D.C.’s Certificate of Need (CON) Process Could See Improvement with Proposed Legislation

In September 2024, a group of Washington, D.C., legislators introduced the Certificate of Need (CON) Improvement Act of 2024, B25-0948.

If passed, the measure will reform the requirements and process for health establishments in the District to obtain CONs from D.C.’s State Health Planning and Development Agency (SHPDA).

Background

D.C.’s CON requirements were originally established in 1980 to ensure that access to health care services is available to all D.C. residents and to contain the costs of such health care services. D.C. regulators have more recently argued that D.C. was experiencing an overabundance of primary care providers, which has led regulators to apply the CON process in an overly broad manner to prevent a doctor on every block.^[1] The CON requirements have been applied in an inconsistent manner such that similarly situated providers may or may not have a CON depending on enforcement by regulators. Stakeholders within the D.C. community have contested the overly broad interpretation and enforcement of the CON law in D.C. and have argued that such interpretations are in fact creating provider shortages, increasing health care costs, and decreasing access to care.

In addition, the time and expense of complying with the CON requirements is enough of a barrier to potentially send independent physician practices across the border into Maryland and Virginia.^[2] Stakeholders have asserted that rather than decrease health care costs and increase access to care, the CON laws have had the opposite effect.

Lastly, the current requirements for institutional and physician providers to apply for a CON for even routine projects or activities is unnecessary and overly burdensome. For example, hospitals must wait months to a year following the CON process to get non-patient improvements like heating, ventilation, and air conditioning (HVAC). Furthermore, under the current interpretation by regulators, a physician group could subject itself to requiring a CON simply by hiring a non-owner physician or maintain a separate room to perform non-surgical procedures.

The Proposed Solution

The proposed bill, sponsored by Councilmembers Christina Henderson, Charles Allen, Anita Bonds, Janeese Lewis George, and Zachary Parker, would amend the Health Services Planning Program Re-establishment Act of 1996 to modernize and improve the D.C. CON requirements.

Councilmember Henderson has said that D.C. is not unique in the use of CONs in the health care field—35 states require them in some instances—but she recognizes that D.C.’s requirements are the third most extensive among states, covering 25 types of health care services, and that the operation of the CON law in D.C. has become overly burdensome.

The legislation proposes to amend D.C. Law 11-191; D.C. Official Code § 44–401 et seq. to:

1. Exempt virtual provider networks and telehealth platforms from the CON process and instead require the D.C. Department of Health to create a registration process for them.
2. Exempt office-based primary care and specialist practices from the CON process in order to encourage these providers to locate in the District;
3. Require SHPDA to update the capital expenditure thresholds that trigger a CON review every two years to accurately reflect inflation and other economic indicators;
4. Exclude from the term “capital expenditures” (and the CON process) nonpatient care capital projects not related to patient care (e.g., installing new elevators, garage improvements, HVAC upgrades);
5. Allow for more flexibility with respect to the project deadline (currently 3 years) for CON-approved capital projects if the applicant is making good faith efforts to meet the schedule;
6. Define the term “group practice” in order to eliminate confusion about when a new health care facility must apply CON. “Group practice” would be defined as “a group of two or more health professionals, including a faculty practice plan, legally organized and authorized to do business in D.C., with each member of the group licensed to practice in D.C.” and with a number of other criteria (members of the group, for example, personally conduct no less than 75 percent of the patient encounters of the group practice. But as we noted above, the definition is still far from clear).
7. Adjust the threshold requirement to require a CON for facilities changing bed capacity, so that the threshold is triggered by either a change by 10 beds or 20 percent of total beds whichever is less. Currently, the CON process is triggered with a change by at least 10 beds or 10 percent of total beds, whichever is less. The current requirement for a facility is to obtain a CON if it changes its licensed bed capacity by at least 10 beds or 10 percent of total beds, whichever is less. The proposal would help small facilities avoid a lengthy CON process for small changes.

Takeaways

While appropriate oversight of health care services is important, it is critical that the laws governing CON requirements do what they were originally designed to do — increase access to health care. This legislation appears to be a step in the right direction, though more clarifications are needed to avoid ongoing overly broad interpretation and application. For questions, please contact the authors.

Epstein Becker Green Attorney Ann W. Parks contributed to the preparation of this post.

ENDNOTES

[1] The D.C. Health Systems Plan, last published in 2017 by the D.C. Department of Health, and a 2021 companion document, the 2021 Annual Implementation Plan Final Report, indicated that “Primary care services, as well as behavioral health and post-acute services, seem well distributed and available”(46). The 2017 report also stated, “As is the case with most components of D.C.’s health system, there is a diverse and geographically well-distributed network of primary care practice sites that provide a comprehensive array of high quality, well integrated, and coordinated services to residents of DC and beyond.”

[2] The recent legislation has met with approval from the Medical Society of the District of Columbia (MSDC), whose president-elect testified in October in favor of the bill. The director of Research and Policy at the D.C. Policy Center also testified regarding the need to reduce CON requirements to encourage healthcare expansion in the District.