News: CJ Exclusives

Certificate of need may get overhaul from Raleigh or D.C.

State Senate will push for repeal and Trump administration could bundle CON reform as part of health-care package

Former state Rep. Marilyn Avila (CJ file photo)
Former state Rep. Marilyn Avila (CJ file photo)

The push to reform North Carolina’s certificate-of-need laws that limit entry into the state’s health care market will continue in the upcoming session, state senators say. An academic researcher also says it’s possible that President-elect Trump’s administration might seek to dissolve the state regulations.

Because the incoming administration wants to reform health care, and “does not look kindly on the current regulatory environment, it wouldn’t surprise me if certificate of need does in fact become a part of all of that,” said Chris Koopman, a research fellow at George Mason University’s Mercatus Center who has studied and written about CON programs.

Certificate-of-need statutes restrict the opening of standalone clinics, expansion of existing facilities, the purchase of big-ticket health care equipment, and the types of services that can be provided unless state permission is granted through a lengthy and expensive process.

The Federal Trade Commission and U.S. Department of Justice “have already weighed in on certificate of need” in the past two administrations, Koopman said. Their position is that CON “is a problem, not a solution” to achieve a vigorous and efficient health care market.

“It wouldn’t surprise me that that tone and that perspective would continue into the new administration,” he said.

The Trump administration could unravel those state-level programs by leveraging the same type of funding mechanism mandate the federal government originally used to create them.

“An administration could say, ‘If you want to continue to receive this funding you have to reform these laws,’ or they could condition certain programs on state-level regulatory reforms,” Koopman said.

“Now I’m not saying that’s good policy. I’m not saying that’s something they should do. I’m just saying that’s something that could be done,” he said.

“That would be a test for some people” who believe the federal government should not withhold federal funds as a pressure point to implement a federal mandate, Koopman said. “For people who agree with these ends, are they willing to accept the means?”

Sen. Ralph Hise, R-Mitchell, co-chairman of the Senate Health Care and the Appropriations on Health and Human Services committees, plans to forge ahead with a state-based solution in the upcoming legislative session.

“I’m confident that the CON repeal will be introduced” Hise said. “I think it’s wise that that be a later-in-session bill than kind of a first-out because I think we’ve got a lot of work to do in the education of the issue before we get to the point of writing it.”

Hise intends to continue working with Senate members and others on legislation he introduced in the last session to abolish the state’s certificate-of-need laws. His bill died at the end of the session.

North Carolina has CON restrictions on 25 devices, services, and facilities, the fourth-highest number in the nation.

Hise will renew his legislative thrust to abolish the CON program at a date several years in the future. That would allow sufficient time for providers to avoid being stuck with outlays they had made to navigate current CON regulations that would become obsolete, among other so-called stranded costs.

“I think we all realize that you can’t have true health care reform without some way of allowing competition to get into the mix. Certificate of need really frustrates competition to my way of thinking,” said Sen. Louis Pate, R-Wayne, a fellow co-chairman of the Senate Health Care and the Appropriations on Health and Human Services committees.

He said the Senate would study the issue carefully in coming months.

“I’m not sure we’re going to take any big, bold action, but I think we’re going to look and see what the various layers are, and maybe see what can be done, what needs to be studied,” Pate said. “I don’t think we’re ready to file a bill or anything like that” at the outset of the upcoming session.

Shepherding a bill through the General Assembly might be more difficult because the House is likely to lose its biggest advocate for CON reform.

State Rep. Marilyn Avila, R-Wake, chairwoman of the House Appropriations, Health and Human Services Committee, and vice chairwoman of the House Health Committee, lost her re-election bid to Democratic challenger Joe John by 390 votes.

“Since I’m under the 1 percent [vote total separating candidates], I’m going to do a request for a recount” as permitted by election law, Avila said. She has notified the Wake County Board of Elections of her intent. The county is scheduled to conduct its canvass of vote totals on Nov. 30.

“I don’t have any significant instances that I could point to for a legitimate challenge or protest,” Avila said. “I’m hoping I’ll get some information afterwards, which won’t do me any good in my seat, but it will make me a nuisance when it comes to Voter ID reform. But that’s down the road.”

Avila said if she does not prevail on the recount, and does not return to the House, “I think there’s going to be some people to step into that” role she has provided as the point person in the chamber on CON reform. “It’s not a dead issue.”

She also sees the potential for a national helping hand, noting that magazine publisher and former Republican presidential candidate Steve Forbes has discussed higher health care costs driven by CON laws.

“We’ve seen a lot of changes in the House as a whole, and yes, Rep. Avila was a good champion of CON reform,” Hise said.

“There’s a lot of new members in the House that we’re going to have to educate early on about the importance of reforming CON,” a role that Avila would normally provide, and then find 61 representatives willing to vote for it, Hise said.