Georgia Health Law Update:  CON Reform

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The Georgia General Assembly passed reforms to Georgia’s Certificate of Need (“CON”) in H.B. 1339, which was signed into law by Governor Kemp on April 19, 2024, and went into effect on July 1, 2024. While the changes are significant, including changes to the CON Application and Appeal process, as well as the creation of new CON exemptions, these changes are less dramatic than expected. In short, CON Law remains alive in Georgia.  

CON Application Process

The Department of Community Health (“the Department”) still has a time limit of 120 days to review a CON Application, but H.B. 1339 streamlines the process:

• A Letter of Intent (“LOI”) must now be filed twenty-five days prior to the submission of a CON Application; previously, the LOI proceeded the Application filing by thirty days.
• The 120-day review period begins upon submission of the Application, rather than after a ten-day period in which the Department determines whether the Application that was submitted contains all the necessary documentation. 
• The traditional “60-Day Meeting” in which the Department meets with the Applicant to discuss any factors that create the potential for denial of the Application, will now occur within thirty days of submission of the Application.
• Any party who wishes to oppose a particular Application must submit its Opposition within 30 days, rather than 60 days, as per the former rule.

CON Appeal

Previously, the CON Appeal process involved two separate levels of administrative review: a hearing officer of the CON Appeal Panel conducted the initial administrative appeal hearing, followed by a review of the hearing officer’s decision by the Commissioner of the Department. Now, the decision of the hearing officer is the final agency determination of the Department, but that decision may still be appealed to a Georgia superior court.

Changes to Existing CON Exemptions

A number of existing CON exemptions in O.C.G.A. 31-67-47 were revised with the enactment of H.B. 1339.

Ambulatory Surgery Centers

Single Specialty Ambulatory Surgery Centers (“ASCs”), which are owned by a single physician or a physician group practice, have long been exempt from CON review in Georgia.  Prior to the enactment of H.B. 1339, however, only owners or employees of the group practice were authorized to utilize such CON-exempt ASCs. Now, H.B. 1339 allows physicians who are of the same surgical specialty, but not owners or employees of the group practice, to utilize a practice’s ASC.

H.B. 1339 also confirms that an individual physician or group practice may enter into an arrangement with an outside entity for practice management, administrative services or both. Arrangements with Management Services Organizations have become increasingly common for many healthcare facilities and group practices; H.B. 1339 now authorizes such arrangements.

Hospital Capital Expenditures and Bed Increases

A hospital’s capital expenditures in excess of $10 million for various clinical health services were previously subject to CON review and approval. H.B. 1339 removes that threshold, meaning that such expenditures are now unlimited.

Importantly, such expenditures do not apply to additional inpatient beds.  Pursuant to H.B. 1339, an increase of 10 beds or a 20% increase, whichever is greater, in a three-year period, is exempt from CON review, provided that the hospital has maintained an overall occupancy rate of 60% for the previous 12-month period.

Diagnostic Imaging

Previous versions of the House Bill proposed the deregulation of diagnostic imaging services entirely. While imaging facilities are still subject to CON review, H.B. 1339 makes a number of important changes. First, H.B. 1339 removes the cost threshold for the repair and replacement of imaging equipment. Moreover, existing health care facilities that are not owned by a hospital or a physician practice, may now acquire new imaging equipment, provided the acquisition does not result in the offering of new clinical health services. 

The acquisition of imaging equipment by a hospital or physician practice has long been CON exempt, but was subject to a $3-million-dollar cost limit. H.B. 1339 removes the cost threshold for hospital and physician acquisitions. 

Relocation of Existing Healthcare Facilities

Previously, certain CON-authorized facilities could relocate within a three-mile radius, provided that the relocation did not involve the offering of new or expanded clinical health services at the new location. Now, H.B. 1339 extends that relocation radius to five miles.

New CON Exemptions

In addition to the revisions to existing CON exemptions, H.B. 1339 creates a number of new exemptions for certain types of healthcare facilities and services.  Specifically, the following new or expanded facilities may be eligible for an exemption:

• Outpatient birthing centers
• Psychiatric and substance abuse inpatient programs
• A hospital’s offering of perinatal services in rural counties
• New acute care hospitals in rural counties, provided that the hospital attains, within 36 months, (i) status as a teaching hospital or (ii) a trauma center designation (Level I, II, III or IV) from the American College of Surgeons

H.B. 1339 also provides an exemption for the re-opening of recently closed rural hospitals, provided that a replacement hospital has not already opened in the same county.

The Department began accepting requests for letters of determination for new exemptions available under H.B. 1339 as of July 1, 2024.