Attempts to Roll Back CON Laws Underway in Virginia

Justin Haskins Heartland Institute
Published January 6, 2016

Consumer Power Report #488

Few Americans know the substantial and detrimental effects certificate of need (CON) laws have on the quality of health care in the 36 states that have chosen to enact them. These laws not only reduce access to quality care, they place a substantial degree of power to make important health care decisions in the hands of government bureaucrats, ignoring the professional opinions of highly educated doctors and other medical experts.

Eight legislative reforms designed to scale back some of the state’s CON laws are being advocated by three Virginia state delegates in the General Assembly, but even more should be done to rid the state of these dangerous regulations.

CON laws are supposed to keep down rising health care costs by preventing the construction of unnecessary services and facilities and the purchasing of expensive medical equipment. CON law proponents say these restrictions are needed because too many organizations in the health care industry have driven up health care costs by making irresponsible decisions. One example may be that a hospital chooses to purchase an MRI machine when nearby medical facilities already provide what government officials believe to be “enough” MRI machines to cover the needs of a community.

The goal of reducing health care costs is a noble one, but government officials are completely incapable of making better choices than the medical experts themselves, and evidence shows CON laws severely limit access to health care for the communities where the regulations exist.

In a nationwide study of the effects of CON laws, Christopher Koopman and Thomas Stratmann, scholars at the Mercatus Center at George Mason University, found “certificates of need are neither controlling costs nor increasing charity care, [and] they continue to … [cause] decreased availability of services and lower hospital capacity.”

Stratmann and scholar Jacob Russ say their research shows CON laws lead to 131 fewer beds per 100,000 persons in the states that have the burdensome regulations, which could mean there are “10,800 fewer hospital beds throughout [Virginia] as a result of its CON program.”

Stratmann and Russ also claim there are likely 41 fewer hospitals offering MRI services and possibly 58 fewer hospitals offering CT scans as a result of the CON laws in Virginia.

In an effort to address these CON law flaws, Dels. John O’Bannon (R-Henrico), Kathy Byron (R-Bedford), and Christopher Peace (R-Hanover) are all introducing reforms that would put more power to make important health care decisions in the hands of medical professionals.

O’Bannon’s legislation would eliminate CON regulations for imaging services, ambulatory and outpatient surgery centers, and hospitals over a three-year period. Byron’s proposal would repeal CON ambulatory surgery center restrictions and would end some requirements related to medical equipment. Peace’s proposal would end CON requirements for important medical equipment, such as CT scanners and MRI machines (with some exceptions), and he also has proposed legislation that would immediately end many of the current CON laws on the books.

All of these proposals, if passed, would greatly increase access to quality health care in Virginia and would allow doctors – in conjunction with hospital administrators and other experts – to determine which services need to be improved and when, rather than putting this important responsibility in the hands of government officials who may or may not have any medical knowledge at all.

Although these efforts by O’Bannon, Byron, and Peace are a step in the right direction, there is much more that could be done to prevent the harms caused by CON laws. All of the proposals currently under consideration in Virginia include puzzling exemptions that would allow CON restrictions to continue in certain situations. For instance, the proposals offered by O’Bannon and Peace would keep in place CON laws related to nursing homes and open-heart surgery centers. Byron’s plan would also protect the regulations governing nursing homes and would exempt CON regulations related to rural hospitals.

CON laws not only restrict access to health care services; Koopman and Stratmann say some studies show they may increase health care costs by 5 percent.

Even more important than the costs associated with CON regulations is the laws’ assault on liberty. Patients should have the freedom to access important health care services, and doctors and other medical professionals should have the right to provide those services without getting permission from a government bureaucrat. If a medical facility is willing to invest huge sums of money in new services, more hospital or nursing home beds, and better medical equipment, and if doctors say the investment is needed, why should the government stand in the way?

— Justin Haskins



The Obama administration said that about 3.6 million users of came back to the site to renew their health plans before a mid-December deadline, and that it has automatically renewed existing coverage for around 2.4 million more who didn’t.

The renewal numbers have been closely watched as a sign of how shoppers who used the site to get coverage in 2015 respond to significant price fluctuations for 2016 in many of the three dozen states where the site sells coverage to people who don’t have access to insurance through a job or government program.

