Details on the proposed Medicaid expansion plan are coming into focus as lawmakers hash out when and how a bill on the matter might pass the legislature. Among the details being debated is the repeal of some Certificate of Need laws that regulate the healthcare industry. These regulations require providers to demonstrate community need for a medical service before requesting permission from the state to offer it. In this week’s Medicaid expansion fine print, the big promise of Certificate of Need reform delivers little.
Of the 27 laws governing N.C.’s healthcare access, just four are changed in the proposed expansion plan that would add more than 600,000 people to the entitlement program. Two of those four reforms would only apply to fewer than 25 of the state’s most populated counties, and three years from now.
N.C. is second-most CON-regulated state in the nation.
CON goes back to the 1970s. A federal mandate required states to adopt laws that required medical practices to show need for a service, using the argument that the laws would keep medical practices from failing if they financially overextend themselves with expensive equipment and facilities. Some states have abandoned the regulations since the mandate was repealed in the 1980s. However, among the 35 that have CON, N.C.’s 27 separate laws make it the second-most CON-regulated state in the nation.
Conservatives have been arguing for years that we should lift CON regulations and allow a free-market approach to open up access to care and bring down prices. However, powerful interest groups like the North Carolina Healthcare Association, representing hospitals, have resisted lifting CON laws. Among other arguments, there is concern that repeal could launch a new crop of private medical businesses, drawing too many privately insured patients away from hospitals and collapsing the financially fragile rural hospitals that depend on private insurance income.
CON repeal in Medicaid Expansion does not go far enough.
The deal in the works to expand Medicaid does contain some Certificate of Need repeal. Even if the four CON laws were completely repealed, North Carolina would move from the second-most strict CON laws to the fourth-most.
So far, the proposal eliminates Certificate of Need for behavioral health hospital beds and chemical dependency beds. For counties with more than 125,000 people, the deal also proposes lifting CON laws for purchases of Magnetic Resonance Imaging (MRIs) and opening ambulatory surgery centers. Those repeals would kick in three years from now, maybe more. Only 23 counties have more than 125,000 people, so 77 counties would only benefit from two of the four proposed CON repeals.
Dialysis patients left behind
Dialysis is among the many life-saving treatments left behind in the rush to get Medicaid expansion out the door. According to 2021 data from the American Kidney Fund, there are more than 26,000 North Carolinians living with end-stage renal disease, or kidney failure. More than 19,000 of them rely on dialysis to live. Nearly all of the state’s 189 dialysis centers are run by the two companies that provide this lifeline for so many.
Critics have rallied on this issue across the country for years as those two companies. DaVita, based in Denver; and Fresenius Medical Care, which is headquartered in Germany, create a “duopoly” that controls 80% of the dialysis business in the United States, including in North Carolina. By repealing CON for dialysis, more providers could open centers.
CON laws drive prices up
According to a study from The Mercatus Center at George Mason University, which examined outcomes analysis in Certificate of Need laws in different states, they found that the laws actually drive prices up. They also found that health outcomes fall in states with CON laws because patients have less access to medical facilities and were more likely to be denied a bed in the local hospital.
“Four times as many studies find that CON laws undermine quality than find that they enhance quality,” said the study author Matthew Mitchell of the Mercatus Center. “Compared with patients in non-CON states, patients in CON states experience higher mortality rates following heart attack, heart failure, and pneumonia.”
It’s not too late. CON reform is critical care for our healthcare system.
As lawmakers run Medicaid expansion through the legislature, they will have to go home and take those calls from existing and new Medicaid patients who cannot get the care they once did, or thought they now could. But it’s not too late.
“They can look to the experiences of Americans in non-CON states to see what is likely to happen,” said Mitchell. “These experiences, documented in dozens of careful studies, strongly suggest that patients in a state like North Carolina would gain greater access to higher-quality and lower-cost care if CON laws were to be eliminated.”
Other states have repealed archaic CON laws. It’s time North Carolina did too.