Weigh­ing CON laws against push for greater price trans­parency

Modern Healthcare - - NEWS - By Maria Castel­lucci

“Our con­cern when CON was re­moved was to main­tain safety and qual­ity pro­tec­tions.” Steve Ah­nen Pres­i­dent of the New Hamp­shire Hospi­tal As­so­ci­a­tion

When New Hamp­shire last year be­came the first state in more than 15 years to elim­i­nate its cer­tifi­cate-of-need laws, hos­pi­tals wor­ried it would spur other leg­is­la­tures to do the same, ul­ti­mately af­fect­ing com­pe­ti­tion and rev­enue.

State CON laws reg­u­late new health­care fa­cil­i­ties and ser­vices and re­quire new providers to make a case for their en­try into the mar­ket. Many, in­clud­ing the U.S. Jus­tice De­part­ment and the Federal Trade Com­mis­sion, which last week urged Alaska to drop CON, be­lieve the laws limit con­sumer choice and give in­cum­bent hos­pi­tals a leg up on the com­pe­ti­tion.

“Our con­cern when CON was re­moved was to main­tain safety and qual­ity pro­tec­tions,” said Steve Ah­nen, pres­i­dent of the New Hamp­shire Hospi­tal As­so­ci­a­tion. The other con­cern was that new providers could more eas­ily siphon away pri­vately in­sured pa­tients, leav­ing hos­pi­tals with a higher ra­tio of unin­sured, Medi­care and Med­i­caid pa­tients.

This year, Florida and West Vir­ginia have in­tro­duced bills that would roll back CON laws, po­ten­tially join­ing 15 oth­ers that have dumped the laws. But hos­pi­tals have lob­bied hard for new reg­u­la­tions through price trans­parency—which some econ­o­mists say works bet­ter than CON laws.

The New Hamp­shire Gen­eral As­sem­bly now re­quires new spe­cialty prac­tices to sub­mit an ar­ray of per­for­mance, op­er­a­tions and vol­ume data, as well as obtain li­censes for cer­tain pro­ce­dures. The law also re­quires newly con­structed inpa- tient fa­cil­i­ties to main­tain ERs to give the unin­sured ac­cess to care.

The new pro­vi­sions should re­sult in higher qual­ity of care, while also lev­el­ing the play­ing field for the in­cum­bent hos­pi­tals, Ah­nen said. The New Hamp­shire Hospi­tal As­so­ci­a­tion worked closely with law­mak­ers on the new law.

Penn­syl­va­nia cre­ated a sim­i­lar reg­u­la­tory scheme for its provider com­mu­nity, forc­ing light on a sec­tor that of­ten tries to keep prices in the dark.

When Penn­syl­va­nia did away with its CON laws in 1996, they made sure trans­parency re­mained in­tact, said Paula Bus­sard, chief strat­egy of­fi­cer of the Hospi­tal and Health­sys­tem As­so­ci­a­tion of Penn­syl­va­nia.

The state’s in­de­pen­dent Health Care Cost Con­tain­ment Coun­cil col­lects, an­a­lyzes and re­leases data on spend­ing and qual­ity out­comes at health­care or­ga­ni­za­tions. The hospi­tal as­so­ci­a­tion last year also launched Care PA, an on­line data­base where Penn­syl­va­nia pa­tients can look up in­for­ma­tion on cost and qual­ity of health­care ser­vices as well as per­for­mance data on providers and nurs­ing homes.

Still, the push to re­store CON laws in the state isn’t dead. Three bills propos­ing a re­turn of CON laws have been floated—the most re­cent ef­fort in 2015. The laws never made it out of com­mit­tee.

In an at­tempt to de­fend cur­rent reg­u­la­tions, the state hospi­tal as­so­ci­a­tion touted the ben­e­fits of re­mov­ing CON laws. Over­all, read­mis­sions to Penn­syl­va­nia hos­pi­tals have de­clined by 26% since the leg­is­la­tion sun­set­ted in 1996. The num­ber of li­censed acute­care hos­pi­tals has also de­clined from 182 in 2000 to 156 this year. Most states aren’t look­ing to re­place CON laws even though pol­icy ex­perts say trans­parency pro­motes com­pe­ti­tion more than other reg­u­la­tion. They do cau­tion that spe­cial, some­times costly, li­censes for cer­tain ser­vice lines such as open-heart surgery and or­gan trans­plant, can sti­fle mar­ket forces.

Matt Mitchell, a se­nior re­search fel­low at the lib­er­tar­ian Mer­ca­tus Cen­ter at Ge­orge Ma­son Univer­sity, said these li­censes “are just CON in all but name.” The group last year put out a study that found CON laws lead to more read­mis­sions. He ar­gues that li­censes reg­u­lat­ing equip­ment, em­ploy­ees and train­ing slow growth of new ser­vices.

“I don’t think there is much of an eco­nomic or pub­lic in­ter­est case for (spe­cial li­censes). The best that can be said is that they might be less-re­stric­tive than CON and so they might there­fore be a step in the right di­rec­tion,” Mitchell added.

On the other hand, Michael Rosko, a pro­fes­sor at Wi­dener Univer­sity who has stud­ied CON laws, said that when in­for­ma­tion on prices and qual­ity is read­ily avail­able to con­sumers, health­care or­ga­ni­za­tions are mo­ti­vated to com­pete. Pa­tients with high-de­ductible health plans, which have be­come in­creas­ingly com­mon, may use cost data to de­cide where they want to re­ceive care, he said. This could mo­ti­vate providers to keep costs down.

Such trans­parency ef­forts by the states “di­min­ish the need for CON,” Rosko said.

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