OLR Research Report

November 26, 2007




By: Robin K. Cohen, Principal Analyst

You asked for background information on the state's nursing home bed certificate of need (CON) moratorium and its impact on (1) the availability of nursing home beds in the state and (2) long-term care expenditures.

This is the first of two reports. It provides a legislative history of the moratorium. The next report will address the number of nursing home beds in the state before and after the moratorium was imposed, as well as the shift to more skilled beds and noninstitutional alternatives.


The legislature enacted the nursing home bed CON moratorium in 1991 in response to a task force study of state long-term care spending. The task force believed that the proliferation of beds was adding to the state's Medicaid budget, of which nursing home spending continually constituted the greatest share. Although it has extended the moratorium every year that it was scheduled to end, the legislature has also amended the moratorium law to allow some homes to add beds, perhaps slowing the rate of the desired bed decline.


Study of CON, Licensure and Certification, and Reimbursement of Long Term Care Facilities

In 1990, the legislature created a task force to undertake a comprehensive review of the factors that affect long-term care expenditures. A private contractor, Peat Marwick, examined three regulatory areas, including the CON process, to determine their impact.

In its review, the task force found that the process for granting CONs could potentially lead to the unnecessary construction of new beds, which in turn led to greater Medicaid outlays (the task force concluded that the Medicaid payment system reimburses facilities based on the costs approved during the CON process.) For example, in 1990, the Commission on Hospitals and Health Care (CHHC) (predecessor to the Office of Health Care Access) used the town as the geographic unit for which nursing home bed needs were determined instead of looking at regional need.

The task force ultimately recommended imposing a moratorium on nursing home bed expansion and suggested different options for achieving it.

PA 91-8, JSS. In 1991, the legislature adopted many of the task force's CON recommendations. PA 91-8, JSS, prohibited the Commission on Hospitals and Health Care (CHHC) from approving requests for additional nursing home beds or modifying the capital costs or expiration dates of existing CONs, between September 4, 1991 and June 30, 1993 (except applications deemed complete as of August 9, 1991). The act established a few exemptions:

1. beds restricted to use by AIDS or traumatic brain injury patients,

2. beds associated with a continuing care retirement community (CCRC), and

3. one-time CON requests for 10 additional beds each costing no more than $30,000.

The act further provided that any CON granted on or before July 1, 1991 expired one year from the date CHHC gave its approval, unless (1) construction had begun, (2) zoning and financing approvals were obtained (this provision was partly a result of the task force finding that 4,000 beds for which CONs had been approved had not been built, presumably due to difficulties obtaining zoning or financing approvals), or (3) the CON's expiration date had been modified. No CON could be extended beyond June 30, 1992.


The 1992 General Assembly extended the moratorium for another year (through June 30, 1994) and further streamlined the CON process. For example, it set deadlines for construction starts and licensing for nursing home projects under existing CONs. It prohibited the CHHC from accepting, as well as approving, CONs during the moratorium. Previously, CHHC had to accept all CON applications and review them for completeness to determine whether a project would be approved. And the act defined a CCRC for purposes of the moratorium provision.

The act further required CHHC to accept, with the possibility of approving, modifying, or denying, a joint request from CON owners for separate health care facilities to merge their separate CONs into one for a single facility, regardless of the moratorium. The request had to be for fewer beds and a lower total capital expenditure than the sum of the total number of beds and capital expenditures sought under the original CONs.

The act also defined (1) what it meant for construction to have begun on a facility and (2) when a facility had received construction financing (PA 92-220).


The 2003 legislature addressed owners of approved, expiring CONs and allowed certain homes, on a one-time basis, to increase their licensed bed capacity without going through the CON process.

PA 93-406 provided that all CONs for new beds that had not yet been constructed expired on June 9, 1993. It exempted beds (1) for which the Connecticut Health and Education Facilities Authority (CHEFA, the state's financing entity for institutional facility construction) had completed applications by February 28, 1993, (2) for AIDS or TBI patients only, (3) associated with CCRCs, (4) authorized under a five-bed CON in facilities that had undertaken 10-bed additions (per PA 91-8, JSS), and (5) for which 25% of projects' costs were spent before June 9, 1993.

The act allowed CON owners to request re-authorizations if they could demonstrate need and at least 20% of the project costs were spent by June 9, 1993.

The act allowed owners of expired CONs to apply to the Department of Income Maintenance for compensation, within a certain amount of time and only for losses they could verify. It also allowed nursing homes participating in both Medicare and Medicaid to add up to 10 beds costing no more than $30,000 each on a one-time basis without CHHC approval.

(In 1993, the departments of Income Maintenance and Human Resources were merged into a new, Department of Social Services (DSS). At this time DSS replaced CHHC as the CON-granting authority for nursing homes and certain other health care facilities (PAs 93-262 & 93-435).


In 1994, the legislature extended the moratorium for three years (to June 30, 1997). But it also extended by one year (until October 1, 1995) the deadline for homes with CONS in effect on August 1, 1991 to get the beds licensed.

The act also required DSS, beginning July 1, 1997, to give priority to CON modification requests coming from CCRCs, but it prohibited CCRCs from participating in the Medicaid program for purposes of the nursing home CON law (PA 94-236).

The same act extended the deadlines by which CCRCs owners had to (1) notify CHHC of their intention to use the beds and (2) demonstrate to DSS that they had met the CCRC law's financial requirements (e.g., disclosures, contingency funds) in order for CONs for additional beds not to expire.


The legislature again extended the moratorium in 1995, from June 30, 1997 to June 30, 2002. But it exempted Medicaid-certified beds to be relocated from one licensed home to another or to a proposed nursing home (PA 95-194). (A subsequent 1995 act removed the exception for beds relocated to proposed homes (PA 95-351). This would help homes that were closing recoup some of their losses by essentially allowing them to sell some of their beds (as long as DSS said they were still needed in the system).

