Repeal CON for ASCs and Inpatient Rehab.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 2
SENATE BILL 1040
Health Care Committee Substitute Adopted 5/13/26

Short Title: Repeal CON for ASCs and Inpatient Rehab. (Public)
Sponsors:
Referred to:
May 4, 2026
*S1040-v-2*
A BILL TO BE ENTITLED 1
AN ACT REPEALING CERTIFICATE OF NEED LAWS FOR AMBULATORY SURGICAL 2
FACILITIES AND FOR I NPATIENT REHABILITAT ION SERVICES, FACILI TIES, 3
AND BEDS; APPROPRIAT ING FUNDS TO THE DEP ARTMENT OF HEALTH AN D 4
HUMAN SERVICES TO IM PLEMENT THESE CHANGES AND DEVELOP A PLAN 5
FOR THE PHASED ELIMINATION OF THE STATE'S REMAINING CERTIFICATE OF 6
NEED LAWS; AND DELET ING OBSOLETE DEFINIT IONS FOR BEHAVIORAL 7
HEALTH FACILITIES TH AT ARE NO LONGER SUB JECT TO CERTIFICATE OF 8
NEED REVIEW. 9
The General Assembly of North Carolina enacts: 10
SECTION 1. G.S. 131E-176 reads as rewritten: 11
"§ 131E-176. Definitions. 12
The following definitions apply in this Article: 13
… 14
(1b) Ambulatory surgical facility. – A facility designed for the provision of a 15
specialty ambulatory surgical program or a multispecialty ambulatory surgical 16
program. An ambulatory surgical facility serves patients who require local, 17
regional, or general anesthesia and a period of post-operative observation. An 18
ambulatory surgical facility may only admit patients for a period of less than 19
24 hours and shall provide at least one designated operating room or 20
gastrointestinal endoscopy room and at least one designated recovery room, 21
have available the necessary equipment and trained personnel to handle 22
emergencies, pr ovide adequate quality assurance and assessment by an 23
evaluation and review committee, and maintain adequate medical records for 24
each patient. An ambulatory surgical facility may be operated as a part of a 25
physician's or dentist's office so long as the facility is licensed under Part 4 of 26
Article 6 of this Chapter, but the performance of incidental, limited 27
ambulatory surgical procedures that do not constitute an ambulatory surgical 28
program and that are performed in a physician's or dentist's office does no t 29
make that office an ambulatory surgical facility. 30
(1c) Ambulatory surgical program. – A formal program for providing on a 31
same-day basis those surgical procedures that require local, regional, or 32
general anesthesia and a period of post -operative observat ion to patients 33
whose admission for more than 24 hours is determined, prior to surgery or 34
gastrointestinal endoscopy, to be medically unnecessary. 35
… 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 1040-Second Edition
(7d) Gastrointestinal endoscopy room. – A room in a licensed health service 1
facility used for the performance of procedures that require the insertion of a 2
flexible endoscope into a gastrointestinal orifice to visualize the 3
gastrointestinal lining and adjacent organs for diagnostic or therapeutic 4
purposes. 5
… 6
(9b) Health service facility. – A hospital; long -term care hospital; rehabilitation 7
facility; nursing home facility; adult care home; kidney disease treatment 8
center, including freestanding hemodialysis units; intermediate care facility 9
for individuals with intellectual disabilities; home health agency offic e; 10
diagnostic center; or hospice office, hospice inpatient facility, or hospice 11
residential care facility; or ambulatory surgical facility. This term does not 12
include a qualified urban ambulatory surgical facility. 13
(9c) Health service facility bed. – A bed licensed for use in a health service facility 14
in the categories of (i) acute care beds; (ii) rehabilitation beds; (iii) nursing 15
home beds; (iv) (iii) intermediate care beds for individuals with intellectual 16
disabilities; (v) (iv) hospice inpatient facility beds; (vi) (v) hospice residential 17
care facility beds; (vii) (vi) adult care home beds; and (viii) (vii) long-term 18
care hospital beds. 19
… 20
(13d) Hospital. – A public or private institution that is primarily engaged in 21
providing to inpatients, by or under supervision of physicians, diagnostic 22
services and therapeutic services for medical diagnosis, treatment, and care of 23
injured, disabled, or sick persons, or rehabilitation services for the 24
rehabilitation of injured, disabled, or sic k persons. The term includes all 25
facilities licensed pursuant to G.S. 131E-77, except rehabilitation facilities 26
and long-term care hospitals. 27
… 28
(15a) Multispecialty ambulatory surgical program. – A formal program for 29
providing on a same -day basis surgical procedures for at least three of the 30
following specialty areas: gynecology, otolaryngology, plastic surgery, 31
general surgery, ophthalmology, orthopedic, or oral surgery. 32
… 33
(16) New institutional health services. – Any of the following: 34
… 35
b. Except with respect to qualified urban ambulatory surgical facilities 36
and except as otherwise provided in G.S. 131E-184(e), the obligation 37
by any person of a capital expenditure exceeding four million dollars 38
($4,000,000) to develop or expand a health service or a health service 39
facility, or which relates to the provision of a health service. The cost 40
of any studies, surveys, designs, plans, working drawings, 41
specifications, and other activities, including staff effort and 42
consulting and other services, essential to the a cquisition, 43
improvement, expansion, or replacement of any plant or equipment 44
with respect to which an expenditure is made shall be included in 45
determining if the expenditure exceeds four million dollars 46
($4,000,000). Beginning September 30, 2022, and on Se ptember 30 47
each year thereafter, the amount in this sub -subdivision shall be 48
adjusted using the Medical Care Index component of the Consumer 49
Price Index published by the U.S. Department of Labor for the 50
12-month period preceding the previous September 1. 51
General Assembly Of North Carolina Session 2025
Senate Bill 1040-Second Edition Page 3
… 1
r. The conversion of a specialty ambulatory surgical program to a 2
multispecialty ambulatory surgical program or the addition of a 3
