CON Bill Would Limit Reach Of Medical Regulators | Eastern North Carolina Now

    Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.

Measure would exempt a host of providers from state-imposed limits on medical services

    RALEIGH — Hoping to loosen the monopoly hospitals have on a variety of medical procedures and facilities, State Rep. Marilyn Avila, R-Wake, has introduced House Bill 200, a measure repealing portions of the state certificate-of-need regulatory statutes.

    Avila is scheduled to discuss the bill and the need for relaxing certificate-of-need regulations at a noon news conference today. Rep. Jeff Colllins, R-Nash, Dan Bishop, R-Mecklenburg, and Mickey Michaux, D-Durham, are co-sponsors of the bill, which would provide greater choice to consumers.

    If passed, the legislation would exempt diagnostic centers, ambulatory surgical facilities, gastrointestinal endoscopy rooms, and psychiatric hospitals from certificate of need review. It also would prohibit the state medical facilities plan from limiting the number of operating rooms and gastrointestinal endoscopy rooms.

    A certificate of need is basically a permission slip from the government to provide a medical service. The lengthy, and usually costly, process can pit hospitals against hospitals, or hospitals against smaller, standalone competitors and doctors' practices.

    Avila said one intention of her bill is to eliminate the "artificial control of supply and demand" in the health care market.

    The federal government originally instituted a certificate-of-need process, and pushed the states into adopting similar systems, under the theory that controlling the number of programs, services, and equipment in a market would lower costs.

    The federal government ended its program and repealed the CON mandate on the states in 1987 after determining the cost-control mechanism failed. Fourteen states dropped their CON programs.

    "This has been an issue that's been on Mickey's radar screen," Avila said. Michaux opposed the certificate-of-need process when it was first instituted, and opposed North Carolina keeping it when the feds abolished the state mandate.

    "Everybody wants to make very clear that we do not have a free market in health care," and the certificate of need is a vital way to buffer against market manipulation, and to protect those who have made investments, Avila said of CON program advocates.

    "I say, Yeah, that's probably one of the reasons we've got trouble" because eliminating the supply kills competition that would otherwise drive down costs.

    An ambulatory surgery center's "price differential from a hospital location is tremendous. It can be as much as 40 percent difference," Avila said. "It can be three times more in terms of price" to perform a procedure in a hospital than what an ambulatory surgery center would charge.

    A recent study by the Mercatus Center at George Mason University noted that North Carolina regulates 25 medical services or devices through the CON program. That is the fourth highest total among all states. Because of those regulations, the study said, North Carolina has fewer hospital and psychiatric beds, MRI services, and CT scans than it should.

    The North Carolina Hospital Association has been a fierce proponent of maintaining the status quo, and fought against a bill Avila sponsored in the last session.

    "The argument for the objections we have from hospitals is the fact that the ambulatory surgery centers, in their mind, cherry pick the healthier patients, and the patients that can pay, and don't' suffer the handicap that the hospital does because of its requirement to serve anyone who shows up and requires quite a bit of charity care," Avila said.

    In response, she tweaked her last bill to require ambulatory surgery centers to provide a set level of charity care.

    "We have also protected rural areas where we've got hospitals that may be a little vulnerable to this sort of thing," Avila said. In counties with populations under 100,000, an ambulatory surgery center must obtain an agreement with a rural hospital before it may open.

    "We've tried to address some of the legitimate concerns that hospitals have, and not develop an uneven playing field for the hospitals to compete against," she said.

    Avila said she has received no indication from House leaders that they would oppose or attempt to block her bill. She said she anticipates a Senate bill to be introduced soon with more sweeping reform, with some saying it might go so far as seeking repeal of the entire CON system.