Alabama Certificate of Need (CON) Program

Alabama Certificate of Need (CON) Introduction

Like many other states, Alabama has an extensive CON process in place for healthcare services and facilities. Winning approval for a CON application is often a time consuming and difficult undertaking. Working with RPC provides clients with a team of consultants with experience working with CON projects.

When working on a CON project, RPC can prepare the entire CON application or sections of the application as the client prefers. When the client is defining the project and deciding whether to file an application, RPC can help assess the market and regulatory situation to determine the relative likelihood of success for a project. RPC not only works to create a thorough market, need and financial analysis, but also works seamlessly with the client’s staff, architects, engineers and, other outside consultants to create a solid CON application.

RPC is led by Ron Luke, JD, PhD, who has prepared CON applications and presented testimony in CON hearings since 1981 in more than 20 states.  RPC’s work on CON projects includes the opening of new acute care hospitals, hospices, physical rehabilitation and psychiatric specialty hospitals, and nursing homes, the relocation and addition of beds, and the acquisition of major medical equipment. Working with RPC during the CON process gives the applicant the advantage of a skilled expert team that can provide expert advice and produce an effective CON application.

State Agencies

State Health Planning & Development Agency (SHPDA)
SHPDA administers the CON program for Alabama. SHPDA staff reviews CON applications and the SHPDA Certificate of Need Review Board issues the Ruling on CON applications.

Alabama State Health Planning & Development Agency
PO Box 303025
Montgomery, Alabama 36130-3025
(334) 242-4103

Administrative Law Judges
If a CON is contested and a hearing is requested, an Administrative Law Judge (ALJ) will hear the contested case and present findings of fact and conclusions of law. Additionally, if a contested case hearing is not requested, a fair hearing may be requested after which the ALJ will issue an order that becomes the final decision of the SHPDA.

 

Services that Require a CON

Alabama’s Certificate of Need program requires certain health care service providers to gain state approval through the CON application process before they are able to offer or expand certain services. Alabama’s CON process was created to assure that only health care services and facilities which are in the public interest will be developed in the state.  The following activities require a CON:

• Construction, establishment, or acquisition of new health maintenance organization or healthcare facilities, including:
  • general and many specialized hospitals
  • skilled nursing facilities
  • intermediate care facilities
  • specialty care assisted living facilities (SCALFs)
  • skilled or intermediate care units in veterans’ homes
  • rehabilitation centers
  • public health centers
  • Ambulatory Surgery Center
  • facilities for End Stage Renal Disease (ESRD) treatment (dialysis)
  • some alcohol and drug abuse facilities
  • home health agencies
  • hospice
  • some kidney disease treatment centers
• New Institutional health services
• Addition of beds or change of bed classification
• Any major medical equipment whose associated cost is greater than $3,165,569
• New annual operating costs greater than $1,266,226
• Any capital expenditure for or on behalf of a healthcare facility or organization in excess of $6,331,138

Please note that the expenditure limits are indexed annually. The amounts indicated are for FY 2019.

Certificate of Need Process Milestones

The timing of the CON milestones outlined below relate to projects for which more than one Letter of Intent (LOI) has been submitted. In those instances, all similar projects will be batched together, as outlined below. When there is only one LOI submitted for any particular project type and location, the applicant has up to six months from when the LOI is submitted to file its application.

1. Submission of Letter of Intent (LOI) An applicant must submit an LOI to SHPDA at least 30 days prior to filing a CON application, along with a processing fee of $250.00. An LOI remains valid for 6 months and must contain the proposed CON filing date, the proposed services or acquisitions, and the financial scope of the project.
2. SHPDA Notifies Interested Parties Approximately one to two days after an applicant has submitted an LOI, SHPDA staff will notify all interested parties. When the SHPDA notifies all interested parties, the first day of application cycle has begun.
3. LOI Filing Deadline for Other Interested Parties Any party interested in filing an application for the same service, to be reviewed with the initial LOI, must submit its LOI by the 30th day of the application cycle.
4. Filing of Application When more than one LOI is being batched together, all applications may be filed 30 days or more after the filing of a LOI, but before the 16 day of the application cycle. All CON applications must be submitted electronically in text searchable PDF format. Applications for substance abuse treatment facilities or psychiatric beds must also publish notice of the application once a week for two consecutive weeks in a newspaper of general circulation in the area(s) affected and submit proof of the publication to the Agency within the 30^th day of the review cycle.
5. Determination of Completeness Within 15 days of receiving a CON application, SHPDA will review the application and determine whether or not it is complete, and notify the filing party of any additional information necessary. If an application is not complete, all missing information must be given to SHPDA by the 90th day of the application cycle or the application will be removed from the cycle.
6. Project Review Cycle Once the application is complete, SHPDA will issue a notice that the review cycle for the project has begun.
7. 30^th Day of Review Cycle An applicant has 30 days from the date an application is deemed complete to submit additional information. No additional data will be accepted after the 30^th day of the review cycle unless it is requested by the Executive Director of the State Agency.
8. 45th Day of Review Cycle Any affected parties wishing to contest the application(s) and submit any information, intervention filings or presentations to the board must do so by the 45th day of the review cycle. Any letters of support for a project must also be submitted by the 45th day of the review cycle.
9. 50th Day of Review Cycle-SHPDA Staff Report SHPDA staff will prepare a report on each application being reviewed and issue the report on or before the 50th day of the review period.
10. 55th Day of Review Cycle The applicant or an intervening party may request a contested case hearing, but must do so by the 55th day of the review cycle. An administrative law judge presides over any contested case hearings and files findings of fact and conclusions of law with the SHPDA Board.
11. 65th Day of Review Cycle An applicant has until the 65th day to respond in writing to the SHPDA’s staff review and address any comments or materials brought forth by opposing parties.
12. Certificate of Need Board Review The application must be heard by the SHPDA Board no sooner than the 80th day of the review cycle. Board meetings are scheduled on the third Wednesday of every month. Notice of the review date will be made available to the applicant, affected parties, and the public.
13. Ruling Issued The ruling shall be issued by the board 15 days after the Board meeting. If an intervention was requested, the issuance of the CON must wait 15 more days.
14. Request for Reconsideration A reconsideration request may be filed by the applicant or any other aggrieved party within 15 days after SHPDA’s decision is deemed final. The hearing on the request for reconsideration shall be held within 30 days from the date of the written request at the next regular meeting of the Board. If such a request is granted, a public hearing will be scheduled at the following monthly Board meeting to approve or deny the application.
15. Contested Case Hearing A hearing request must be made in writing, and an ALJ will be assigned to the case within 10 days of receipt of the written request. In cases of competing or batched applications, when one applicant or intervenor makes a hearing request, all competing applications will be conducted as contested cases, Public hearings will be conducted within 45 days of assignment to an ALJ, and be completed within 90 days. The ALJ will render proposed conclusions within 30 days of the hearing’s completion.

