Michigan Certificate of Need (CON) Program

Certificate of Need (CON) Introduction

Like many other states, Michigan 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 skilled 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 diverse team of experts that can provide guidance and produce an effective CON application.

Contents last updated on July 2024

State Agencies

Michigan Department of Community Health
The Department administers and enforces the CON program.  The staff reviews applications and LOIs, and conducts hearings.  The Department Director has the authority to render final decisions.

Certificate of Need Commission
The eleven-member Commission is appointed by the Governor and develops, approves, disapproves, and revises CON Review Standards on a three-year rotating schedule.  The Commission also makes recommendations on clinical services within the scope of CON review. Expert committees meet regularly to advise the Commission. The Commission is not involved in the review of CON applications.

State of Michigan

Department of Health and Human Services – Certificate of Need Program
South Grand Building, 4th Floor, P.O. Box 30195

Lansing, MI 48909
(517) 241-3344

Services that Require CON

The Certificate of Need regulatory program is intended to balance the cost, quality, and access of Michigan’s health care system.  Services and facilities are regulated to make sure they meet the needs and costs requirements of the state.  The following types of projects must obtain a Certificate of Need:

• Relocation of licensed beds from one geographic site to another geographic site if the distance between facilities is greater than a two-mile radius
• Acquisition of an existing health facility
• Operation of a new health facility
• Increase in the number of licensed beds
• Initiation, replacement, or expansion of covered clinical services
• Covered capital expenditure related to a health facility that is above the threshold. The current threshold (effective January 1, 2024) is $4,002,500
• Extended care services (swing beds)

A Certificate of Need is required for the following clinical services:

• Air Ambulance (Helicopter)
• Cardiac Catheterization (includes diagnostic, therapeutic, angioplasty, and electrophysiology)
• Computed Tomography (CT) Scanners
• Hospital Beds
• Magnetic Resonance Imaging (MRI)
• Megavoltage Radiation Therapy (MRT)
• Neonatal Intensive Care Unit (NICU)
• Nursing Home and Hospital Long-Term Care Unit (NH-HLTCU) Beds
• Open Heart Surgery
• Positron Emission Tomography (PET) Scanners
• Inpatient Psychiatric Beds
• Surgical Services – Hospital and Freestanding
• Transplantation services: bone marrow, including peripheral stem cell; heart, lung & liver
• Urinary Lithotripters

Certificate of Need Process Milestones

1. File Letter of Intent
   The applicant files a Letter of Intent (LOI) with the Department and regional review agency (if there is one) by fax, mail, or online.  The LOI is processed within fifteen (15) calendar days after receipt.  Based on the LOI’s information, the Project Review Coordinatornotifies the applicant if a certificate of need is required and provides the appropriate application forms for the project.
2. Submit Application
   The applicant files three copies of the completed application with the Department and an additional copy with the regional review agency by mail or through the online application system.  Comparatively reviewed applicants must submit only paper copies of the application. Nonsubstantive applications can be filed any work day, substantive applications must be filed on the first work day of the month, and comparative applications must be filed on the first work day of February, June, or October.
3. Completeness Review
   Within fifteen days of receiving an application, the Department reviews it for completeness and may request additional information.  The applicant has fifteen days to send the requested information.  The Department deems the application complete when all necessary information for review has been submitted.
4. Review
   Once the application is deemed complete, it is forwarded to the assigned reviewer for an in-depth review of the proposed project.  The reviewer prepares a report with findings and analysis and proposes approval or disapproval. The applicant is notified of all information that the Department considered in its review before the decision is issued.
5. Proposed and Final Decisions
   A proposed decision on a nonsubstantive application will be issued within 45 days following the date deemed complete. A proposed decision on a substantive application will be issued within 120 days following the date deemed complete. A proposed decision on comparative review group applications will be issued within 150 days after notification of the start of review. If the proposed decision is an approval, a final decision is issued by the Department Director within five (5) days.  If the proposed decision is a denial and no hearing is requested, the Department Director will issue a final decision within 60 days.
6. Appeal Hearing
   An applicant can request a hearing if the CON application is denied or the Director reverses a proposed approval. The applicant has fifteen days to request a hearing from the date the initial decision is received. The hearing commences within 90 days from the date that the Department received the request for a hearing.  The first hearing day is a pre-hearing conference.  The Department designates and authorizes hearing officers.
7. Final Decision
   The Director’s final decision may be appealed only by the applicant and only on the record directly to the circuit court for the county where the applicant has its principal place of business (in the state of Michigan) or the circuit court for Ingham County.
8. Project Implementation Progress Report (PIPR)
   A certificate of need expires one year from its effective date if no progress has been made implementing the proposed project. An applicant is required to file a PIPR demonstrating that the project is 100% complete or an enforceable contract has been executed within eleven months after CON approval.  If the project is not complete, the applicant can request a six month extension.  Any construction contracts must be initiated and any covered clinical equipment must be installed within 24 months from the date of CON approval.

What Criteria are Used to Review a CON?

There are three types of review:

1. Nonsubstantive
   These involve projects not requiring a full review, require less information, and are processed more quickly.
2. Substantive
   These reviews involve projects that require a full review but on an individual basis, such as a new MRI unit.
3. Comparative
   Comparative reviews involve situations where two or more applicants submit competing project applications for which the need is limited, including beds and transplantation services. Applications subject to comparative review must be filed on the first working day of February, June or October of each year.

There are specialized review standards for each type of clinical service, but the criteria below are considered in every review:

• The proposed project will meet an unmet need in the proposed service area
• The proposed project is the most efficient and effective alternative to meeting the need
• The proposed project meets financial criteria:
  • capital costs result in least costly total annual operating costs
  • funds are available to meet capital/operating needs
  • utilization of least costly financing method
  • competitive bidding for construction contacts
• Compliance with applicable operating and quality assurance standards
• Project meets viability criteria set out by the Commission
• Proper governing body/advisory board, depending on the type of institution

Certificate of Need Application Filing Fee

Application fees are determined by the schedule below:

$3,000	for projects costing up to	$500,000
$8,000	for projects costing	$500,000 to $3,999,999
$11,000	for projects costing	$4,000,000 to $9,999,999
$15,000	for projects costing more than	$10,000,000

Additional Sources

(links good as of July 2024)

Michigan Department of Community Health, Certificate of Need
https://www.michigan.gov/mdhhs/0,5885,7-339-71551_2945_5106—,00.html

CON Statute
http://www.legislature.mi.gov/(S(e3xvy12be2mnlx4c1kfyz2rd))/documents/mcl/pdf/mcl-368-1978-17-222.pdf

CON Brochure
https://www.michigan.gov/mdhhs/-/media/Project/Websites/mdhhs/Doing-Business-with-MDHHS/Health-Care-Providers/Certificate-of-Need/CON-Eval/Brochure/2024-Brochure.pdf

CON Rules
https://www.michigan.gov/documents/mdch/CON_Administrative_Rules.2_229951_7.pdf

CON Application Forms
https://www.michigan.gov/mdhhs/0,5885,7-339-71551_2945_5106-30500–,00.html