Summary of Changes to the Tennessee Certificate of Need Statue

This article compares Tennessee House Bill No. 948 (“HB 948”) to current Tennessee Code relative to certificate of need (“CON”). HB 948 amends Tennessee Code Annotated, Title 4, Title 56, Title 68, and Title 71. This document summarizes changes to the Tennessee Code Annotated, Title 68, Chapter 11, Part 16.

Tennessee Code Annotated Title 68, Chapter 11, Part 16 contains several sections. The discussion below is organized by section, with each section containing a summary of changes. Many sections have additional subsections that follow a numerical and/or alphabetical sequence. When applicable, descriptions include a footnote that cites the letter and/or number sequence to which it refers. No footnotes are included when the section has no additional subsections.

1601 Short Title

Formerly cited as the “Tennessee Health Services and Planning Act 2002,” the law has been amended to be known and cited as the “Tennessee Health Services and Planning Act 2021.”

1602 Part Definitions

No substantial changes.

1603 Policy

Tennessee Code previously stated, “It is declared to be the public policy of this state that the establishment and modification of health care institutions, facilities and services shall be accomplished in a manner that is orderly, economical and consistent with the effective development of necessary and adequate means of providing for the health care of the people of Tennessee. To this end, this section shall be equitably applied to all health care entities, regardless of ownership or type, except those owned and operated by the United States government.”

HB 948 revises: “It is declared to be the public policy of this state that the establishment and modification of healthcare institutions, facilities, and services must be accomplished in a manner that promotes access to necessary, high-quality, and cost-effective services for the health care of the people of this state. To this end, this section applies equitably to all healthcare entities, regardless of ownership or type, except those owned and operated by the United States government.”

1604 Health services and development agency: Creation, Composition, Appointments, Terms, Compensation, Officers, Meetings, Conflict of interest.

This section added development of CON criteria and standards to the responsibilities of the Health Services and Development Agency (“agency”). These criteria and standards guide the agency when issuing CONs and conducting studies related to health care. This section also gave the agency responsibility to conduct studies related to health care which must include a needs assessment.[1] A description of a staggered schedule for members’ terms was removed from this section.[2]

1605 Powers and Duties of Agency

This section details the duties and responsibilities of the agency. HB 948 amended this section so the agency’s duties are:

1. Develop criteria and standards to guide the agency when issuing CONs that are:
   • Based, in whole or in part, on input from the division of TennCare and other departments
   • Evaluated and updated not less than once every five (5) years; and
   • Developed by rule under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5;
2. Receive and consider CON applications, review CON recommendations, and grant or deny CON applications.
3. Conduct studies related to health care, including a needs assessment that must be updated at least annually.
4. Disseminate rules and policies, including a procedure for issuing emergency CONs if an unforeseen event necessitates. Emergency CONs are approved only if the public health, safety, and welfare would be unavoidably jeopardized by complying with the policies in the Tennessee Health Services and Planning Act 2021;
5. Contract when necessary for developing CON criteria and standards and for implementing the CON program;
6. Weigh and consider access to quality health care and the healthcare needs of consumers, particularly those in underserved communities; those who are uninsured or underinsured; women and racial and ethnic minorities; TennCare or Medicaid recipients; and low-income groups whenever the agency performs its duties or responsibilities assigned by law; and
7. Issue exemptions from the voiding a CON if the actions the CON authorizes are not performed for a continuous period of one year after the date the certificate of need is implemented.

1606 Executive Director of Agency: Appointment, Salary, Duties, Delegation of Authority, and Review

The following bold and italicized items were added to duties of the executive director:

