News: CJ Exclusives

Certificate-Of-Need Reforms Face Tough Test In NCGA

Bipartisan measure touted as benefit to taxpayers and health-care consumers

Removing outdated legal barriers to consumer health care choices could help corral rising Medicaid costs in North Carolina, reform advocates say.

“With the special interests that consistently lobby to keep these laws in place, the certificate of need laws in North Carolina are approaching a state and regulatory capture, which is very dangerous,” said Donald Bryson, North Carolina state director of Americans for Prosperity.

“Legislators as well the general public should view CON reform as an integral supplement to Medicaid reform,” Bryson said. “We can’t continue to have $300 million and $400 million cost overruns. We have to find a way at the macro level to control health care costs overall” to tamp down Medicaid costs borne by taxpayers.

Bryson was among those speaking at a Wednesday press conference in favor of House Bill 200 hosted by Reps. Marilyn Avila, R-Wake, Mickey Michaux, D-Durham, and Jeff Collins, R-Nash. The bill’s other co-sponsor, Rep. Dan Bishop, R-Mecklenburg, was unable to attend.

Avila, the primary sponsor, acknowledged the controversial nature of the legislation, which would begin to strip away protections granted to hospitals allowing them to charge significantly higher prices than costs at smaller doctor-led clinics, proponents of the measure say.

“At times it may get uncomfortable, and we’re going to make enemies as well as friends,” Avila said.

“Unfortunately, some people are just going to have to swallow what may be a bitter pill and take the next step” to usher in lower-cost, high-quality health care with greater accessibility, and more robust consumer choice, Avila said.

The legislation would exempt diagnostic centers, ambulatory surgical facilities, gastrointestinal endoscopy rooms, and psychiatric hospitals from certificate-of-need review. A CON is basically a permission slip a provider must receive from the state in a regulatory approval process that is dominated by hospitals that currently provide the services.

Relaxing certificate-of-need laws “actually doesn’t make or break a hospital system,” Avila said. Since the federal government abolished its mandate on states to have a CON system in 1987, 24 states have exempted ambulatory surgery centers from their CON laws.

“We want to bring down the cost of medical care and health care in the state, and the way to do it is to put it on a competitive basis. CONs simply just knock out that competitive basis,” Michaux said. North Carolina has the fourth-most restrictive laws in the nation, according to a recent study.

Some areas of the state don’t have a nearby hospital, he said, and the restrictive CON laws prevent ambulatory surgery centers from opening, forcing residents to drive long distances for care.

Michaux said he has been trying to peel back the CON process for 15 years, “and I know I’m going to get a lot of flak from the big hospital [Duke] I’ve got in my district. But I think eventually they’ll come around to seeing how things are, and that it will work.”

Cody Hand, a spokesman for the North Carolina Hospital Association, said the bill is dead on arrival in the association’s mind. He said the association sees nothing in the bill as even a starting point for discussion.

“We oppose the bill primarily because it would destabilize the market we’re trying to stabilize right now with Medicaid, and Medicare, and all of our uninsured patients,” Hand said.

“The bill has some provisions in it that would require charity care attempts by the ASCs [ambulatory surgery centers], but there’s nothing that makes them do it. We’re forced to do it,” Hand said. “It doesn’t level the playing field, and it will cause rural hospitals and rural health care to limit access.”

Avila said the bill requires facilities exempted from the CON law to commit a minimum of 7 percent of their revenues to charity care. On average, hospital charity care is 3.9 percent of revenues, she said. No ambulatory surgery center could open in a county with fewer than 100,000 residents without consent of the local hospital, she said.

Hand said the hospital association also is concerned about high medical costs. But hospitals, unlike small same-day surgery centers operated by doctors, must be prepared for all manner of events — from the recent fatal train crash in Halifax County to Ebola epidemics — that ambulatory surgery centers are not tasked with.

If less-costly centers lure away insured and self-pay patients, costs will rise for patients who stay in hospitals, he said.

North Carolina Medical Society spokesman Shawn Scott said the society “has not taken a position on H.B. 200.”

Kevin Howell, a spokesman at the state Department of Health and Human Services, said regulators at the agency’s Division of Health Service Regulation enforce the state’s current CON laws, “and we will monitor for any regulatory changes that may be enacted during the legislative session.”

Prospects for the bill remain uncertain. A similar, less expansive, version failed to get out of committee in the last session.

Collins noted that H.B. 200 was referred Wednesday to three House committees: Health, the Judiciary and Appropriations. Referring a bill to multiple committees often is viewed as a sign legislative leaders are trying to block its passage.

Collins said H.B. 200 has the dubious distinction of the most committee referrals of any bill this session, but three is “certainly not a record.”

He and Avila took a more optimistic view, saying three committee hearings would give ample time for close scrutiny of a complex subject, public comment, and ironing out issues with input from all interested parties.

Alex Johnson of Generation Opportunity, an advocacy organization for millennials, the last generation born in the 20th century, said cost reductions that would result from easing CON regulations would help those of that age in light of recent “federal laws,” referring to Obamacare.

“Due to some federal laws that have been passed regarding our health care system, millennials are now paying the brunt of health insurance costs,” Johnson said. “Our premiums have skyrocketed throughout the country, especially here in North Carolina.”

Noting that the unemployment rate for North Carolina millennials is 14 percent, Johnson mentioned the difficulty they face purchasing health insurance.

“On a statewide basis there are real world consequences involved by maintaining the status quo,” said Matt Appenzeller, an ophthalmologist with Alamance Eye Center. He cited one patient who suffered intense financial strain for eye surgery performed at a hospital outside her county to which she did not have transportation.

CON laws prevented him from performing the surgery at a lower cost in his office.

“Right now our ophthalmologists in the Wilmington area have limited access to hospital-based operating rooms, and the request for additional block time or operating room time for established surgeons and new surgeons goes unanswered or even denied,” said Kathy Erickson, practice manager of Eye Associates of Wilmington.

Their surgeon has to book hospital surgeries as much as three months out, and cataract patients may have to have surgery on one eye at a time, waiting four to six weeks to get surgery on the other eye. If the surgeon were able to operate at their clinic, wait times would be greatly reduced, Erickson said.

“I haven’t seen any data that makes that accurate,” Hand said. Operating rooms have capacity to handle current demand, and “I just don’t see that the patients are waiting.”

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.