TITLE 12. HEALTH

STATE BOARD OF HEALTH

Fast-Track Regulation

Title of Regulation: 12VAC5-220. Virginia Medical Care Facilities Certificate of Public Need Rules and Regulations (amending 12VAC5-220-280 through 12VAC5-220-310; adding 12VAC5-220-285).

Statutory Authority: § 32.1-102.2 of the Code of Virginia.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: November 4, 2026.

Effective Date: November 19, 2026.

Agency Contact: Geoff Garner, Senior Policy Analyst, Virginia Department of Health, 9960 Mayland Drive, Suite 401, Richmond, VA 23233, telephone (804) 367-2157, fax (804) 527-4502, or email regulatorycomment@vdh.virginia.gov.

Basis: Section 32.1-12 of the Code of Virginia authorizes the State Board of Health to make, adopt, promulgate, and enforce regulations necessary to carry out the provisions of Title 32.1 of the Code of Virginia and other laws of the Commonwealth administered by the board, the Commissioner of Health, or the Virginia Department of Health. Section 32.1-102.2 of the Code of Virginia requires the board to promulgate regulations that are consistent with Article 1.1 (§ 32.1-102.1 of the Code of Virginia et seq.) of Chapter 4 of Title 32.1 of the Code of Virginia.

Purpose: This action is essential to protect the health, safety, and welfare of citizens because the Certificate of Public Need (COPN) program ensures that the health care marketplace is not flooded with unneeded medical facilities or equipment and that charity care is provided to indigent patients.

Rationale for Using the Fast-Track Rulemaking Process: This action is considered noncontroversial and therefore appropriate for the fast-track rulemaking process because it codifies the requirements of Chapter 325 of the 2025 Acts of Assembly. The board used its discretion only in determining batch cycle dates.

Substance: The amendments establish expedited review processes for the following Certificate of Public Need requests: (i) establishment of a new medical care facility by an existing medical care facility that has an existing certificate to provide psychiatric services, provided the new medical care facility is located in the same planning district as the existing medical care facility; (ii) addition of psychiatric beds at an existing medical care facility that has an existing certificate to provide psychiatric services, not to exceed 10 beds or 10% of all beds at the medical care facility, whichever is greater, and provided that the applicant has not been awarded a certificate for the addition of psychiatric beds pursuant to this provision in the previous two-year period; (iii) relocation of psychiatric beds to an existing medical care facility that has had an existing certificate to introduce a psychiatric service for at least the previous 12 months and that is within the same planning district; and (iv) capital expenditure of $15 million or more, not defined as reviewable in § 32.1-102.1:3 B 1 through B 7 of the Code of Virginia, by or on behalf of a medical care facility described in subsection A other than a general hospital.

The amendments also (i) establish a 90-day batching schedule for the expedited review process; (ii) clarify that the expedited review period shall begin on the first day of the applicable review cycle within which an application is determined to be complete and that if the application is not determined to be complete for the applicable batch cycle within 60 calendar days from the date of submission, the application may be refiled in the next applicable batch cycle; and (iii) clarify that any member of the public may request a public hearing on an expedited review project.

Issues: The primary advantage to the public is that the amendments create an expedited review process for Certificate of Public Need requests related to psychiatric beds by hospitals and psychiatric care facilities, which may result in greater access to inpatient psychiatric care for the public. The primary advantage to the agency and Commonwealth is that the regulation will comply with Chapter 325 of the 2025 Acts of Assembly. There are no disadvantages to the public, the agency, or the Commonwealth.

Department of Planning and Budget Economic Impact Analysis:

The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Code of Virginia and Executive Order 19. The analysis presented represents DPB's best estimate of the potential economic impacts as of the date of this analysis.¹

Summary of the Proposed Amendments to Regulation. Pursuant to Chapter 325 of the 2025 Acts of Assembly, the State Board of Health (board) proposes to establish an expedited review process for certain Certificate of Public Need (COPN) requests.

Background. Chapter 423 of the 2024 Acts of Assembly, directed the board to convene the State Health Services Plan Task Force to make recommendations on expedited review of projects subject to COPN requirements. The Virginia Department of Health (VDH) submitted the task force recommendations (RD883) on December 3, 2024.² In response to the recommendations,³ the 2025 General Assembly enacted Chapter 325 that requires the board to promulgate regulations that establish an expedited review process for the following types of projects: (i) A new branch of an existing psychiatric care facility within the same planning district, (ii)The addition of psychiatric beds not to exceed the greater of 10 beds or 10 percent of all beds at the facility, (iii) Relocation of psychiatric beds to an existing facility, and (iv) Capital expenditures of $15 million or more by facilities other than general hospitals. Further, Chapter 325 requires the regulations to include certain procedures in the expedited review process: (i) Four annual batch cycles for filing, (ii) Review completed within 90 days, (iii) Ability for the public to request a public hearing, and (iv) Criteria for removing an application from expedited review and subjecting it to the full review process.

