MORGANTOWN – The years-long effort to repeal the Certificate of Need process for health care facilities and equipment took a blow Feb. 24, but not a fatal one, according to Gov. Patrick Morrisey.
As Morrisey continues his push for repeal, leaders from Mon Health, WVU Medicine and the West Virginia Hospital Association provided some perspective on just what certificate of need is — and what it means to hospital systems.
But first, some background on what certificate of need is. The state Health Care Authority oversees the certificate of need process.
All health care providers, the HCA explains, unless otherwise exempt, must obtain a certificate of need before adding or expanding health care services; exceeding the capital expenditure threshold of $5,803,788; obtaining major medical equipment valued at $5,803,788 or more; or developing or acquiring new health care facilities.
The certificate of need program was enacted in 1977 and put under the HCA in 1983. The HCA says its goals are to control health care costs, improve the quality and efficiency of the health care system, encourage collaboration and develop a system of health care delivery that makes health services available to all residents of the state.
The certificate of need process, HCA says, is often associated with cost containment measures. It also, by legislative intent, allows for health services to be provided in an orderly, economical manner that discourages unnecessary duplication.
HCA says some states have repealed their certificate of need statutes, but 36 states and the District of Columbia retain some form of review. Three states limit their review to long-term care.
Certificate of need review includes the determination of need, determined using CON Standards, which generally include population-based quantifiable need methodologies; consistency with the State Health Plan; and financial feasibility, which includes the evaluation of the reasonableness of proposed charges to patients and the determination if the expense and revenue projections demonstrate fiscal viability for the proposed project. Other review criteria include quality, accessibility and continuum of care.
HCA says, “The advantage of CON programs to the public is that they encourage accountability by providing an avenue for public comment, discourage or limit unnecessary services, and promote community planning. In West Virginia, the CON program offers some protection for small, often financially fragile, rural hospitals and the underinsured population they serve by promoting the availability and accessibility of services and, to some extent, the financial viability of the facility.”
The repeal effort
This is not the first year that a certificate of need repeal bill has been introduced, but it is the first year it was introduced on behalf of the governor. Morrisey’s bill took form in twin Senate and House bills: SB 453, which is sitting idle, and HB 2007, which died in a procedural move in House Health on Feb. 24.
Morrisey said later that week that he believes the majority of lawmakers agree with him that certificate of need needs to be repealed. “I want to protect citizens that are in need, and I want there to be a viable private health care marketplace. Right now, we’re going in a direction where that’s not happening. That’s going to change. We’re going to continue to push for policies that make a difference that put the people first, not the special interest. That’s what we’re working on.,” Morrisey told reporter Steven Allen Adams.
Morrisey’s office offered this statement on the matter: “The fight to repeal Certificate of Need is not over. West Virginia currently pays more for hospital services than all but one state – while experiencing the worst health care outcomes. We must reduce the unaffordable price of health care and increase consumers’ access to the services they depend on.”
His office said to expect future announcements on this front.
A conservative coalition of the Cardinal Institute, Institute for Justice and AFP West Virginia backs Morrisey, saying certificate of need laws hinder health care access, increase health care costs, lengthen wait times and lower quality of care, especially in rural areas. States that have repealed certificate of need have seen no negative effects, they claim.
The coalition claims, “In short, certificate of need laws are holding every West Virginian back from better access to more quality health care.”
But the health care professionals disagree. To some extent, they offer the same reasons for supporting certificate of need, but we give each their own voice here.
Mon Health System
David Goldberg is president and CEO of Mon Health System and Davis Health System – Vandalia Health Northern Region, and executive vice president of Vandalia Health. He testified in favor of certificate of need before the House Health Committee.
He said that he’s worked in certificate of need and non-certificate of need environments, and it’s a complex issue.
About 75% of West Virginians are covered by Medicare, Medicaid or PEIA, he said. “Certificate of Need covers the ability for us and our health systems and providers to be balanced, where we build things to be able to generate the revenue that’s appropriate to invest in our health care system in balance.”
Without certificate of need protections, he said, we could see providers putting everything in the more economically focused markets – such as the panhandles and the Morgantown-Clarksburg corridor. “You have health systems in Kentucky who would love to come over the border to reach into the southern quadrant of the state and be able to expand their reach. Will they have this in focus? We do, on taking care of our own in West Virginia.”
