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New bill creates Health Facilities Commission in Tennessee

In its recent legislative session, the Tennessee legislature passed a bill to create the Health Facilities Commission, which combines the Health Services Development Agency, which administers the Certificate of Need (“CON”) program, and the Board for Licensing Health Care Facilities in Tennessee.  The actions and activities of the previous two Boards will now operate under one Commission.  The law is set to be signed by Governor Bill Lee in the coming weeks. 

The Health Facilities Commission the legislature created is defined as “the commission created by this part to develop the criteria and standards to guide the commission when issuing certificates of need; to conduct studies related to health care, including needs assessments; to administer the certificate of need program and related activities; and to license and regulate hospitals, recuperation centers, nursing homes, homes for the aged, residential HIV supportive living facilities, assisted-care living facilities, home care organizations, residential hospices, birthing centers, prescribed child care centers, renal dialysis clinics, ambulatory surgical treatment centers, outpatient diagnostic centers, adult care homes, and traumatic brain injury residential homes.”

The primary responsibility of the Board of Licensing Health Care Facilities was to license and survey health care facilities, which will continue under the new Commission.  The Board also facilitated changes of ownership, renewals, and branch office applications.  The new law allows for all administrative rules that were promulgated by the Board of Licensing Health Care Facilities while under the Department of Health to be transferred to the Health Facilities Commission.  

The Health Services Development Agency administered the CON law, which had major changes go into effect in October 2021.  In creating the new Commission, the legislature also amended some of the CON laws.  The high-level changes are as follows: 

  • The new law modified the existing CON regulations that allow the executive director to approve a change of location if at least 75 percent of patients to be served are reasonably expected to reside in the same zip code, and the relocation does not reduce access to consumers by increasing that percentage to 95 percent.  Now, a CON holder will be able to apply for a relocation if at least 95 percent of the patients to be served are reasonable expected to reside in the same zip code, rather than 75 percent.
  • The new law also clarifies that the “loser pays” provision does not apply to a party if the Commission’s decision to approve that party’s CON application is being appealed in the contested case. 
  • To contest a case, a health care institution will not only have to be located within a thirty-five mile radius but also must have served patients within that radius within the 365 days immediately preceding the date of the filing of the CON application. 

The enactment date is set for July 1, 2022, so transitional work related to the Health Facilities Commission should begin this summer.  If you need assistance with a CON application or completing an initial, change of ownership, or renewal application of a healthcare facility, please reach out.

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