1. Administering the development of criteria and standards to guide the agency when issuing certificates of need;
2. Administering the certificate of need program;
3. Conducting studies related to health care;
4. Representing the agency before the general assembly;
5. Overseeing the issuance of responses to requests for determination regarding the applicability of this part;
6. Issuing exemptions from the requirement that a certificate of need be obtained for the relocation of existing or certified facilities providing healthcare services and healthcare institutions under § 68-11-1607(a)(4);
7. Keeping a written record of proceedings and transactions of the agency, which must be open to public inspection during regular office hours
8. Preparing the agenda, including consent and emergency calendars, and notice to the general public of all meetings and public hearings of the agency;
9. Employing personnel, within the agency’s budget, to assist in carrying out this part;
10. Carrying out policies and rules that are promulgated by the agency and supervising the expenditure of funds;
11. Submitting an annual report, no later than January 15 of each year, to the chairs of the health and welfare committee of the senate and the health committee of the house of representatives that includes, but is not limited to, a comparison of the actual payer mix and uncompensated care provided by certificate of need holders with the projections the holders submitted in the holder’s certificate of need application; and
12. Submitting to the chairs of the health and welfare committee of the senate and health committee of the house of representatives no later than January 1, 2023, a plan:
    1. Developed by the executive director;
    2. To consolidate into a health facilities commission the powers and duties of the agency with those of the board for licensing health care facilities established under part 2 of this chapter; and
    3. For which agencies of this state shall provide assistance to the executive director following a request by the executive director.

1607 Certificate of Need: Applications, Exemptions, Registration of Equipment & Critical Access Hospital Designation

This section was amended to allow health facilities (except nursing homes) to increase their bed count at their main facility without CON approval. However, they need CON approval to add new types of beds or add beds at any satellite locations. The table below shows these changes compared to previous Tennessee Code.[3]

This section also made these changes:

• Mental Health hospitals and psychiatric services no longer require a CON[4]
• A change in location or replacement of medical equipment no longer requires a CON.[5]
• Added language which allows executive director to issue a CON exemption for the relocation of existing healthcare institutions and approved services if the executive director determines that:[6]
  • At least 75 percent of patients to be served are expected to reside in the same zip codes as existing patients
  • Relocation will not reduce access to consumers, particularly in underserved communities; those who are uninsured or underinsured; women and racial and ethnic minorities; TennCare or Medicaid or low-income groups.
• Decreased population threshold which requires a CON to initiate or increase MRI or PET services. Now, a CON is only required if a county has a population of 175,000 or fewer, according to the 2010 federal census or any subsequent census.[7] Written notification is required to the agency for initiation in a county with a population over 175,000.[8] This section was also amended to require a CON in a county of 175,000 or more people if an MRI is performed on patients 14 years or younger on more than five occasions per year.[9]
• Satellite inpatient facilities established by a hospital at a location other than hospital’s main campus was added with satellite emergency department facilities to require a CON.[10]
• Changed letter of intent (LOI) filing deadline to between the 1st and 15th day of the month before the application’s submission. LOI publication in newspaper must also now include a statement allowing language stating a person may express opposition to the application in person.[11]
• Applicants seeking simultaneous review regarding a similar project must file an LOI with the agency between the 16th day of the month and the last day of the month of the first application’s LOI publication.[12]
• Changed requirements for filing CON application to the 1st business day of month after LOI date of publication.[13]
• Changed the first date of the review cycle to the 15th day of each month.[14]
• Added language stating the first meeting at which the agency can consider an application is the meeting after the application’s review cycle.[15]
