News: CJ Exclusives

Modest certificate-of-need reforms may get Senate vote

A years-long push to expand competition in the health-care industry passed the Senate Health Committee Monday and soon may reach the Senate floor.

Under current certificate-of-need laws, hospitals and medical providers must apply to the state planning board before they can build or expand facilities. North Carolina’s CON laws impose the nation’s fifth-toughest restrictions on health providers, a report from the Mercatus Center at George Mason University says.

The advocates of full repeal vilify CON laws for protecting monopolies and crushing competition. They say CON laws place providers’ ability to serve patients in the hands of state regulators. Others backing incremental repeal blame CON laws for driving up paperwork and costs while reducing access to health care, especially in poor or rural areas.

“If you look at the statistics and the studies, nobody would be in favor of CON. The outcomes in states that have CON are worse: they have fewer rural hospitals, there is less access to hospice care, health outcomes are worse, health costs are higher — I could go on and on,” said Sen. Joyce Krawiec, R-Forsyth. “It’s time we started looking at reform and moving forward.”

If House Bill 126 becomes law, it would loosen restrictions on buying medical equipment, and CON laws would be lifted from kidney disease treatment facilities, psychiatric care and chemical dependency facilities, and certain continuing care facilities, among others. Ambulatory surgery centers — outpatient facilities that charge less for services than do hospital outpatient departments — would be free to expand into multi-specialty services.

Facilities could spend up to $2 million on a piece of equipment before applying for CON permission — a jump of more than $1.2 million dollars from previous monetary thresholds. The bill also contains a provision to adjust the cost threshold with inflation beginning in 2022, as well as new time limits.

“We are the fourth-most regulated state on CON,” said Krawiec in the earlier committee meeting. “Those adjustments have not been made since 1993. This is just medical inflation that we are increasing the thresholds.” 

The District of Columbia ranks third-highest in CON regulations, so North Carolina’s regulations are the fourth-highest among states.

But defenders of CON laws argue CON requirements protect economically fragile providers, prevent unnecessary spending on facilities, and subsidize health care for the poor. Providers looking to receive a certificate of need often trade increased services for the poor for certificates under CON law’s “charity care” requirements.

The bill still faced opposition from the kidney dialysis providers. 

“[If CON passes] you’ll see the dialysis stations go where the money is,” said lobbyist John Bode, who represented Wake Forest Baptist Medical Center. “They will leave the rural poor. … They will leave those areas to continue to suffer. Those people will suffer because they are poor.”

Backers of reform say CON repeal would allow patients to do dialysis at home or in hospitals. H.B. 126 would allow this process to take place in the five N.C. counties with at least 300,000 residents and keep CON rules in place elsewhere.

“They ought to be doing dialysis in hospitals. This will help rural hospitals keep people there instead of transporting them,” said Sen. Jim Burgin, R-Harnett, who supports home-based dialysis treatments. “Can you imagine being transported from a hospital, having four hours of dialysis, and then being transported back? That in of itself is bad for your health.” 

CON laws are a child of the 1970s, when Congress used federal funding to encourage states to adopt CON regulations. Only Louisiana refused at the time.

But a decade later, the federal government had repealed the CON mandate and 12 states removed the requirements. Now, both the Federal Trade Commission and the Department of Justice have called for their repeal.

“We’re going to have to reform them. I’ll try to be political here and not overstep my bounds, but what we have become is a country of monopolies,” Rep. Wayne Sasser, R-Stanley, said. “Our electricity, our banking system, our telephones, our health care — the system of competing and having fair prices just doesn’t exist anymore. If you’re the only game in town, you charge what you want to.”

Originally a bill regarding tissue donations, H.B. 126 transformed into a push to reform CON when it hit the Senate committee. The version the committee debated Monday was a “vanilla” version of an earlier reform that jettisoned CON laws from ambulatory surgery centers.

“CON reform has been on the agenda since Republicans became the majority in 2010. Every session, a bill is filed, and it doesn’t go anywhere. This is the first time where we’ve really had an opportunity and taken votes,” Krawiec said. “It dies, and I keep bringing it back. We’re going to get CON reform this session.”