The most popular plans in the country have raised premiums for the year ahead, often by double-digit percentages. That has prompted the health law’s boosters to focus much of their efforts for this sign-up season in persuading existing enrollees to try to “shop around,” although a Wall Street Journal analysis of options available to people indicated that there were few easy choices that those people could make.

SOURCE: By Louise Radnofsky, The Wall Street Journal


Healthcare’s “wall-of-shame” for 2015 officially ends tonight at midnight. It’s not really a “wall,” it’s just a website, but it’s the online mechanism for the Office of Civil Rights (OCR) under Health and Human Services to publish data breaches as reported to them and required by HIPAA. The numbers this year are just staggering.

According to OCR, there were 253 healthcare breaches that affected 500 individuals or more with a combined loss of over 112 million records.

The Top 10 data breaches alone accounted for just over 111 million records that were lost, stolen or inappropriately disclosed.

The top 6 breaches affected at least 1 million individuals – and 4 of the 6 were Blue Cross Blue Shield organizations.

SOURCE: By Dan Munro,”>


In fact, it appears the Medicaid changes of the Beshear administration will remain largely untouched as Bevin explores ways to restructure the program, according to Bevin’s comments Wednesday. He said major changes would not take place until 2017, if the Bevin administration gets permission from the Centers for Medicare and Medicaid Services.

“We are going to transform the way Medicaid is delivered in Kentucky,” Bevin said.

And most health care advocates appeared relieved Wednesday that despite some of his campaign rhetoric, Bevin announced no immediate changes for Medicaid. …

“We have to do it the right way,” [Emily] Beauregard [executive director of Kentucky Voices for Health,] said. “We need to encourage access to care and improve quality of care.”

Terry Brooks, executive director of Kentucky Youth Advocates, praised Bevin for being willing to take the time to develop a plan for Kentucky.

“We applaud Gov. Bevin for upholding the commitment to those currently on Medicaid by continuing their coverage until an alternative plan is developed and approved by the federal government,” Brooks said.

During the campaign, Bevin initially said he would “repeal immediately” the expansion of Medicaid under the federal health law that covers anyone earning up to 138 percent of the federal poverty level, about $16,200 a year for an individual. Traditional Medicaid covers only very low-income women with children, children, the disabled and elderly in nursing homes.

Bevin also had said he would not continue to enroll people in Medicaid at up to 138 percent of the federal poverty level, believing that to be too high. Yesterday, he acknowledged he could not change that immediately.

“That’s not actually possible,” he said.

But Bevin said the current Medicaid program, which covers nearly 1.3 million Kentuckians, is not sustainable. The federal government pays 70 percent of costs of about 875,000 people in traditional services and 100 percent of costs for those added through the expansion, dropping to 90 percent by 2020.

Instead, Bevin said his administration in the coming months will focus on devising a plan to restructure Medicaid using a waiver, or federal approval, that would allow it to make some of the changes he has envisioned such as charging premiums or co-payments for services.

SOURCE: By Deborah Yetter, Courier-Journal (KY)


During a time of growing interest in covering Medicare members, the CMS is looking to vastly expand audits of Medicare Advantage plans as a way to monitor insurers that may game the system to obtain higher payments.

Last week, the CMS released a request for information … that outlined the expansion of Medicare’s Recovery Audit Program, a program that has drawn the scorn of hospitals and doctors. In that program, the government hires private companies called recovery audit contractors, or RACs, to comb through medical records at hospitals and doctor offices and find instances of where Medicare is paying too much money.

Providers have characterized RACs as administrative burdens and argued auditors have clear incentives to hunt for overpayments even when they may not exist. RACs are paid an amount that is contingent on how much money they recover for the government. Those same complaints are likely to extend to Medicare insurers, which, if found to have improperly billed, could have to forfeit millions of dollars back to Medicare if the program gets off the ground. But the CMS touts RACs as a way to ensure taxpayer money is being spent appropriately.

The Affordable Care Act required Medicare’s RAC program to be expanded to Medicare Advantage and Part D plans, but that has not happened yet. The recently released CMS document explains how that would be done and the scope of the program, although there is no definitive timeline for when the program would go into effect.

SOURCE: By Bob Herman, Modern Healthcare