Florida lawmakers are considering bills that would reduce health care costs, encourage competition, and remove barriers to market entry.
Under current Florida state law, those who would build hospitals, nursing homes, or other medical facilities must first obtain a certificate of need (CON) from the state’s health care agency. These laws restrict construction of new facilities based on established criteria, including population density and proximity to existing facilities.
A bill sponsored by state Rep. Chris Sprowls (R-Palm Harbor) “deletes provisions relating to certificates of need required for new, expanded, or modified hospital construction,” according to House Bill 437’s summary. The Florida Health and Human Services Committee passed the bill 12–3 in January.
The Florida Senate is contemplating its own CON law reforms. Senate Bill 236, sponsored by state Sen. Denise Grimsley (R-Sebring) and cosponsored by Sen. Don Gaetz (R-Niceville), would make it easier for operators to build hospitals within 10 miles of existing facilities. The Health Policy Committee reported favorably on the bill on February 9, when it voted 8–0 in favor of its advancement.
On February 17, the Appropriations Subcommittee on Health and Human Services voted against SB 1144, sponsored by Gaetz, which would have exempted health care facilities from obtaining a CON, but only if those facilities “donate” enough “charity care” to uninsured patients with incomes below 200 percent of the federal poverty level.
Outdated CON Requirements
Allison Hess, a member of Gaetz’ staff, told Health Care News many of the reasons Florida adopted CON laws no longer apply.
“Certificate of need was developed at a time when reimbursement, particularly Medicare and Medicaid, was based on cost,” Hess said. “Simply put, more cost equaled more reimbursement. CON was supposed to restrict the number of hospital beds, high-cost/low volume equipment, and other services to prevent ‘duplicative’ facilities and services from being passed along as reimbursable costs.”
Hess says now that cost-based reimbursement has given way to negotiated rates, CON restrictions limit competition.
“In today’s context, competition doesn’t increase costs, it can and often does decrease cost,” Hess said. “More and more states are finding that CON—with its multiple layers of approvals, appeals, and administrative hearings—actually costs more to administer than any purported savings.”
No CON Golden Age
Mercatus Center Research Fellow Christopher Koopman says CON laws have always fallen short of their proponents’ goals.
“The evidence is pretty clear that the regulations have never been effective,” Koopman said. “The early studies were pretty consistent on that. That’s why the federal government ultimately repealed its requirement that states enforce CON laws—which is why many states created CON programs in the first place.”
Hess says CON laws fail to control costs.
“CON does restrict competition and choice without saving money,” Hess said. “Health care spending in CON states is actually 11 percent higher than in states that have repealed or reformed CON.”
Florida’s regular legislative session was scheduled to end on March 11, and the bills had not been voted on by press time.
Dustin Siggins ([email protected]) writes from Washington, DC.
