Senate bill would repeal CON rules for surgery centers, rehab
RALEIGH — A North Carolina Senate committee is scheduled Wednesday to consider legislation that would repeal certificate-of-need requirements for ambulatory surgical facilities and inpatient rehabilitation services, facilities and beds.
Senate Bill 1040, titled “Repeal CON for ASCs and Inpatient Rehab,” is scheduled for the Senate Health Care Committee at 10 a.m. Wednesday, May 13. The bill was filed April 30, passed first reading May 4, and was re-referred May 6 to Senate Health Care. If approved there, it would go next to the Senate Appropriations/Base Budget Committee.
The bill’s primary sponsors are Republican Sens. Michael Lee of New Hanover County, Benton Sawrey of Johnston County and Jim Burgin of Harnett County. Republican Sens. Amy Galey of Alamance County and Norman Sanderson of Pamlico County are also listed as sponsors.
The measure would continue a yearslong debate over North Carolina’s certificate-of-need law, a regulatory system that requires state approval before certain health care providers can build facilities, add beds, buy major equipment or develop some new services. The N.C. Department of Health and Human Services says the law “prohibits health care providers from acquiring certain medical equipment or developing new health services, health service facilities, and health service facility beds” without prior approval from the department. DHHS says the law is intended to restrict unnecessary cost increases and limit unnecessary services and facilities based on geographic, demographic and economic factors.
Senate Bill 1040 targets two categories: ambulatory surgical facilities and inpatient rehabilitation. Ambulatory surgical facilities are facilities where patients receive same-day surgical procedures requiring anesthesia and post-operative observation but are not admitted for more than 24 hours.
The bill would remove ambulatory surgical facilities from the definition of “health service facility” under the certificate-of-need law. It also would remove rehabilitation beds from the categories of health service facility beds covered by that law.
The bill would also amend the definition of nursing care to exclude rehabilitation services provided at an inpatient rehabilitation facility. Under the proposal, rehabilitation facilities would no longer be included in the definition of a hospital under the affected section of law.
The bill says its purpose is to repeal certificate-of-need laws for “ambulatory surgical facilities and for inpatient rehabilitation services, facilities, and beds.” It also would appropriate $50,000 in nonrecurring money for the 2026-27 fiscal year to the DHHS Division of Health Service Regulation.
That money would be used to implement the repeal for ambulatory surgical facilities and inpatient rehabilitation and to develop a broader plan for the “phased elimination” of North Carolina’s remaining certificate-of-need laws. The plan would have to include a proposed phaseout to be completed within three years after adoption by the General Assembly, along with a recommended timeline for phasing out specific health services and facilities. DHHS would have to submit the plan by July 1, 2027.
The bill would take effect July 1, 2026.
Supporters of certificate-of-need repeal generally argue the system limits competition, protects existing providers and makes it harder for new or independent facilities to enter the market. Opponents generally argue the process helps control unnecessary duplication of expensive health care services, protects rural hospitals and preserves planning authority in a system where providers are not competing under ordinary market conditions.
The current proposal comes after North Carolina already made significant changes to certificate-of-need law through the 2023 Medicaid expansion law. Those changes included removing CON requirements for some urban ambulatory surgical centers in counties with populations greater than 125,000, with a charity care reporting requirement for those exempt facilities.
Senate Bill 1040 would go further by removing certificate-of-need requirements for ambulatory surgical facilities more broadly and by adding inpatient rehabilitation to the repeal. The practical effect could be significant for hospitals, independent surgical centers, orthopedic practices, rehabilitation providers and patients seeking outpatient surgical or post-acute rehabilitation care.
The proposal leaves several policy questions for lawmakers. The bill would not repeal all certificate-of-need laws immediately, but it would require DHHS to develop a plan for eliminating the remaining system. It also does not appear to replace CON review with a detailed alternative process for determining whether new surgical or rehabilitation facilities would affect charity care, rural access or existing hospital service lines.
No public sponsor statement or committee testimony was included in the official bill materials reviewed before publication. The bill page also did not show a recorded vote as of Monday, and the Legislative Reporting Service page said a summary had not been entered.
The Senate Health Care Committee could approve the bill, amend it, hold it for more discussion or take no action. If it advances, the next stop would be Senate Appropriations/Base Budget, where lawmakers would review the funding provision and any fiscal effect on DHHS oversight.
Editor’s note: This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.