• Added that, before deeming an application complete, the executive director shall ensure an independent review and verify information submitted to the agency in applications or presentations, or otherwise ensure the information is accurate, complete, comprehensive, timely, and relevant to the decision to be made by the agency. The independent review and verification must be applied to, but not necessarily limited to, applicant-provided information as to the number of available beds within a region, occupancy rates, the number of individuals on waiting lists, the demographics of a region, the number of procedures, and other critical information submitted or requested about an application; and staff examinations of data sources, data input, data processing, and data output, and verification of critical information.[16]
• Changed language so a person providing MRI services shall file an annual report with the agency within 30 days after the end of the state fiscal year. (It was previously required by March 1.[17])
• Added language which states an outpatient diagnostic center must become accredited by the American College of Radiology within two years of receiving a CON as a condition of the CON. Failure to do is subject to licensure sanction.[18]
• A CON is not required for a hospital to operate a nonresidential, substitution-based treatment center for opiate addiction if the treatment center is located on the same campus as the operating hospital and the hospital is licensed.[19]
• CON is not required in a county that, as of January 1, 2021, is designated as an economically distressed eligible county by the department of economic and community development, and has no hospital that is actively licensed under this title located within the county.[20]
• To provide PET or MRI services, a person must be accredited by the Joint Commission or the American College of Radiology and submit proof of the accreditation within two years of initiation of services.[21]
• A CON is not required for establishing a home health agency limited to providing home health service under the federal Energy Employees Occupational Illness Compensation Program Act of 2000. A home health agency must be accredited by the Joint Commission, the Community Health Accreditation Partner, or the Accreditation Commission for Health Care, and submit proof of accreditation to the agency within two years of initiating services.[22]
• A CON is not required for establishing a home health agency limited to providing services to patients under age 18. Such agencies may continue to provide home health services until the patient reaches 21 if the patient received home health services before the date the patient reached 18 and the services are provided under a TennCare program. A home health agency must be accredited by the Joint Commission, the Community Health Accreditation Partner, or the Accreditation Commission for Health Care, and submit proof of accreditation to the agency within two years of initiating services.[23]
• A CON is not required for an existing hospital licensed by the department of mental health and substance abuse services to become licensed by the department of health as a satellite of an affiliated general acute care hospital.[24]
• Annual Reports[25]
  • Annual reports must be submitted to the agency for services:
    • Cardiac catheterization;
    • Open heart surgery;
    • Organ transplantation;
    • Operation of a burn unit;
    • Operation of a neonatal intensive care unit;
    • Provision of home health services; or
    • Provision of hospice services.
  • Annual reports must be submitted as prescribed by the agency and include utilization data according to source of payment and zip codes of patient origin.
  • Annual reports must be submitted for the period coinciding with the state fiscal year ending June 30, 2021, by Sept 30, 2021. Subsequent fiscal year reports must be submitted to the agency within 30 days after the end of the state fiscal year.
  • State must impose civil penalty not to exceed $50 per day for each day an annual report is late.
• A CON is not required for home health and residential hospices providing hospice services to patients under care of a healthcare research institution. However, this must be limited to the provision of services only to patients of a healthcare research institution or patients of a hospital or clinic with its principal place of business in this state and that is affiliated with the healthcare research institution. Applicable home care or residential hospice services must obtain accreditation by the Joint Commission, the Community Health Accreditation Partner (CHAP), DNV GL Healthcare, or the Accreditation Commission for Health Care (ACHC), to continue to qualify for the exception within 12 months of licensure.[26]

