26:2H-7 Certificate of need required for construction, expansion of health care facility.

7. No health care facility shall be constructed or expanded, and no new health care service shall be instituted after the effective date of P.L.1971, c.136 (C.26:2H-1 et seq.) except upon application for and receipt of a certificate of need as provided by P.L.1971, c.136 (C.26:2H-1 et seq.). No agency of the State or of any county or municipal government shall approve any grant of funds for, or issue any license to, a health care facility which is constructed or expanded, or which institutes a new health care service, in violation of the provisions of P.L.1971, c.136 (C.26:2H-1 et seq.).

Except as provided in section 19 of P.L.1992, c.160 (C.26:2H-7a) and section 16 of P.L.1998, c.43 (C.26:2H-7c), the provisions of this section shall apply to:

a. The initiation of any health care service as provided in section 2 of P.L.1971, c.136 (C.26:2H-2);

b. The initiation by any person of a health care service which is the subject of a health planning regulation adopted by the Department of Health;

c. The purchase by any person of major moveable equipment whose total cost is over $2 million;

d. The expenditure by a licensed health care facility of over $2 million for construction of a new health care facility; and

e. The construction of a facility by any person, whose total project cost exceeds $2 million, if the facility-type is the subject of a health planning regulation adopted by the Department of Health.

The commissioner may periodically increase the monetary thresholds established in this section, by regulation, to reflect inflationary increases in the costs of health care equipment or construction.

For the purposes of this section, "health care service" shall include any service which is the subject of a health planning regulation adopted by the Department of Health, and "person" shall include a corporation, company, association, society, firm, partnership, and joint stock company, as well as an individual.

A physician who initiates a health care service which is the subject of a health planning regulation or purchases major moveable equipment pursuant to subsection b. or c. of this section, may apply to the commissioner for a waiver of the certificate of need requirement if: the equipment or health care service is such an essential, fundamental, and integral component of the physician's practice specialty, that the physician would be unable to practice his specialty according to the acceptable medical standards of that specialty without the health care service or equipment; the physician bills at least 75% of his total amount of charges in the practice specialty which uses the health care service or equipment; and the health care service or equipment is not otherwise available and accessible to patients, pursuant to standards established by the commissioner, by regulation. The commissioner shall make a determination about whether to grant or deny the waiver, within 120 days from the date the request for the waiver is received by the commissioner and shall so notify the physician who requested the waiver. If the request is denied, the commissioner shall include in that notification the reason for the denial. If the request is denied, the initiation of a health care service or the purchase of major moveable equipment shall be subject to the certificate of need requirements pursuant to this section.

A health maintenance organization which furnishes at least basic comprehensive care health services on a prepaid basis to enrollees either through providers employed by the health maintenance organization or through a medical group or groups which contract directly with the health maintenance organization, which initiates a health care service, or constructs a health care facility pursuant to subsection a., b., d., or e. of this section, may apply to the commissioner for a waiver of the certificate of need requirement if: the initiation of the health care service or the construction is in the best interests of State health planning; and the health maintenance organization is in compliance with the provisions of P.L.1973, c.337 (C.26:2J-1 et seq.) and complies with the provisions of subsection d. of section 3 of P.L.1973, c.337 (C.26:2J-3) regarding notification to the commissioner. The commissioner shall make a determination about whether to grant or deny the waiver within 45 days from the date the request for the waiver is received by the commissioner and shall so notify the health maintenance organization. If the request for a waiver is denied on the basis that the request would not be in the best interests of State health planning, the commissioner shall state in that notification the reason why the request would not be in the best interests of State health planning. If the request for a waiver is denied, the health maintenance organization's initiation of a health care service or construction project shall be subject to the certificate of need requirements pursuant to this section.

The requirement to obtain a certificate of need for major moveable equipment pursuant to subsection c. of this section shall not apply if a contract to purchase that equipment was entered into prior to July 1, 1991.

L.1971, c.136, s.7; amended 1991, c.187, s.30; 1992, c.160, s.24; 1998, c.43, s.6; 2012, c.17, s.169.