Estimated Benefits and Costs. Chapter 325 requires the regulations to include four annual batch cycles, and the board exercised discretion by determining the schedule of these cycles. Otherwise, all elements of the proposal appear to come directly from Chapter 325. Thus, any potential economic impacts of the proposed changes to the regulation are a direct result of the legislation. The Fiscal Impact Statement (FIS) for Chapter 325 states that the average number of COPN requests over the last 10 years that would be subject to the requirements of the proposed legislation is 2.8 a year, ranging from zero to six COPN requests. The largest number of COPN applications for expedited review of psychiatric projects that VDH has ever received in a year is six. Therefore, any increase in workload for these additional projects can be handled within existing resources. Additionally, VDH indicated that the cost of amending the regulations will be less than $5,000 and can be absorbed by existing agency staffing and resources. Furthermore, the FIS indicates an indeterminate impact on Medicaid expenditures, although it also acknowledges that a direct impact on Medicaid for the biennium would be unlikely.⁴ In addition to what was noted by the FIS, the mandated faster review process (90 days versus 190 days for the standard process) may also help contribute to increased competition for the existing psychiatric care facilities. The benefits of the legislation, on the other hand, include a decrease in review time for COPN applications that would qualify for the expedited process, which results in other benefits: faster entry into the psychiatric care industry for qualified entities and the ability to realize the benefits of increased competition and access to consumers more quickly. Another benefit is the opportunity for the public to request a public hearing on an expedited application. Because the main costs and benefits of the expedited process are legislatively driven, the primary benefits of the proposed regulatory changes are that the regulations would be in compliance with Chapter 325 of the 2025 Acts of Assembly and that applicants would have a clear understanding of the timing for batch review cycles.

Businesses and Other Entities Affected. Psychiatric care facilities and their patients are affected, as are VDH staff. According to the FIS, on average 2.8 projects per year (the range being between zero and six projects) may qualify for the expedited process. No entity appears to be disproportionately affected. The Code of Virginia requires DPB to assess whether an adverse impact may result from the proposed regulation.⁵ An adverse impact is indicated if there is any increase in net cost or reduction in net benefit for any entity, even if the benefits exceed the costs for all entities combined.⁶ The main impacts of the regulatory change are compliance with the legislative mandate and establishment of batch review cycles. Thus, no adverse impact is indicated on account of this regulatory action.

Small Businesses⁷ Affected.⁸ The proposed regulatory changes do not appear to adversely affect small businesses.

Localities⁹ Affected.¹⁰ The proposed regulatory changes do not create costs for localities. However, according to VDH, the County of Bedford, Lee County Hospital Authority, and Chesapeake Hospital Authority may be affected by the implementation of the legislative mandate since Bedford operates a nursing home and the two hospital authorities each operate a licensed general hospital.

Projected Impact on Employment. The proposed regulatory changes do not have a direct impact on total employment.

Effects on the Use and Value of Private Property. No impact of the use and value of private property nor on real estate development costs are expected on account of this regulatory action.

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¹ Section 2.2-4007.04 of the Code of Virginia requires that such economic impact analyses determine the public benefits and costs of the proposed amendments. Further the analysis should include but not be limited to: (1) the projected number of businesses or other entities to whom the proposed regulatory action would apply, (2) the identity of any localities and types of businesses or other entities particularly affected, (3) the projected number of persons and employment positions to be affected, (4) the projected costs to affected businesses or entities to implement or comply with the regulation, and (5) the impact on the use and value of private property.

² https://rga.lis.virginia.gov/Published/2024/RD883/PDF.

³ See Legislative Recommendations-Psychiatric on Page 10 of RD883 and Regulatory Recommendations-Operational on Page 11.

⁴ https://lis.blob.core.windows.net/files/1063579.PDF

⁵ Pursuant to § 2.2-4007.04 D: In the event this economic impact analysis reveals that the proposed regulation would have an adverse economic impact on businesses or would impose a significant adverse economic impact on a locality, business, or entity particularly affected, the Department of Planning and Budget shall advise the Joint Commission on Administrative Rules, the House Committee on Appropriations, and the Senate Committee on Finance. Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation.

⁶ Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation. As a result, DPB has adopted a definition of adverse impact that assesses changes in net costs and benefits for each affected Virginia entity that directly results from discretionary changes to the regulation.

⁷ Pursuant to § 2.2-4007.04, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

⁸ If the proposed regulatory action may have an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include: (1) an identification and estimate of the number of small businesses subject to the proposed regulation, (2) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the proposed regulation, including the type of professional skills necessary for preparing required reports and other documents, (3) a statement of the probable effect of the proposed regulation on affected small businesses, and (4) a description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation. Additionally, pursuant to § 2.2-4007.1 of the Code of Virginia, if there is a finding that a proposed regulation may have an adverse impact on small business, the Joint Commission on Administrative Rules shall be notified.

