Cat Fight in North Carolina Over Health Care CON Law

Published July 7, 2016

Consumer Power Report #511

A play called late in the game in the latest session of the North Carolina General Assembly presented lawmakers with a bizarre choice: adopt a state cat or a vital health care reform proposal.

In its earliest form, House Bill 161, An Act Adopting the Bobcat As the Official State Cat of the State of North Carolina, would have done just that, and only that.

Once the General Assembly’s May 10 deadline for introducing legislation had passed, however, state Sen. Ralph Hise (R-Mitchell) went looking for a vehicle to drive health care reform. Hise introduced an amendment to the bobcat measure: “A bill to be entitled An Act Repealing North Carolina’s Certificate of Need Law.”

Neither the bobcat nor repeal of the state’s certificate of need (CON) law made it to Gov. Pat McCrory’s (R) desk before lawmakers adjourned on July 1.

That’s bad news for North Carolina patients and caregivers, who should urge their elected officials to help CON repeal land on its feet when lawmakers reconvene in January 2017.

Like all CON laws, North Carolina’s restricts operators of hospitals and other medical facilities from expanding to new locations, offering more services, buying valuable but expensive equipment, and performing construction. Before altering services and facilities in these ways, operators must apply for and obtain approval from the state bureaucracy – specifically the Healthcare Planning and Certificate of Need Section of the North Carolina Division of Health Service Regulation, which is part of the North Carolina Department of Health and Human Services.

CON laws cause problems for patients by making it more difficult for medical facilities operators, developers, and other providers to expand their service offerings. Sometimes state CON review boards stop these providers outright.

Restricting the entry of new providers into the market quashes the financial incentive of existing providers to compete for patients’ business. Less competition and fewer suppliers result in lower quality and higher costs for patients.

Moreover, a system requiring operators to demonstrate a facility’s “need” for renovation encourages operators to wait until their facilities fall into disrepair. This is an ironic and unfortunate twist of the CON knife, considering many hospital operators would probably prefer to prevent any part of their health care facilities from growing obsolete – a point state Rep. Cameron Sexton (R-Crossville), in neighboring Tennessee, made well in a recent Heartland Health Care News Podcast.

Like federal government-centered health care policies critiqued in a previous issue of the Consumer Power Report, the logic of state CON laws works against the patients the laws were intended to help.

The CON chokehold was implemented in the 1970s and 1980s to prevent providers from unnecessarily running up expenses. The fear was providers would drive up costs by offering services, buying equipment, and constructing facilities or building additions the government determines patients don’t need. Congress repealed a national CON law in 1987, recognizing its ineffectiveness. Many states followed suit. North Carolina did not.

Regulating 25 services, North Carolina’s CON law is the fourth-most restrictive among the 36 states with CON laws, according to a 2015 study by the Mercatus Center at George Mason University. All 36 states regulate the addition of nursing home or long-term care beds, and most regulate acute care services, heart-related procedures, and radiation services, according to data provided by the John Locke Foundation in Raleigh.

Fewer than one-third of CON states, however, join North Carolina in restricting the provision of assisted living and residential care, burn care, dialysis for renal failure, subacute rehabilitation services, and computerized tomography (CT) scanners.

Ranking states by least restrictive (#1) to most restrictive (#36), the Mercatus Center puts North Carolina very near the bottom, with a rank of 33rd. Adding the 15 states without CON laws to these rankings puts North Carolina in the bottom 10 percent of states, at 47th.

By tossing out CON repeal, lawmakers have sealed North Carolina’s rank near the bottom of states restricting the free enterprise of health care providers. Next session, lawmakers should give CON repeal, and patients, a fresh start.

— Michael T. Hamilton


… Although the New Jersey Legislature voted last month to add $50 million to subsidies for charity-care hospitals, Republican Gov. Chris Christie line-item vetoed the measure when he signed the fiscal 2017 budget on June 30, according to the New Jersey Hospital Association.

Under the signed budget, 64 safety net hospitals will share $302 million in charity-care funding from the state, a $200 million drop from fiscal 2016. …

Thirteen hospitals will receive more money from the state in fiscal 2017 than in the previous year, including four Hackensack University Medical Center campuses. Hackensack Meridian Health, the academic medical center’s parent system, provides the most unreimbursed care in the state and is the fifth-largest charity-care provider in New Jersey, according to Robert Glenning, president of the system’s financial services division and chief financial officer.

“Since several hospitals of Hackensack Meridian Health serve as important safety net hospitals for the state, an increase in funding will enable us to continue our mission to provide world-class healthcare to the communities we serve,” Glenning said.

New Jersey did add $60.7 million in graduate medical education funding for safety net hospitals.

“Our safety net hospitals provide a tremendous service, particularly to residents most in need,” Christie said in a statement. “This budget prioritizes safety net hospitals to ensure there is continued access to care for uninsured and underinsured New Jerseyans.”

Christie initially proposed cutting charity-care subsidies by $150 million and then added another $50 million in planned cuts in May after receiving lower-than-expected state revenue projections. Christie rejected all attempts by the Legislature’s Democratic majority to add more spending to his budget, claiming it would be irresponsible, according to the New Jersey Hospital Association. …

The charity-care funding is supported by an assessment paid by the state’s hospitals, which draws federal Medicaid matching funds. Hospitals criticized the governor for sacrificing $50 million in hospital subsidies to generate just $25 million in savings for the state. …

But the Hospital Alliance of New Jersey, which represents the state’s safety net hospitals, said it was pleased that 12 safety net hospitals will get priority treatment in the fiscal 2017 budget. …

SOURCE: Erica Teichert, Modern Healthcare

A rash of opioid overdose deaths plagues the community – among them, several men in their 20s who had been in and out of all-too-short addiction treatment programs.

