A BILL TO BE ENTITLED
AN ACT amending certificate of need laws.
The General Assembly of North Carolina enacts:

PART I. REFORMS EFFECTIVE OCTOBER 1, 2019
SECTION 1.1.  G.S. 131E‑176 reads as rewritten:
"§ 131E‑176.  Definitions.
As used in this Article, unless the context clearly requires otherwise, the following terms have the meanings specified:
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(2)	"Bed capacity" means space used exclusively for inpatient care at a health service facility, including space designed or remodeled for licensed inpatient beds even though temporarily not used for such purposes. The number of beds to be counted in any patient room shall be the maximum number for which adequate square footage is provided as established by rules of the Department except that single beds in single rooms are counted even if the room contains inadequate square footage.
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(5)	"Change in bed capacity" means (i) any relocation of health service facility beds, or dialysis stations from one licensed facility or campus to another, or (ii) any redistribution of health service facility bed capacity among the categories of health service facility bed as defined in G.S. 131E‑176(9c), or (iii) any increase in the number of health service facility beds.
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(7a)	"Diagnostic center" means a freestanding facility, program, or provider, including but not limited to, physicians' offices, clinical laboratories, radiology centers, and mobile diagnostic programs, in which the total cost of all the medical diagnostic equipment utilized by the facility which cost ten thousand dollars ($10,000) or more exceeds one million five hundred thousand dollars ($1,500,000). In determining whether the medical diagnostic equipment in a diagnostic center costs more than one million five hundred thousand dollars ($1,500,000), the costs of the equipment, studies, surveys, designs, plans, working drawings, specifications, construction, installation, and other activities essential to acquiring and making operational the equipment shall be included. The capital expenditure for the equipment shall be deemed to be the fair market value of the equipment or the cost of the equipment, whichever is greater. Beginning September 30, 2022, and on September 30 each year thereafter, the cost threshold amount in this subdivision shall be adjusted using the Medical Care Index component of the Consumer Price Index published by the U.S. Department of Labor for the 12‑month period preceding the previous September 1.
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(9a)	"Health service" means an organized, interrelated medical, diagnostic, therapeutic, or rehabilitative activity, or any combination of these, that is integral to the prevention of disease or the clinical management of a sick, injured, or disabled person. "Health service" does not include administrative and other activities that are not integral to clinical management or any activities performed at a facility that does not meet the definition of a health service facility.
(9b)	"Health service facility" means a hospital; long‑term care hospital; rehabilitation facility; nursing home facility; adult care home; home health agency office; diagnostic center; hospice office, hospice inpatient facility, hospice residential care facility; and ambulatory surgical facility. The term "health service facility" does not include a licensable facility, as defined in G.S. 122C‑3(14)b.
(9c)	"Health service facility bed" means a bed licensed for use in a health service facility in the categories of (i) acute care beds; (ii) rehabilitation beds; (iii) nursing home beds; (iv) hospice inpatient facility beds; (v) hospice residential care facility beds; (vi) adult care home beds; and or (vii) long‑term care hospital beds.
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(14a)	"Intermediate care facility for individuals with intellectual disabilities" means facilities licensed pursuant to Article 2 of Chapter 122C of the General Statutes for the purpose of providing health and habilitative services based on the developmental model and principles of normalization for persons with intellectual disabilities, autism, cerebral palsy, epilepsy or related conditions.
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(14o)	"Major medical equipment" means a single unit or single system of components with related functions which is used to provide medical and other health services and which costs more than two million dollars ($2,000,000). In determining whether the major medical equipment costs more than two million dollars ($2,000,000), the costs of the equipment, studies, surveys, designs, plans, working drawings, specifications, construction, installation, and other activities essential to acquiring and making operational the major medical equipment shall be included. The capital expenditure for the equipment shall be deemed to be the fair market value of the equipment or the cost of the equipment, whichever is greater. Major medical equipment does not include replacement equipment as defined in this section. Beginning September 30, 2022, and on September 30 each year thereafter, the cost threshold amount in this subdivision shall be adjusted using the Medical Care Index component of the Consumer Price Index published by the U.S. Department of Labor for the 12‑month period preceding the previous September 1.
