Lawmakers weigh possible changes to certificate of need law

A new committee convened this week at the Capitol to discuss changes to the state’s law requiring medical facilities to seek state approval before offering new or expanded services.  

Health leaders said there is room to strengthen the law with reforms but cautioned against doing away with it entirely.

The law, which requires medical facilities to apply for a “certificate of need,” aims to lower costs and increase the accessibility and quality of health care in the state by avoiding duplication of services. 

Critics argue that the law stifles competition in the state’s already sparse health care ecosystem and does little to decrease costs. Advocates say it ensures that communities have access to a range of services, not just those that are profitable for providers. 

Nationwide, the laws have not accomplished much of what they were intended to, like increase quality or reduce costs, State Health Officer Dr. Daniel Edney told committee members on Monday. 

But the law has been “extremely” successful at preventing health care companies from choosing only to offer only the most profitable services to patients, he said. 

“When we’re looking at a very fragile health care framework, especially in rural areas of the state, cherry-picking can be disastrous,” he said. “It can be catastrophic.” 

When health centers choose to offer only services with a high-profit margin, he explained, it can draw business away from hospitals that provide services at a loss, like inpatient and emergency care. He said this applies in both rural and urban areas. 

Rural hospitals in Mississippi are struggling to stay afloat. Over half are at risk of closing, and 64% are operating with losses on services. More than half of Mississippi residents live in a rural area. 

Richard Roberson, the incoming president and CEO of the Mississippi Hospital Association, said he believes it is unlikely that removing certificate of need requirements will incentivize investment in areas of the state with the highest need for new health care services.

“What I suspect is you’re going to see an overproliferation of services in more commercially insured areas,” he said. “And if you’re talking about folks coming in and investing money, that’s where they’re going to put it, where they can make their money back.” 

Gov. Tate Reeves has advocated for abolishing certificate of need laws in the state, arguing that it will allow more competition and innovative health care services to flourish.

Last session, a bill sponsored by Sen. Angela Burks Hill, R-Picayune, sought to repeal the state’s certificate of need law, but it died in committee. 

Bills seeking to repeal or reform the law have become run-of-the-mill in the statehouse. Last year, over two dozen bills sought to modify the state’s certificate of need law. 

Legislators in 2016 made several changes to the law, including shortening application review timelines and increasing capital expenditure thresholds.

States were first required to implement certificate of need laws in 1974 in order to receive funding for certain federal programs. Today, 35 states operate certificate of need programs, and 12 have repealed their laws entirely, according to the National Conference of State Legislatures. 

Laurin St. Pé, CEO of the nonprofit Singing River Health System, said that without the certificate of need law, private equity-backed companies could open health centers near existing hospitals, drawing away patients with insurance. 

Hospitals with emergency departments are required to provide emergency care to patients regardless of insurance status under the Emergency Medical Treatment and Labor Act. These hospitals depend on providing services to patients with insurance to offset losses from uncompensated care.

“If they siphon (insured patients) off, we’re not going to be able to take care of those with the most need,” he said. 

Over 10 percent of Mississippians do not have health insurance, according to data from KFF. 

Edney said that Medicaid expansion could offset risks associated with repealing the certificate of need law by lowering the rate of people in the state without insurance in response to a question from House Medicaid Chair Missy McGee, R-Hattiesburg. 

McGee authored the Medicaid expansion bill that died earlier this year. Mississippi remains one of 10 states in the country not to have expanded Medicaid.

Rep. Hank Zuber, R-Ocean Springs, is the co-chair of the committee on the certificate of need law. Credit: Mississippi House

“As we close the coverage gap, that does create more revenue into the system that flows to the hospitals,” Edney said. 

Keith Norman, vice president and chief government affairs officer for Baptist Memorial Health Care, agreed. 

“I believe expansion goes hand in hand with this conversation,” he said. 

Though Edney and Roberson cautioned lawmakers of the impacts of repealing certificate of need law, they agreed that reforms could improve the program. 

Roberson suggested that allowing hospitals to offer dialysis services without a certificate of need would reduce patient transfers to other hospitals. Many small hospitals do not have their own dialysis centers. 

He also proposed allowing hospitals to operate home health services, which would reduce rates of readmission to the hospital. The Centers for Medicare and Medicaid Services penalizes hospitals when readmissions top the national average. Hospitals in the Delta have in the past faced high penalty rates for readmissions. 

Edney added psychiatric and perinatal care to the list of services he believed should not have to undergo the review process due to the state’s dearth of such care. 

The application itself should also be reformed to prevent long, costly appeals, said Edney. 

Last year, an applicant vying to provide “much-needed” ambulatory care in the Delta – a region of the state with limited health care services – withdrew its application after its certificate of need approval was contested. He said the hospital did not have the resources to sustain a potentially years-long legal struggle. 

“We go through these long battles that are very costly, just to get to the same ruling,” Edney said.

The State Department of Health approves 95% of certificate of need applications, he said. 

Edney also suggested that lawmakers consider more vigorous enforcement of existing certificates of need, noting that some health care facilities do not follow through on the commitments made in their applications. 

“We’re lacking accountability and transparency in the CON world,” he said.

Rep. Henry Zuber III, R-Ocean Springs, co-chair of the committee, said the group will explore a range of possibilities for certificate of need reform before drafting any legislation. The group will meet again on Sep.10.

“Everything, everything is on the table,” Zuber said.

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