The Alabama CON program was established to prevent the construction of unnecessary and inappropriate healthcare facilities through a system of mandatory reviews. At one time, every state had its own CON law, but today only 35 states maintain a CON program. At times, the CON process can be political, as the recent events with Richard Scrushy and former Governor Don Siegelman highlight. It can also be subject to abuse by healthcare providers who use the process to keep competitors out of the market or oppose projects to gain concessions on other matters. However, the CON program does help to prevent the unnecessary duplication of health services. Regardless of one's view, the CON program is here to stay and every healthcare provider should become familiar with its requirements.
The State Agencies
Alabama CON law is regulated by the Alabama State Health Planning and Development Agency (SHPDA), which is run by Alva Lambert, the executive director. Lambert is a political appointee of Governor Bob Riley and is in charge of the daily operations of SHPDA. Generally speaking, SHPDA is separated into two divisions: the Alabama Certificate of Need Review Board (the Board), and the Alabama Statewide Health Coordinating Council (SHCC). The Board is a nine member panel consisting of three consumers, three providers and three representatives of the governor, all of whom are appointed by the governor. The Board is the primary rulemaking/adjudicatory segment of SHPDA and is charged with determining the appropriateness of healthcare proposals (i.e., awarding CONs). The Board also interprets the CON rules by issuing what are called declaratory rulings. The SHCC, like the Board, is composed of members (approximately 30), who are appointed by the governor to develop the Alabama State Health Plan, a document prepared triennially and approved by the Governor. The State Health Plan is essentially an assessment of Alabama health resources, evaluated with regard to current utilization and future need. Its most important feature is a catalogue of the methodologies which are used by parties in the CON process to demonstrate that a need for a particular facility or service does or does not exist. The State Health Plan, for example, addresses the need for radiation therapy services, ambulatory surgery, home healthcare, cardiac services and end stage renal disease services.
Who Needs a CON?
If a desired new venture falls within the types of arrangements regulated by the Alabama CON program, a person will need to obtain a CON from the Board, or qualify under an exemption. Consequently, significant effort is usually made to characterize a proposed project as one which is outside the scope of CON law and, hence, is not reviewable.Legal authority for determining what types of facilities and services are subject to review is found in the CON statute, Ala. Code § 22‑21‑260, et seq., and under the regulations promulgated by SHPDA, Ala. Admin. Code § 410‑1‑1, et seq. Under the statute and regulations, four types of "new institutional health services" are subject to CON review:
- the construction, development, acquisition or other establishment of a new healthcare facility or health maintenance organization (HMO);
- a capital expenditure by a healthcare facility for major medical equipment, new annual operating costs, or "other expenditures" which exceed certain monetary thresholds;
- a change in the existing bed capacity of a healthcare facility or HMO; or
- the offering of a "new health service" by a healthcare facility not previously offered within the prior 12 month period.
Letters of Non-Reviewability
If a person believes its project falls within the physician's office exemption, (or is outside of CON review in general), the person may request a letter of non‑reviewability from the executive director of SHPDA. In order to receive such a letter, a written request must be filed with the executive director disclosing fully the scope and extent of the project and the reasons the person believes CON review is not required. In addition, a $500 nonrefundable filing fee must be submitted. A letter of non‑reviewability is by regulation "for informational purposes only" and is only valid as long as the law and facts upon which its issuance was based do not change. Notwithstanding, a letter of non‑reviewability is usually honored by SHPDA and the other Alabama administrative agencies such as the Alabama Department of Public Health. The drawback in requesting a letter of non‑reviewability is that the request may be denied and the proposal deemed reviewable under CON law. Unless the proposal is revised accordingly and a letter of non‑reviewability subsequently obtained, a CON would need to be acquired prior to the institution of the project.The CON Hearing Process
Within 45 days following the date a CON application is deemed complete by SHPDA, any person or entity who can demonstrate that it is "adversely affected" by the proposal can request "intervention." Intervention allows a party to speak in opposition to the project before the Board. Within 55 days following the date a CON application is deemed complete by SHPDA, an intervenor can request a Contested Case hearing, which is an administrative proceeding conducted before an administrative law judge (ALJ) to decide the appropriateness of the application. Generally speaking, a Contested Case hearing is a "mini trial" where both the applicant and the opponent introduce testimony and evidence to support their respective positions. Once the Contested Case hearing is completed, the ALJ issues his or her recommended findings of fact and conclusions of law which are directed back to the Board. The Board, at its next regularly scheduled meeting, will approve or deny the application.
June 2007