Re-located beds would be exempted from the moratorium only if (1) the availability of beds in “an area of need” would not be adversely affected, (2) the relocation would not increase state spending (3) the relocation would decrease the number of nursing home beds in the state, and (4) there was a demonstrated bed need both in the town where the new beds would be located and towns within a 20-mile radius of it.

The Legislative Program Review and Investigation Committee, in its 2001 study of nursing home rate setting, suggested that this provision resulted in the state being slower than other states to eliminate beds, hence keeping Medicaid costs higher. It found that this change resulted in a transfer of 814 beds and a reduction of 312, with another 1,042 beds remaining available for transfer or closure (DSS' response indicated that 220 of those beds would be reduced, with the other 812 available for transfer) (LPRI, Nursing Home Medicaid Rate Setting System, 2001).

The act also made it easier for CCRCs with Medicaid-certified nursing home beds to get CONs. Specifically, it deemed facilities as CCRCs, for purposes of the moratorium exemption, if they (1) were Medicaid certified before October 1, 1993 and (2) had been deemed qualified to enter into a continuing care contract for at least two consecutive years before filing their CON application. But this could only occur if (1) any additional beds approved would not be Medicaid-certified (2) the CCRC did not involuntarily transfer from one bed to another a resident living in one of the additional beds due to that resident being eligible for Medicaid and (3) the CCRC would pay the cost of care for such residents if they did not wish to be transferred to another (presumably Medicaid-certified) bed.

The act also required DSS to project bed need at no more than five years into the future at 97% occupancy, using the latest population projections (PA 95-160).


Although it did not directly alter the moratorium, which it had already extended through June 30, 2002, the 1998 legislature passed a law allowing a CCRC to add nursing home beds in certain circumstances, if it was registered with DSS before September 1, 1991. For example, it could add beds if it agreed to no longer admit nonresidents (of the CCRC) into any of its nursing home beds, except for residents' spouses.(According to DSS, this law was tailored to a specific CCRC that felt that the general CON law, with its CCRC exemption and Medicaid bar, would not permit these additional beds.)

The same act allowed the DSS commissioner to approve the relocation of Medicaid-certified beds from licensed nursing homes to CCRCs and allowed the Medicaid certification to continue, with some limitations. For example, the transferee CCRC had to be under the same ownership as, or be a subsidiary of, the home making the transfer (PA 98-250).


The 2001 legislature extended the moratorium to June 30, 2007. It also allowed nursing homes to change the skill level of existing beds and tightened the criteria DSS had to use when determining bed need (PA 01-2, JSS).

Conversions of Beds. Although PA 01-2, JSS extended the CON moratorium, it permitted nursing homes to convert rest home with nursing home supervision (RHNS) beds (for residents requiring less skilled nursing) to chronic and convalescent nursing home (CCNH) beds (those requiring a higher level of skilled nursing services) provided the beds were under common ownership and in the same or immediately adjacent buildings. These conversions could not raise the state's cost more than 12% of the amount it previously paid to the home for both care levels. Conversions of RHNS beds in freestanding facilities, RHNS beds transferred to another licensed and certified home, and conversions for which homes had applied for CONs before May 2, 2001 were not subject to this limitation.

Determining Need. Under prior law, the DSS commissioner, when determining whether there was a need to relocate beds, had to look at demonstrated need in the towns within a 20 mile radius of the town where the new beds would be located. The act instead provided that when the commissioner was determining whether there was “a clear public need to relocate beds,” he or she had to consider need within a 15 mile radius.

The act also changed how DSS looked at occupancy rates when making these determinations. It required bed need to be based on the recent occupancy rate of area nursing facilities as well as projected bed need using the latest official population projections, by town and age, and the latest available Department of Public Health utilization statistics by age cohort. By law, bed need had to be projected using a 97.5% occupancy rate. The act also required utilization statistics to be statewide but allowed DSS also to consider area-specific utilization and reductions in utilization rates when accounting for the increased use of noninstitutional care.


A 2002 law established another exception to the moratorium by permitting DSS to approve a licensed nursing home's request for up to 20 beds for providing lifetime nursing home services. The applicant (1) could not participate in Medicare or Medicaid, (2) had to admit residents and provide health care without regard to their finances, and (3) demonstrate to DSS's satisfaction that it was able to provide the lifetime of services without Medicaid participation (PA 02-135). (DSS indicated that this law was tailored for one particular facility.)

The same act established notification requirements for nursing homes and other health care facilities (i.e., residential care homes and intermediate care facilities for the mentally retarded) undertaking certain activities requiring DSS CONs. For example, it required facilities to concurrently notify the Office of the Long Term Care Ombudsman when filing “requests for permission” (CON application) with DSS. It also required facilities submitting CON letters of intent to terminate services or decrease bed capacity to notify their residents and legally responsible parties (PA 02-135).


A 2005 act allowed DSS to grant CONs for requests for up to 20 beds associated with freestanding hospice facilities for the terminally ill. These facilities had to be operated by organizations that DPH had previously authorized to provide hospice services (PA 05-280).


In the 2007 regular session, the legislature extended the moratorium for another five years (until June 30, 2012). The same act builds on the 2002 law by requiring the DSS commissioner to hold a public hearing at any facilities for which DSS has CON granting authority within 30 days after the facility submits a letter of intent or applies for a CON, whichever happens first, to close the facility or substantially decrease bed capacity. Previously, hearings were held at the commissioner's discretion and there were no deadlines for holding them (PA 07-209).