State Licensure Overview

To participate in the Federal ASC program and receive facility fees from governmental payers, the ASC must meet Medicare criteria and approval, known as Certification. This Certification is also mandatory in order to contract with “other” payers for facility fees.

A pre-requisite to Medicare Certification is compliance with State Licensure Law. Although Medicare governs the ASC program, each state Department of Health is their own authority having jurisdiction over the program. Forty-three states require a state licensure for ASC’s. These states specify the criteria that ASC’s must meet for licensure prior to Certification.

The process of Licensure includes surveys and approval by the state department of health. In return for making increased payments to ASCs, federal and state governments have specific requirements for the physical environment as well as a whole host of rules and regulations covering procedures performed, staffing and administrative function.

State Licensure Tasks

Realizing that an ASC is one the most highly regulated health care entities with many regulations to meet, it is most efficient to create a detailed list of tasks for your team to work on together. Additional tasks for state licensure may also be required beyond the tasks listed here.

  • Research and determination of individual State requirements CON filing or exemption?
  • Legal issues- stark, anti kick-back?
  • Design and construction plans
  • Name of Facility/Tax ID number
  • Articles of Incorporation or operating agreement
  • Shareholders agreement
  • Determine Governing Body and
  • Organizational Chart
  • By-Laws
  • Medical Staff Rules and Regulations
  • Loan and Line of Credit
  • Billing Service or in-house
  • Staff Recruitment
  • Proposals on equipment and supplies
  • State License application, Medicare applications and AAAHC applications filed minimum of 90 days prior to construction finish out
  • Begin requesting all other payor applications

Certificate of Need

Some states require a Certificate of Need (commonly referred to as CON, Certificate of Public Need (COPN) or Determination of Need (DON) but certainly not all, or even a majority to establish a new ASC.

CON is state regulatory program intended to balance cost, quality, and access issues and ensure that only needed services and facilities are developed as needed. It may be possible to obtain an exemption in some states for single specialty ASC’s or for just one operating room or for wholly physician owned ASC’s. The process of CON or an exemption varies per state such as:


  • A petition may be filed in some states for exemption
  • Some states have a number of rooms exemption – such as one operating room facilities
  • Some states have a cost of the project threshold for exemption
Certificate Of Need Laws States

Map of US states that have Certificate-Of-Need Laws.

By PiMaster3 – Own work, CC BY-SA 4.0 

State Licensure Phase 2 Tasks

  • Develop detailed policies and procedures to comply with Medicare Conditions for Coverage.
  • State Provisions for Licensure (Note: many State Departments of Health publish their provisions for ASC Licensure on their website).
  • Perform Credentialing with primary verification source for all Clinical Staff through The National Practitioners Data Bank and the American Medical Association.
  • Stocking and Storage of equipment and supplies is next, all equipment must be inspected, tagged and an in-service documented.