⁹ "Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

¹⁰ Section 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency Response to Economic Impact Analysis: The Virginia Department of Health has reviewed the economic impact analysis (EIA) prepared by the Department of Planning and Budget and believes the contents of the analysis to be substantively complete and accurate as of the date of the EIA, and no modification of the EIA is warranted.

Summary:

Pursuant to Chapter 325 of the 2025 Acts of Assembly and in response to the recommendations of the State Health Services Plan Task Force report, the amendments (i) establish an expedited review process for Certificate of Public Need requests for additions, relocations, and capital expenditures under specific situations; (ii) clarifies that the expedited review cycle takes 90 days and establishes a 90-day batching schedule for the process; (iii) clarifies beginning and completion of the batch cycle; and (iv) provides that any member of the public may request a public hearing on an expedited review project.

12VAC5-220-280. Applicability.

A. Capital expenditures as contained in subdivision 8 of "project" as defined in § 32.1-102.1 of the Code of Virginia or projects that involve relocation at the same site of 10 beds or 10% of the beds, whichever is less, from one existing physical facility to another, when the cost of such relocation is less than $5 million, shall be subject to an expedited review process.

B. The following projects shall also be subject to an expedited review process:

1. The establishment of a new medical care facility described in § 32.1-102.1:3 A 2 of the Code of Virginia by an existing medical care facility described in § 32.1-102.1:3 A 1 of the Code of Virginia that has an existing certificate to provide psychiatric services pursuant to § 32.1-102.1:3 B 6 of the Code of Virginia, provided such new medical care facility is located in the same planning district as the existing medical care facility;

2. The addition of psychiatric beds at an existing medical care facility described in § 32.1-102.1:3 A 2 of the Code of Virginia that has an existing certificate to provide psychiatric services pursuant to § 32.1-102.1:3 B 5 of the Code of Virginia, not to exceed 10 beds or 10% of all beds at the medical care facility, whichever is greater, and provided that the applicant has not been awarded a certificate for the addition of psychiatric beds pursuant to this provision in the previous two-year period;

3. The relocation of psychiatric beds to an existing medical care facility described in § 32.1-102.1:3 A 2 of the Code of Virginia that has had an existing certificate to introduce a psychiatric service for at least the previous 12 months pursuant to § 32.1-102.1:3 B 5 of the Code of Virginia and that is within the same planning district; and

4. Any capital expenditure of $15 million or more, not defined as reviewable in § 32.1-102.1:3 B 1 through B 7 of the Code of Virginia, by or on behalf of a medical care facility described in subsection A of this section other than a general hospital.

12VAC5-220-285. 90-day review cycle.

The department shall review completed applications that qualify for expedited review pursuant to 12VAC5-220-280 in accordance with the 90-day scheduled expedited review cycles in the table in this section.

12VAC5-220-290. Application forms.

A. Obtaining application forms. Application forms for an expedited review shall be available from the department upon the request of the applicant. The department shall transmit application forms to the applicant within seven days of receipt of such request.

B. Application fees. The department shall collect application fees for applications that request a certificate of public need under the expedited review process. No application will be reviewed until the required application fee is paid as provided in 12VAC5-220-180 B.

C. Filing application forms. All requests for a certificate of public need in accordance with the expedited review process shall be reviewed by the department and the regional health planning agency which shall each forward a recommendation to the commissioner within 40 60 days from the date the submitted application has been deemed complete. No application for expedited review shall be reviewed until the application form has been received by the department and the appropriate regional health planning agency, has been deemed complete, and the application fee has been paid to the department. The expedited review period shall begin on the first day of the applicable review cycle within which an application is determined to be complete, in accordance with scheduled batch review cycles described in 12VAC5-220-285. If the application is not determined to be complete for the applicable batch cycle within 60 calendar days from the date of submission, the application may be refiled in the next applicable batch cycle.

12VAC5-220-300. Participation by other persons.

Any person directly affected by the review of a project under the expedited review process may submit written opinions, data and other information to the appropriate regional health planning agency and to the commissioner prior to their final action. Any member of the public may request a public hearing for an expedited application.

12VAC5-220-310. Action on application.

A. Decisions to approve any project under the expedited review process shall be rendered by the commissioner within 45 90 days of the receipt of such completed request. The commissioner shall approve and issue a certificate for any project which that is determined to meet the criteria for expedited review set forth in 12VAC5-220-280.

B. If the commissioner determines that a project does not meet the criteria for an expedited review set forth in 12VAC5-220-280, the applicant will be notified in writing of such determination within 45 90 days of the receipt of such request. In such cases, the department will forward the appropriate forms to the project applicant for use in filing an application for review of a project in the appropriate review cycle in accordance with Part V of this chapter.

C. Any project which that does not qualify for an expedited review in accordance with 12VAC5-220-280, as determined by the commissioner, shall be exempted from the requirements of 12VAC5-220-180 A and B when such project is filed for consideration in accordance with Part V of this chapter.