1608. Applications on Consent or Emergency Calendars – Authority to Grant Emergency Certificate of Need

This section replaced the previous section which covered review of applications and reporting. Under the new section, the agency may issue an emergency CON “if an unforeseen event necessitates action of a type requiring a certificate of need, and the public health, safety, or welfare would be unavoidably jeopardized by compliance with the standard procedures for the application for and granting of a certificate of need.” The executive director and agency will concur on a decision to issue an emergency CON at the next regularly scheduled meeting unless the applicant’s facility, equipment, or services are rendered inoperable, in which case they may act immediately to issue the emergency CON. The applicant must publish notice of the application in a newspaper of general circulation. An emergency CON is valid for no more than 120 days.

1609. Decision on Application

General criteria requirements were changed. Now, a CON will not be approved unless the project is, “necessary to provide needed health care in the area to be served, will provide health care that meets appropriate quality standards, and the effects attributed to competition or duplication would be positive for consumers.”[27] This change edits previous four criteria the Agency used to grant a CON: need, orderly development, economic feasibility and adequate quality.

A healthcare institution opposing other CON applications now must be within a 35-mile radius of the proposed location of the CON they are opposing. If a healthcare institution wishes to oppose a home care organization application, they must have served patients in at least one county in the application’s proposed service area within the 730 days immediately preceding the filing date of the CON application.[28]

CON will now become void if there has been no activity one year after the CON award. For home care organizations, this applies to each county they are licensed in. Applicable licenses will not be issued or renewed.[29] The agency may issue a temporary exemption if they find sufficient cause and a plan to resume activity in the future is submitted to the agency.[30] Their decision to approve or deny a temporary exemption is a final agency decision that is subject to appeal in the chancery court of Davidson County.[31]

68-11-1610. Contested Case Hearings— Petition — Procedure — Arbitration and Mediation Alternatives — Orders — Costs

The following language was removed from this section:

“Initial orders of the administrative law judge in contested cases may be appealed in writing to the agency. The agency may decline to hear any appeal. If the agency reviews the order, it must do so in accordance with the Uniform Administrative Procedures Act. If the agency declines to review the order, the requesting party may appeal the order to the Davidson County chancery court in accordance with the Uniform Administrative Procedures Act.”[32]

68-11-1611. Review of Progress — Revocation of Certificate

No changes.

68-11-1612. Enjoining Violations — Jurisdiction.

No changes.

68-11-1613. Appropriation/Expenditures Impact Statement

No changes.

68-11-1614. Information Submitted to Agency by Commissioners of Health, Mental Health and Substance Abuse Services, and Intellectual and Developmental Disabilities

Previously, this section required commissioners of health, mental health and substance abuse services, and intellectual and developmental disabilities to establish policies and procedures to ensure independent review and verification of information submitted to the agency. The section was amended with these policies regarding data submission:

• Commissioner of health must provide the agency an aggregate hospital discharge database and ambulatory surgical treatment center discharge database within seven business days of a request.
• Commissioner of mental health and substance abuse services must provide the agency with aggregate data about nonresidential, substitution-based treatment centers for opiate addiction licensed in this state within seven business days of a request.
• All submitted data must be aggregated by state, county, or zip code. It must not include patient identifiers and must be available for public disclosure.
• These commissioners may inform the agency through written reports, statements, or oral testimony regarding applications.

68-11-1615. Independent Review and Verification of Information for Joint Annual Report

No changes.

68-11-1616. Violations — Penalties

Section 1616 was previously written regarding documentation and explanation for grant or denial of CON. That section was deleted. “Violations — Penalties” was previously under section 1617. This section was moved, with no changes to the language.

68-11-1617. Revocation of Certificate of Need — Grounds

Section 1617 was previously “Violations — Penalties.” “Revocation of certificate of need — Grounds” was previously under section 1619. This section was moved, with no changes to the language.

68-11-1618. Nontransferability of Certificate of Need

Section 1618 was previously “Change of ownership — Notice to agency.” “Nontransferability of certificate of need” was previously under section 1620. This section was moved and language was added to this section allowing the agency to approve a transfer of a CON if “the new holder of the certificate of need would provide health care that meets appropriate quality standards, and that the transfer would not reduce access to consumers, particularly those in underserved communities; those who are uninsured or underinsured; women and racial and ethnic minorities; TennCare or Medicaid recipients; and low-income groups; and if the certificate of need is transferred as part of the transfer of ownership of a licensed healthcare institution.”[33]

68-11-1619. Application for Medicare Skilled Nursing Facility (SNF) Beds

Section 1619 was previously “Revocation of certificate of need — Grounds.” “Application for Medicare skilled nursing facility (SNF) beds” was previously under section 1622. This section did not change, aside from extending the date in which no CON issuing new nursing home beds can be approved through June 30, 2025.

68-11-1620. Account for Disposition of Fees — Budget

Section 1620 was previously “Nontransferability of certificate of need.” “Account for disposition of fees — Budget” was previously under section 1623. This section added these fee schedules:

(1) Residential hospice: $100 per license;

(2) Nursing homes 1–50 beds: $500 per license;

(3) Nursing homes 51–100 beds: $1,500 per license;

(4) Nursing homes, 101+ beds: $2,500 per license;

(5) Hospitals, 1–100 beds: $2,000 per license;

(6) Hospitals, 101–200 beds: $3,500 per license;

(7) Hospitals, 201+ beds: $5,000 per license;

