The North Carolina General Assembly’s historic 2011 session included sweeping reforms to curtail the regulatory authority of all state agencies, including the Division of Health Service Regulation and its Licensure and Certificate of Need Sections, the Division of Medical Assistance, and other agencies directly affecting the operation of long-term care providers in our state. Among the most important legislative changes impacting agencies’ regulatory powers is the new rulemaking framework that takes effect October 1, 2011.

A common thread interwoven throughout the new rulemaking laws is a heightened focus on economic impact. One of the key changes is a requirement that prohibits agencies from adopting a new rule that will have an aggregate financial impact of $500,000 or more in a 12- month period, unless the rule is required to respond to: (a) a serious and unforeseen threat to public health, safety or welfare; (b) an act of the General Assembly or U.S. Congress that specifically requires the agency to adopt rules; (c) a change in federal or state budgetary policy; (d) a federal regulation; or (e) a court order. Given the relatively low economic impact threshold that will trigger these rule-making constraints, these limitations will likely apply to the majority of new rules of any substance. The new $500,000 significant economic impact floor is a substantial reduction of the $3 million level that existed under the prior law.