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(16)	"New institutional health services" means any of the following:
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b.	Except as otherwise provided in G.S. 131E‑184(e), the obligation by any person of a capital expenditure exceeding four million dollars ($4,000,000) to develop or expand a health service or a health service facility, or which relates to the provision of a health service. The cost of any studies, surveys, designs, plans, working drawings, specifications, and other activities, including staff effort and consulting and other services, essential to the acquisition, improvement, expansion, or replacement of any plant or equipment with respect to which an expenditure is made shall be included in determining if the expenditure exceeds four million dollars ($4,000,000). Beginning September 30, 2022, and on September 30 each year thereafter, the amount in this sub‑subdivision shall be adjusted using the Medical Care Index component of the Consumer Price Index published by the U.S. Department of Labor for the 12‑month period preceding the previous September 1.
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d.	Except as otherwise allowed in G.S. 131E‑184(j), the offering of home health services by or on behalf of a health service facility if those services were not offered within the previous 12 months by or on behalf of the facility.
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SECTION 1.2.  G.S. 131E‑177 reads as rewritten:
"§ 131E‑177.  Department of Health and Human Services is designated State Health Planning and Development Agency; powers and duties.
The Department of Health and Human Services is designated as the State Health Planning and Development Agency for the State of North Carolina, and is empowered to exercise the following powers and duties:
(1)	To establish standards and criteria or plans required to carry out the provisions and purposes of this Article and to adopt rules pursuant to Chapter 150B of the General Statutes, to carry out the purposes and provisions of this Article.
(2)	Adopt, amend, and repeal such rules and regulations, consistent with the laws of this State, as may be required by the federal government for grants‑in‑aid for health service facilities and health planning which may be made available by the federal government. This section shall be liberally construed in order that the State and its citizens may benefit from such grants‑in‑aid.
(3)	Define, by rule, procedures for submission of periodic reports by persons or health service facilities subject to agency review under this Article.
(4)	With respect to health service facilities planning, all of the following:
a.	Develop policy, criteria, and standards for health service facilities planning.
b.	Conduct statewide registration and inventories of and make determinations of need for health service facilities, health services as specified in G.S. 131E‑176(16)f., and equipment as specified in G.S. 131E‑176(16)f1., which shall include consideration of adequate geographic location of equipment and services.
c.	Develop a State Medical Facilities Plan, provided, however, that the State Medical Facilities Plan shall not include policies or need determinations that limit the number of operating rooms or gastrointestinal endoscopy rooms.
(5)	Implement, by rule, criteria for project review.
(6)	Have the power to grant, deny, or withdraw a certificate of need and to impose such sanctions as are provided for by this Article.
(7)	Solicit, accept, hold and administer on behalf of the State any grants or devises of money, securities or property to the Department for use by the Department in the administration of this Article.
(8)	Repealed by Session Laws 1987, c. 511, s. 1.
(9)	Collect fees for submitting applications for certificates of need.
(10)	The authority to review all records in any recording medium of any person or health service facility subject to agency review under this Article which pertain to construction and acquisition activities, staffing or costs and charges for patient care, including but not limited to, construction contracts, architectural contracts, consultant contracts, purchase orders, cancelled checks, accounting and financial records, debt instruments, loan and security agreements, staffing records, utilization statistics and any other records the Department deems to be reasonably necessary to determine compliance with this Article.
The Secretary of Health and Human Services shall have final decision‑making authority with regard to all functions described in this section."
SECTION 1.3.  G.S. 131E‑183(a)(1) reads as rewritten:
"(1)	The proposed project shall be consistent with applicable policies and need determinations in the State Medical Facilities Plan, the need determination of which constitutes a determinative limitation on the provision of any health service, health service facility, health service facility beds, operating rooms, or home health offices that may be approved."
SECTION 1.4.  G.S. 131E‑184(c) reads as rewritten:
"(c)	The Department shall exempt from certificate of need review any conversion of existing acute care beds to psychiatric beds.
	