(8) Ambulatory surgical treatment centers: $2,000 per license

(9) Outpatient diagnostic centers: $2,000 per license;

(10) Home care organizations authorized to provide home health services or hospice services: $500 per license;

(11) Birthing Centers: $50 per license;

(12) Nonresidential, substitution-based treatment centers for opiate addiction: $500 per license;

(13) Mental health residential treatment facilities: $100 per license;

(14) Intellectual disability institutional habilitation facilities: $100 per license

68-11-1621. Participation by Local Governing Body in Hearing for Certificate of Need Application

Section 1621 was previously “Certificate of Need-criteria.” “Participation by local governing body in hearing for certificate of need application” was previously under section 1624. This section was moved, with no changes to the language.

68-11-1622. State Health Planning Division of the Department of Health

Section 1622 was previously “Application for Medicare skilled nursing facility (SNF) beds.” “State health planning division of the department of health” was previously under section 1625. This section was moved. The only change to this section was moving the division from the department of finance and administration to the department of health.

68-11-1623. Replacement Facility Applications — Certificates of Need for Nursing Home Beds

Section 1623 was previously “Account for disposition of fees — Budget.” “Replacement facility applications — Certificates of need for nursing home beds” was previously under section 1627. This section was moved, with no changes to the language.

68-11-1624. Delegation of Authority to the Department to Issue New License to Successor Owner

Section 1624 was previously “participation by local governing body in hearing for certificate of need application.” “Delegation of authority to the department to issue new license to successor owner” was previously under section 1630. This section was moved, with no changes to the language.

68-11-1625. Development of Measures for Assessing Quality of Entities Receiving Certificate of Need — Failure to Meet Quality Measures — Penalties

Section 1625 was “Participation by local governing body in hearing for certificate of need application.” “Development of measures for assessing quality of entities receiving certificate of need — Failure to meet quality measures — Penalties” was previously under section 1630. This section was moved, with no changes to the language.

68-11-1626. Renewal of License for Closed Hospitals in Rural or Distressed Counties

Section 1626 was previously “Meeting for organizational and other purposes — Administration of certificate of need process.” “Renewal of license for closed hospitals in rural or distressed counties “is a new section. This section allows CON exclusion for establishment of a hospital license if:

• The hospital was previously licensed;
• The hospital is in a county designated as a tier 2, tier 3, or tier 4 enhancement county by the department of economic and community development, or if there is a population fewer than 49,000;
• The last date of operation at the hospital, the hospital site service area, or proposed hospital site service area was no more than 15 years prior; and
• The party establishing the hospital applies for a CON within 12 months.

A license may be renewed if the above criteria are met and the hospital will operate in a similar manner to the previous hospital license at time of previous hospital’s closure.

[1] 1604(a)

[2] 1604(c)

[3] 1607(a)(2)(A)-(C). Formerly 1607(a)(2)(A)-(C).

[4] 1607(a)(3). Formerly 1607(a)(4).

[5] 1607(a)(4). Formerly 1607(a)(5)

[6] 1607(a)(4). Formerly 1607(a)(5)

[7] 1607(a)(5). Formerly 1607(a)(10)

[8] 1607(m). Formerly 1607(n)

[9] 1607(u)

[10] 1607(a)(6). Formerly 1607(a)(12)

[11] 1607(c)(1)

[12] 1607(c)(2)

[13] 1607(c)(3)

[14] 1607(c)(5)

[15] 1607(c)(5)

[16] 1607(c)(5)

[17] 1607(m). Formerly 1607(n)

[18] 1607(o). Formerly 1607(p)

[19] 1607(p)

[20] 1607(q)

[21] 1607(q)

[22] 1607(r)

[23] 1607(s)

[24] 1607(t)

[25] 1607(v)

[26] 1607(w)

[27] 1609(b)

[28] 1609(g)(1)

[29] 1609(i)(1)

[30] 1609(i)(2)(A)

[31] 1609(i)(2)(c)

[32] Formerly 1610(e)

[33] 1618(a)(1) – (2)

Learn More About RPC’s CON Services