challenges that our providers in rural areas face,” added Gardenhire. “Those challenges are very different than what providers in our more urban areas work through every day. As such, this legislation takes that into account to ensure access and quality of care for all Tennesseans, urban or rural.”
Another key part of the reform includes requiring entities that contest the CON application to pay a 25 percent examination fee prior to accepting the contest. If the application is denied, the 25 percent will be refunded to the applicant.
The bill reflects the agreement made by many healthcare stakeholders across the state who met with Gardenhire and other key leaders in the Senate and House of Representatives last summer and during the current legislative session.