A young man dies by suicide in a Fargo park. His family says the mental health system failed him.

These incidents in the last few months demonstrate what some lawmakers say are dangerous shortcomings in North Dakota’s behavioral health care system, which includes mental health and substance abuse treatment. …

Rep. Kathy Hogan, D-Fargo, who chairs the interim Human Services Committee on behavioral health, likens the problem to a complex jigsaw puzzle for which the state has only 100 of 1,000 pieces in place.

“Until then, people are going to fall through the cracks and are going to die,” Hogan said. “It’s almost criminal.” …

Hogan says one major change has happened since the consultant’s report came out. She estimated only about 30 percent of the legislative leadership previously acknowledged mental illness and substance abuse as a rapidly growing problem.

“Everybody owns it now,” Hogan said. …

Hogan said about 90 recommendations for improving the state of behavioral health in North Dakota came out of the Schulte report. …

Almost none of the dozens of recommendations have been enacted.

The handful of accomplishments include a voucher program that just took effect Friday, July 1, for people who need substance abuse treatment but don’t have insurance coverage, Hogan said.

For example, someone living in a smaller town wouldn’t have to drive to one of the state’s eight regional human service centers. They could be treated in their hometown and the voucher system would reimburse the provider. …

SOURCE: Robin Huebner, Grand Forks Herald

After years of big promises, telemedicine is finally living up to its potential. …

The fastest-growing services in telemedicine connect consumers with clinicians they’ve never met for one-time phone, video or email visits – on-demand, 24/7. Typically, these are for nonemergency issues such as colds, flu, earaches and skin rashes, and they cost around $45, compared with approximately $100 at a doctor’s office, $160 at an urgent-care clinic or $750 and up at an emergency room.

Many health plans and employers have rushed to offer the services and promote them as a convenient way for plan members to get medical care without leaving home or work. Nearly three-quarters of large employers will offer virtual doctor visits as a benefit to employees this year, up from 48% last year.

Web companies such as Teladoc, Doctor on Demand and American Well are expected to host some 1.2 million such virtual doctor visits this year, up 20% from last year, according to the American Telemedicine Association.

But critics worry that such services may be sacrificing quality for convenience. …

While employers and health plans have been eager to cover virtual urgent-care visits, insurers have been far less willing to pay for telemedicine when doctors use phone, email or video to consult with existing patients about continuing issues. “It’s very hard to get paid unless you physically see the patient,” says Peter Rasmussen, a neurosurgeon and medical director of distance health at the Cleveland Clinic.

Some 32 states have passed “parity” laws requiring private insurers to reimburse doctors for services delivered remotely if the same service would be covered in person, though not necessarily at the same rate or frequency. Medicare lags further behind. The federal health plan for the elderly covers a small number of telemedicine services – only for beneficiaries in rural areas and only when the services are received in a hospital, doctor’s office or clinic.

Bills to expand Medicare coverage of telemedicine have bipartisan support in Congress. Opponents worry that such expansion would be costly for taxpayers, but proponents say it would save money in the long run – as much as $2 billion over 10 years, according to an estimate by Avalere Health, a consulting firm. …

SOURCE: Melinda Beck, The Wall Street Journal

WASHINGTON – A federal appeals court has ruled that consumers must be allowed to buy certain types of health insurance that do not meet the stringent standards of the Affordable Care Act, deciding that the administration had gone beyond the terms of federal law.

The court struck down a rule issued by the Obama administration that barred the sale of such insurance as a separate stand-alone product.

“Disagreeing with Congress’s expressly codified policy choices isn’t a luxury administrative agencies enjoy,” the United States Court of Appeals for the District of Columbia Circuit said on Friday in a decision that criticized “administrative overreach” by the Department of Health and Human Services.

At issue is a type of insurance that pays consumers a fixed dollar amount, such as $500 a day for hospital care or $50 for a doctor’s visit, regardless of how much is actually owed to the provider.

Such “fixed indemnity” insurance is normally less comprehensive and less expensive than the “minimum essential coverage” required by the Affordable Care Act. Under the rule, issued by the Obama administration in 2014, fixed indemnity policies could be sold only to people who already have the more comprehensive coverage that meets detailed federal standards.

State officials and insurers estimate that as many as four million people might have fixed indemnity policies without major medical coverage. …

In adopting the final rule in 2014, the Obama administration said that allowing people to buy free-standing fixed indemnity insurance would undermine the goal of “maximizing the number of individuals who have comprehensive, major medical coverage.”

Since 1996, fixed indemnity insurance has generally been exempt from federal insurance standards, and the Affordable Care Act did not change that, nor did Congress “give even the slightest indication” that it meant to alter the exemption, the appeals court said.

But, the court said, the administration “effectively eliminated stand-alone fixed indemnity plans altogether,” by tacking “additional criteria” onto the 1996 law.

The ruling in the case, Central United Life Insurance v. Burwell, was issued by a panel composed of Judges Janice Rogers Brown, Patricia A. Millett and Douglas H. Ginsburg. …

The plaintiffs in the case, who sell fixed indemnity insurance, said the federal rule would essentially destroy the market for such products. …

SOURCE: Robert Pear, The New York Times