NC budget repeals CON for inpatient rehabilitation care

North Carolinians could soon have more options for inpatient rehabilitation care. 

Senate Bill 257, the 2026 Appropriations Act, includes a provision repealing CON review for inpatient rehabilitation services, facilities, and beds starting Oct. 1, 2026. 

North Carolina’s Certificate of Need law, which dates back to the 1970s, requires healthcare providers to obtain state approval before building or expanding certain facilities, adding beds or services, or buying major medical equipment. 

The repeal is narrower than a bill filed earlier this session by state Sen. Benton Sawrey, R-Johnston, to fully repeal North Carolina’s CON law. Senate Bill 370 passed the Senate 31-17 in April 2025 but has remained in the House Rules Committee since. 

House Speaker Destin Hall’s office referred questions about the bill’s status to Rep. Tim Reeder, R-Pitt, chairman of the House Health Committee. Reeder did not respond to Carolina Journal’s request for comment by publication time. 

Sawrey, chairman of the Senate Health Committee, said the House and Senate could not reach an agreement on full repeal, so he pushed for narrower changes in areas where supporters identified specific access issues. 

“If we can’t get broad reform, then I’m going to work on finding targeted areas so we can make incremental progress,” Sawrey said in a statement to Carolina Journal. 

As part of the 2023 Medicaid expansion deal, the General Assembly repealed CON requirements for some ambulatory surgery centers and MRI machines. 

Sawrey said he expects to see results from those reforms in the next few years as new facilities and machines come online, and he hopes they will show opponents and the public that CON reform can have “a stabilizing effect on prices and access.” 

Brian Balfour, senior vice president of research at the John Locke Foundation, said the inpatient rehabilitation repeal is a small but important step in the right direction. 

“Government interference is the main cause of spiraling healthcare costs and supply shortages,” Balfour said in a statement to Carolina Journal. “Repealing our CON law would be an important step in unraveling some of that interference.” 

A 2021 report by the John Locke Foundation found that CON laws are associated with 30% fewer hospitals per capita, 13% fewer hospital beds, 14% longer emergency room wait times, and 3% higher spending. 

The North Carolina Healthcare Association, which represents health systems across the state and is the major supporter of maintaining CON laws, said it is “concerned” by the provision. 

“North Carolina’s CON program helps ensure that healthcare resources are allocated efficiently and equitably across the state, preventing costly duplication of services while supporting access to essential care — including charity care and services in rural and underserved communities,” a spokesperson said in a statement to Carolina Journal. 

“Hospitals are still assessing the full impact of previous CON modifications, and additional changes could disrupt the balance that protects access to care for patients across North Carolina,” the spokesperson added. 

The North Carolina Department of Health and Human Services is still evaluating the proposal, according to a spokesperson. 

“While we are still evaluating to understand the specific impact of the changes put forth in the budget, we will continue to work with lawmakers toward our shared goal — a healthier North Carolina for all,” the spokesperson said in a statement to Carolina Journal. 

Blue Cross NC, the largest health insurer in North Carolina, declined to comment. 

The John Locke Foundation, which publishes Carolina Journal, filed an amicus brief in April supporting a New Bern doctor’s challenge to North Carolina’s CON law. The case is currently before the state’s Court of Appeals. 

The budget passed the House 88-21 and the Senate 35-10 on final reading Thursday. Gov. Josh Stein, a Democrat, has until July 12 to sign or veto it. 

“NC budget repeals CON for inpatient rehabilitation care” was originally published on www.carolinajournal.com.