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SECTION 1.5.  G.S. 131E‑184(e)(1) reads as rewritten:
"(1)	The proposed capital expenditure would:
a.	Be used solely for the purpose of renovating, replacing on the same site, or expanding an existing:
1.	Nursing home facility, or
2.	Adult care home facility.
	
b.	Not result in a change in bed capacity, as defined in G.S. 131E‑176(5), or the addition of a health service facility or any other new institutional health service other than that allowed in G.S. 131E‑176(16)b."
SECTION 1.6.(a)  G.S. 131E‑184 is amended by adding new subsections to read:
"(i)	The Department shall exempt from certificate of need review the development, acquisition, construction, expansion, or replacement of a health service or health service facility that obtained certificate of need approval prior to October 1, 2019, as a kidney dialysis treatment center, including freestanding hemodialysis units; intermediate care facility for individuals with intellectual disabilities; psychiatric facility; chemical dependency treatment facility; or any other licensable facility, as defined in G.S. 122C‑3(14)b.
(j)	The Department shall exempt from certificate of need review the establishment of a home health agency by a continuing care retirement community licensed under Article 64 of Chapter 58 of the General Statutes to provide home health services to one or more residents of a continuing care retirement community who have entered into a contract with the continuing care retirement community to receive continuing care services with lodging. A continuing care retirement community that seeks to provide home health services to individuals who do not reside at the continuing care retirement community pursuant to a contract to receive continuing care services with lodging shall be required to obtain a certificate of need as a home health agency prior to developing or offering home health services to any individual not a resident of the continuing care retirement community under a contract to receive continuing care services with lodging. As used in this subsection, the terms "continuing care" and "lodging" are as defined in G.S. 58‑64‑1. Nothing in this subsection shall be construed to exempt from the State's home health agency licensure and certification requirements a continuing care retirement community that has been exempted from certificate of need review for the provision of home health services to one or more residents pursuant to this subsection."
SECTION 1.6.(b)  G.S. 131E‑184(j), as enacted by this section, applies to continuing care retirement communities engaged in the direct provision of home health services on or after October 1, 2019.
SECTION 1.7.  G.S. 131E‑186(a) reads as rewritten:
"(a)	Within the prescribed time limits in G.S. 131E‑185, the Department shall issue a decision to "approve," "approve with conditions," or "deny," an application for a new institutional health service. Approvals involving new or expanded nursing care shall include a condition that specifies the earliest possible date the new institutional health service may be certified for participation in the Medicaid program. The date shall be set far enough in advance to allow the Department to identify funds to pay for care in the new or expanded facility in its existing Medicaid budget or to include these funds in its State Medicaid budget request for the year in which Medicaid certification is expected."
SECTION 1.8.  G.S. 131E‑189 is amended by adding a new subsection to read:
"(d)	Notwithstanding any other provision of this section, a certificate of need for the construction of a health service facility expires if the holder of the certificate of need fails to initiate construction of the project authorized by the certificate of need within the following time frames:
(1)	For a project that costs over fifty million dollars ($50,000,000), the holder of the certificate of need shall initiate construction of the project authorized by the certificate of need within four years after the date the Department's decision to approve the certificate of need for that project becomes final.
(2)	For a project that costs fifty million dollars ($50,000,000) or less, the holder of the certificate of need shall initiate construction of the project authorized by the certificate of need within two years after the date the Department's decision to approve the certificate of need for that project becomes final."
SECTION 1.9.  G.S. 131E‑175(11) and (12) are repealed.
SECTION 1.10.  This Part becomes effective October 1, 2019.

PART II. REFORMS EFFECTIVE JANUARY 1, 2020
SECTION 2.1.  G.S. 131E‑147 reads as rewritten:
"§ 131E‑147.  Licensure requirement.
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(c1)	All initial applications and renewal applications shall require the applicant to state the number of procedure rooms on, and the number of procedures performed at, the premises named in the application.
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SECTION 2.2.  G.S. 131E‑176(16), as amended by this act, reads as rewritten:
"(16)	"New institutional health services" means any of the following:
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SECTION 2.3.  This Part becomes effective January 1, 2020.

PART III. SEVERABILITY
SECTION 3.1.  If any part of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part declared to be unconstitutional or invalid.
SECTION 3.2.  This Part is effective when it becomes law.