House And Senate Split On Whether To Repeal, Reform Certificate Of Need Laws

Feb 1, 2016

As lawmakers grapple with healthcare costs, they’re taking another look at rules governing where health care centers can be built. Those rules are called certificate of need. A scaled-down version of a bill addressing certificate of need is in play, but it’s not without controversy.

The Federal government put certificate of need laws in place in the 1970’s to limit healthcare costs. But some say those laws are out-of-date, as the reimbursement system has changed. Certificate of need is seen by many as a barrier to care, not a protector of it. Sen. Don Gaetz, R-Niceville, says C-O-N is out-dated.

“The only remaining reason for C-O-N is to restrict competition, or to prevent cherry picking. A new provider a new service picking off new patients, and leaving providers with a disproportionate amount of un-reimbursed charity care," said Gaetz.

But the decision to roll back some of the certificate of need laws isn’t without controversy. The Florida House is pushing a measure to fully repeal certificate of need for hospitals, leading to the concern Gaetz cited. But health providers including two of the state’s major hospital associations, say the laws are still needed to protect quality of care. Gaetz’s bill stops short of a full repeal and would add another exemption to the regulatory system based on the amount of charity care a center provides. And if that center doesn’t serve uninsured patients, it could face a financial fine. But Sen. Arthenia Joyner, D-Tampa, worries the language is repetitive.

“My concern was that it would allow the creation or the expansion of hospitals in wealthy neighborhoods and non-wealthy neighborhoods wouldn’t benefit," Joyner said.

And fellow Democratic Senator Eleanor Sobel is also concerned.

“We were just talking about access. But I just want to comment that competition doesn’t equal quality," she said.

Hospitals are also invested in the outcome of the bill. “C-O-N still has a role in helping patients get access regardless of economic status. And it helps avoid concentrating care in highly populated, or economically enriched areas," said the Florida Hospital Association's Bill Bell. But on the other side, Republican Senator Denise Grimsley, a hospital administrator, worries the proposed penalties attached to Gaetz’s bill are too strict.

"I’ll be the first one to say that I think our current C-O-N process is burdensome, difficult ad its very costly and eventually gets passed down to the patient. But I’m not sure what you’ve outlined here is much better," she said. "And it appears punitive to me and the providers. In the absence of Medicaid expansion, it seems like it still puts all the burden of charity care on the provider, rather than falling back on the state.”

Grimsley says it’s not fair to punish healthcare centers if the people it treats, don’t qualify for charity care. But she does plan to support Gaetz’s proposal. And Gaetz argues his proposal is better than the House’s full repeal.

“Let me just hit a couple of points made by testifiers and members in debate. The concern for indigent care is a real one. If this bill reduced indigent care, or access to indigent care I would not be in favor of it," he said.

Gaetz cites a 2014 report from the Mercatus Center at George Mason University, which found certificate of need laws do little to increase access to health care for the poor, but they do limit the supply of such services. The federal government repealed its certificate of need mandate in 1987, but the majority of states still have rules in place.