A high-profile legislative healthcare oversight committee entered Monday the first prominent give-and-take phase of its reform efforts.
The committee on Access to Healthcare and Medicaid Expansion spent its latest meeting discussing the state’s controversial certificate-of-need (CON) laws in perhaps the most comprehensive single presentation.
The previous sessions have been focused on addressing potential options for Medicaid expansion, which faces significant opposition from House Republicans. The committee is slated to meet again April 26 before taking a break for the 2022 short session.
The more comprehensive CON bills have not advanced out of committee in recent sessions.
State health regulators must issue a CON before a health care system or other medical provider can build a facility, buy equipment or offer a surgical procedure. It affects 28 health care sectors. The law took effect in 1978.
The primary goal of the laws is to prevent unnecessary duplication of services within a community or region as a means of controlling costs with service capacity.
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Dedicating a committee hearing to CON laws is the latest example of what co-chairwoman Sen. Joyce Krawiec, R-Forsyth, has called “exploring all avenues … Our plan will be to provide better access to health care and to improve the health of our residents in North Carolina.”
Krawiec has emerged over the past three years as a key health-care reform proponent in the GOP, which typically has not promoted Medicaid expansion. She has emphasized changing the state’s CON laws addressing major healthcare system’s infrastructure and equipment requests.
CON opponents claim that adding competition, particularly from for-profit groups, would lead to new services and facilities, including more acute-care hospitals, diagnostic centers and rehabilitation centers.
They say competition would force more providers to lower fees for high-risk procedures.
CON advocates, particularly the N.C. Healthcare Association, say ending or significantly diminishing the laws would allow for-profit groups to cherry-pick the most profitable medical procedures, while leaving not-for-profit systems with caring primarily for the sickest patients who may lack health insurance.
They also express concern that allowing for-profit systems into major metro areas would produce too much service capacity, particularly during a time with significant staffing shortages.
The limitations that result from the state’s CON program have helped fortify the revenue streams of not-for-profit health care systems, such as Atrium Health Wake Forest Baptist, Cone Health and Novant Health Inc.
Dawn Carter, senior partner with Ascendient Healthcare Advisors, provided the committee with an overview of CON laws and financial implications that received pushback from some Republican committee members.
“CON repeal arguments are often more about who provides imaging services,” Carter said.
“Ample evidence exists to show that physician-owned imaging centers tend to increase utilization, perhaps even unnecessary utilization, and thus drive up system costs — precisely the outcome that CON regulators work to prevent.”
Ascendient said the state regulators worked within CON law to have 13 new hospitals open statewide from 2010 to 2022. That includes Kernersville Medical Center in 2011 and Clemmons and Davie medical centers in 2013.
“Any analysis that treats CON status as a binary choice — and most do — is grossly oversimplified,” Carter said.
Among the 35 states with CON laws, Carter said there are “huge variations in services covered, enforcement, administrative policies and threshold levels.”
“CON laws correspond strongly with denser populations and more fluid commuting patterns.”
Carter said her group’s research found that states with similar CON laws to North Carolina have better resident access to health care, and have higher and more efficient patient occupancy rates.
Carter also stressed that the state’s CON laws supported “provider stability during this unprecedented time of uncertainty and transformation” of the COVID-19 pandemic.
Stressing the value of repealing the state’s CON law was Matt Mitchell, a senior research fellow at George Mason University’s Mercatus Center.
The university’s conservative-leaning reports that cite CON laws as inefficient and anti-competitive have been cited repeatedly by Republican legislative leaders as evidence of the need to reform or repeal the laws.
Mitchell’s presentation could be summed up with “spending per service is likely to go up … though total spending might be restrained through rationing … patients are likely to get less care and … quality of care usually suffers with less competition.”
Mitchell said that patients in CON states “travel longer for care, wait longer for care, are more likely to leave their states for care,” and that CON programs “have no statistically significant effect on charity care and exacerbate black-white disparities in the provision of care (those disparities disappear following repeal).”
Quid pro quo?
Some level of acceptance of CON law reform is likely the quid pro quo necessary to pass some level of Medicaid expansion, said John Dinan, a political science professor who is a national expert on state legislatures.
“The way that things are shaping up is that for Medicaid expansion … it would likely have to be coupled with passage of other health-policy changes that have long been Republican priorities, such as altering CON laws and making other changes,” Dinan said.
Cynthia Charles, NCHA’s vice president of communications and public relations, said the association “thinks it is very appropriate for the committee to be having this conversation.”
“The policy environment around the issue of access to healthcare can be thought of like an ecosystem … certificate of Need is an important part of the state’s policy ecosystem.”
Charles said there is “no one individual policy issue that is a silver bullet to making healthcare more accessible, affordable and equitable for all.”
Dinan said that “nobody is more important than the Senate president in determining what legislation will pass.”
“Sen. Phil Berger (R-Rockingham) has sent signals that although he has relented somewhat in his opposition to Medicaid expansion, the most likely route to passing expansion in his view is to couple it with other long-sought health-policy changes.”
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