specialty to a specialty ambulatory surgical program. 4
… 5
(17a) Nursing care. – Any of the following: 6
a. Skilled nursing care and related services for residents who require 7
medical or nursing care. 8
b. Rehabilitation services services, other than those provided at an 9
inpatient rehabilitation facility, for the rehabilitation of individuals 10
who are injured or sick or who have disabilities. 11
c. Health-related care and services provided on a regular basis to 12
individuals who, because of their mental or physical condition, require 13
care and services above the level of room and board that can be made 14
available to them only through institutional facilities. 15
These are services that are not primarily for the care and treatment of 16
mental diseases. 17
… 18
(21a) Qualified urban ambulatory surgical facility. – An ambulatory surgical facility 19
that meets all of the following criteria: 20
a. Is licensed by th e Department to operate as an ambulatory surgical 21
facility. 22
b. Has a single specialty or multispecialty ambulatory surgical program. 23
c. Is located in a county with a population greater than 125,000 according 24
to the 2020 federal decennial census or any subs equent federal 25
decennial census. 26
(22) Rehabilitation facility. – A public or private inpatient facility which is 27
operated for the primary purpose of assisting in the rehabilitation of 28
individuals with disabilities through an integrated program of medical a nd 29
other services which are provided under competent, professional 30
supervision.A facility that has been classified and designated as an inpatient 31
rehabilitation facility by the Centers for Medicare and Medicaid Services 32
pursuant to Part 412 of Subchapter B of Chapter IV of Title 42 of the Code of 33
Federal Regulations. 34
… 35
(24f) Specialty ambulatory surgical program. – A formal program for providing on 36
a same -day basis surgical procedures of the same surgical specialty and 37
authorized by its certificate of need, if a certificate of need is required. 38
…." 39
SECTION 2. G.S. 131E-178(a) reads as rewritten: 40
"(a) No person shall offer or develop a new institutional health service without first 41
obtaining a certificate of need from the Department; provided, however, no person who provides 42
gastrointestinal endoscopy procedures in one or more gastrointestinal endoscopy rooms located 43
in a nonlicensed setting, shall be required to obtain a certificate of need to license that setting as 44
an ambulatory surgical facility with the existing number of gastrointestinal endoscopy rooms, 45
provided that:Department. 46
(1) The license application is postmarked for delivery to the Division of Health 47
Service Regulation by December 31, 2006; 48
(2) The applicant verifies, by affidavit submitted to the Division of Health Service 49
Regulation within 60 days of the effective date of this act, that the facility is 50
in operation as of the effective date of this act or that the completed application 51
General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 1040-Second Edition
for the building permit for the facility was submitted by the effective date of 1
this act; 2
(3) The facility has been accredited by The Accreditation Association for 3
Ambulatory Health Care, The Joint Commission on Accreditation of 4
Healthcare Organizations, or The American Association for Accreditation of 5
Ambulatory Surgical Facilities by the time the license application is 6
postmarked for delivery to the Division of Health Service Regulation of the 7
Department; and 8
(4) The license application includes a commitment and p lan for serving indigent 9
and medically underserved populations. 10
All other persons proposing to obtain a license to establish an ambulatory surgical facility for 11
the provision of gastrointestinal endoscopy procedures shall be required to obtain a certificate of 12
need. The annual State Medical Facilities Plan shall not include policies or need determinations 13
that limit the number of gastrointestinal endoscopy rooms that may be approved." 14
SECTION 3. G.S. 90-21.82A(a)(2) reads as rewritten: 15
"(2) Ambulatory surgical facility. – As defined in G.S. 131E-176.G.S. 131E-146." 16
SECTION 4. G.S. 131E-146(3), 131E -147.5, 131E -176(5b), 131E -176(5c), and 17
131E-176(21) are repealed. 18
SECTION 5. There is appropriated from the General Fund to the Department of 19
Health and Human Services, Division of Health Service Regulation, the sum of fifty thousand 20
dollars ($50,000) in nonrecurring funds for the 2026-2027 fiscal year. These funds shall be used 21
to do both of the following: 22
(1) To implement the repeal of certificate of need laws for ambulatory surgical 23
facilities and for inpatient rehabilitation services, facilities, and beds, as 24
provided by Sections 1 and 2 of this act. 25
(2) To develop a comprehensive plan for the phased elimination of the State's 26
remaining certificate of need la ws. The plan shall include (i) a proposed 27
phaseout to be completed within a three-year period following adoption of the 28
plan by an act of the General Assembly and (ii) a recommended time line for 29
phasing out specific health services and health service faci lities. The 30
Department of Health and Human Services, Division of Health Service 31
Regulation, shall develop and submit the plan required by this subdivision to 32
the Joint Legislative Oversight Committee on Health and Human Services, the 33
chairs of the House Ap propriations Committee on Health and Human 34
Services, the chairs of the Senate Appropriations Committee on Health and 35
Human Services, the Speaker of the House of Representatives, the President 36
Pro Tempore of the Senate, and the Fiscal Research Division by July 1, 2027. 37
SECTION 6. If any provision of this act or its application is held invalid, the 38
invalidity does not affect other provisions or applications of this act that can be given effect 39
without the invalid provisions or application and, to this end, t he provisions of this act are 40
severable. 41
SECTION 7. This act becomes effective July 1, 2026. 42