Certificate Of Need Laws Are Falling Out Of Fashion

After New York instated the first Certificate of Need (CON) law in 1964, the legislation’s popularity both rose and dove swiftly. Within a decade, the federal government effectively mandated that each state adopt its own CON program. Another decade later, it repealed both its mandate and its support for the legislation.

CON laws require that a new medical business prove it is necessary to the community— including its own competitors—before it can begin operating. In a retail chain comparison, a CON law would require a hopeful local discount store to ask a town’s government—including Walmart beneficiaries—to allow it to operate.

The reasoning behind this idea is both ever-changing and convoluted, and its effects are debatable. But unsurprisingly, new medical businesses were often prevented from opening, some communities ended up with fewer places to shop for health care, and the prices for the remaining services sometimes rose. Often, the only people showing up to support CON enforcement were “medical Walmarts.” People of the community fought to have healthcare options. 

Despite this, the existing healthcare behemoths and their lobbyists have kept CON programs aloft in 35 states since the federal mandate’s repeal in 1986. However, that number has quite consistently decreased, as has the number of individual CON rules in states that still have a program. 

So it’s noteworthy when a state legislator tries to increase the strictness of a CON program. 

The National Academy for State Health Policy (NASHP), a nonpartisan organization headed by legislators and healthcare employees of various political affiliations, found that 61 bills concerning CON legislation had been introduced in 19 states by September this year. As expected, many of these were aimed at repealing CON laws. But voters in a few states should be aware if their elected officials are trying to go in the opposite direction.

The following is by no means a comprehensive list, and voters in every state would do well to look at the more complete report linked in the preceding paragraph.

Connecticut

Some Republicans and Democrats joined to introduce bills making Connecticut CON rules less restrictive and more streamlined. But some seem more intent on cracking down on violators.

Senator Maria Horn (D) wants to ensure that anyone failing to obtain a legally required CON is financially penalized and forced to stop practicing, even if the failure was unintentional. A bill that passed both houses enacts a $1,000-per-day penalty for “negligent” failure to obtain one before practicing. If a medical practice misfiles paperwork for a CON, a community will have one fewer medical center, and the doctors will be fined.

Horn, notably, has expressed concern about rural healthcare access. Given that states with CON laws have overwhelmingly fewer rural hospitals and ambulatory surgical centers than non-CON states, Horn’s focus on enforcing CON laws is especially confusing and seems counterproductive.

Mississippi

Mississippi CON legislation had a potentially busy year. Ultimately, however, the staggering 12 bills introduced all failed. Rep. Lee Yancey (R) tried to eliminate CON regulations entirely, but his attempts never made it out of committee. 

Multiple legislators tried to grant CONs to specific areas or businesses while still excluding others. This could either amount to the kind of special treatment that CONs are guilty of creating, or it could be an attempt to get the certificates to more businesses. Either way, the narrowness of the proposed bills is interesting. For example, Sen. John Horhn (D) proposed a measure that would authorize “the issuance of a certificate of need for the construction of a 60-bed nursing facility in any underserved minority zip code area that meets certain qualifications.”

Mississippi CON laws are a major subject of current debate. Voters there need to make their voices heard because legislators are interested in the issue but seem unwilling to agree on broad action.

New Jersey

Asm. Ralph Caputo (D) (note: New Jersey has assemblymen rather than representatives, in an Assembly rather than a House) introduced a bill requiring emergency medical services (EMS) companies to obtain a CON before operating. This is quite a step backward in itself, especially considering the problems this caused in other places. He also proposed that all existing EMS services be required to obtain such a certificate within three years of the passage of the bill. 

The Other 47 States

Patients overall had a good year in terms of CON laws. As mentioned, the trend is to eliminate them either entirely or piecemeal. 

One new concern raised by the piecemeal repeals involves the possible picking of winners and losers, as noted in Mississippi. Voters need to ensure that if their legislators are loosening CON laws, they are doing so fairly—across the board—and not just for their pet projects or companies. This kind of “repeal” is just another version of CON restriction in disguise, which is obviously counter to what patients have demanded.