Please note that certain “limited services,” including nursing home beds, home health providers, hospice providers, and hospital beds, are “batched” together when applications compete for a finite number of beds providing the same services in the same service area. In these cases, the applications are reviewed together and compared against one another.

What criteria are used to review a CON?

Alabama’s State Code §22-21-264 outlines the following 8 CON review criteria:

1. Consistency with the appropriate State Health Plan
2. Relationship of proposed service(s) to the long-range plan of the applicant
3. Availability of alternative, less costly or more effective methods of providing the services applied for
4. Determination of an unmet public requirement for proposed service or expenditure, consistent with orderly planning for comprehensive care. Elements considered for this requirement are:
   1. Financial Feasibility of the project
   2. Specific data demonstrating need for the project is reasonable, relevant and appropriate
   3. Proposal’s consistency with the facility and community’s overall health and health plans
   4. Consistency with nonpatient objectives of the facility, such as teaching and research
   5. Evidence of review of the facility, service or expenditures by state agencies, when requested
   6. Locational acceptability—transportation, manpower, zoning, etc.
   7. Ability of facility or service to meet licensure standards
   8. Consideration will be given to facilities involved in medical education
5. Determination that the applicant is appropriate, as evidence by ability to render adequate service to the public. Affirmative evidence of the following serves to determine acceptability:
   1. Professional capability
   2. Management capability
   3. Adequate manpower for project
   4. Long-range and ongoing planning
   5. Existing and ongoing monitoring of utilization and fulfillment of unmet or undermet health needs
   6. Evidence of communication with any necessary planning, regulatory or utility agencies
6. Considerations for entities providing a substantial amount of services and resources to individuals not residing in the service area where the facility is located
7. Special needs and circumstances of health maintenance organization
8. For construction projects consideration is given to:
   1. Costs and methods of proposed construction and accompanying energy provision
   2. Probable impact of construction on costs for providing health services

Additionally, Administrative Code §410-1-6 outlines 15 main criteria that do not differ greatly from the above-indicated criteria. Each criterion in the code has a detailed explanation. The basic criteria are outlined below.

1. Consistency with State Health Plan
2. Applicant’s long-range development plan
3. Availability of alternatives
4. Need for proposed project
5. Additional criteria for determining need (correct population data is used, projected utilization, unmet existing need)
6. Access to facility/Service
7. Relationship with existing health care system
8. Appropriateness of applicant
9. Access by health schools
10.  Special needs of Multi-Area providers
11.  Special needs of health maintenance organizations
12.  Construction project (must maximize cost containment, be properly zoned and must supply cost estimate)
13.  Supplemental Review Criteria-Compliance with Zoning and Environmental Protection Statutes
14.  Compliance with State Licensure Rules and Regulations
15. Past Performance of Services and Facilities

Certificate of Need Application Filing Fee

Every CON applicant must submit a nonrefundable fee equal to 1% (or in some special instances .5%) of the estimated overall project cost. Effective October 1, 2018, the maximum CON filing fee is $24,105.

Additional Sources

(links good as of January 2022)

Alabama State Health Planning and Development Agency (SHPDA)
http://www.shpda.alabama.gov

CON Statute (Title 22)
https://law.justia.com/codes/alabama/2016/title-22/title-1/chapter-21/article-2/

Alabama CON Rules and Regulations

http://www.shpda.alabama.gov/documents/conforms/Rules%20Effective%205.5.2017%20Searchable%207.16.2019.pdf?sm=b_d

Alabama State Health Plan

http://www.shpda.alabama.gov/Announcements/SHP/2020-2023SHP/SHP/2020-2023%20State%20Health%20Plan%20Amended%2011.14.2020%20Locked.pdf

CON Application Forms
http://www.shpda.state.al.us/condivision/forms.aspx?sm=d_a