Goldberg noted that there are no certificate of need prohibitions from opening private practices. For instance, UPMC recently bought some MedExpress assets in order to build some urgent care centers. So there is competition, but certificate of need prevents organizations from coming in with freestanding radiology centers that could harm small neighboring hospitals by draining their revenues.
“For example, I have something that comes right into Monongalia County, that starts to negatively impact my ability to generate revenue. How do I support the Preston Memorials, the Webster hospitals and Webster Springs, the Stonewall Jackson Memorial Hospital that are predominantly Medicare-Medicaid, that don’t cover costs to begin with. So I think we have to be balanced.”
Goldberg said they’ve shared this with Morrisey and the Legislature, “We think there’s ways to modernize. We think there’s ways to collaborate. We all want to improve our outcomes and improve the affordability and the cost structure, but Certificate of Need in a state like West Virginia, it maintains the ability of balance, and we need to have that, because the northern part of the state is not the same as the east, the west or the south.”
Goldberg said health systems across the state are planning more than $1 billion in health care infrastructure across the next five to 10 years. So there is competition already. “I think that competition makes us that much better for the communities we serve, but we want to be balanced in how we compete.”
Goldberg concluded, “I am mandated by the federal government, the state government and some locals how I operate. My reimbursement is set by contracts with payers, Medicare, Medicaid and PEIA. We are mandated and rightfully take care of our patients, regardless of their ability to pay, so it is not a free market. … And I think let’s modernize Certificate and Need, let’s find ways to collaborate and do that.”
WVU Medicine
WVU Medicine’s Candace Miller, president and CEO of WVU Medicine Jackson General Hospital, offered her views as well.
A native West Virginian, Miller said she worked her whole career in Ohio, coming to WVU Medicine last June from a large system based out of Columbus.
And when she got here, “The first thing I started scratching my head on was Certificate of Need. I was like, well, this is crazy. Why in the world do we do this? This is, this is nothing but red tape, stupid, bureaucracy kind of thing.”
But it didn’t take long for her to figure out, she said, that West Virginia is very different from other states. Without certificate of need, her rural, critical access hospital would be at risk.
Critical access hospitals must meet criteria set by the Centers for Medicare & Medicaid Services. Among the criteria, they must be located in a rural area either more than 35 miles from the nearest hospital or more than 15 miles in areas with mountainous terrain or only secondary roads; maintain no more than 25 inpatient beds that can be used for either inpatient or swing-bed services; and furnish 24-hour emergency care services seven days a week.
Critical access hospitals receive higher federal reimbursements than other hospitals, though still less than the cost of delivering care.
Miller explained, “Let’s say a small hospital was built right beside me, and it’s defined by five beds or more. I would lose my critical access hospital designation. … If I lose my designation, I immediately start running in the negative.”
And operating margins here are slim, she said: 14% where she previously worked, 2% in West Virginia.
Ohio has 250 hospitals of which 33 are critical access, she said. West Virginia has 72 hospitals total, with 21 of them critical access. And Ohio has 11.8 million people, compared to West Virginia’s 1.7 million.
“So, why does all that matter? It matters because when you have a limited amount of people to serve, like we have in West Virginia, when you have these rural areas, like we have in West Virginia, you can pretty much, if you’re big health care, big system, deep pockets, you can bully other providers out. And that limits access.”
Without certificate of need, she said, a company could come in and set up a surgery or imaging center – two of the biggest-profit operations – and put a critical access hospital that has to provide more services out of business. “No one’s going to come in and set up a business, a health care service line that’s not going to make money. You just can’t.”
Miller takes issue with repeal proponents who cite West Virginia’s poor health statistics as a reason for repeal. West Virginia tops the nation proportionally for obesity and smoking – issues not tied to proximity to a health care facility. “And so it’s not fair to say the limited access to care equals poor health outcomes when you’re not taking into consideration other facts that play into poor health outcomes for our state.”
West Virginia Hospital Association
Jim Kaufman is president and CEO of the WVHA.
Certificate of need, he said, is a valuable tool used by states for appropriate health care planning, such as a sufficient population to support that program, and the overall impact on the delivery system in the state.
Setting up a facility next to another one may simply drain the resources of the first one, he said, reducing access to care instead of increasing it. But a certificate of need review can take into consideration location, and economic and health care impacts.
