A legislative task force on Thursday deferred proposing any changes to the state’s certificate of need program, instead recommending possible “further study” of the issue in 2024.
The one-sentence recommendation came after six months of meetings of the state Certificate of Need Task Force established by the Legislative Research Commission back in April. Considerable testimony during the meetings centered around Northern Kentucky, where St. Elizabeth Healthcare holds four of NKY’s seven required certificates of need for hospitals and about eight percent of the region’s 109 total certificates of need for health facilities and services.
Written verbatim, the recommendation adopted by the task force Thursday says:
“The task force recommends that further study may provide additional information to guide statutory and regulatory changes in Kentucky’s certificate of need program.”
Two Northern Kentucky lawmakers – Sen. John Schickel (R-Union) and Rep. Marianne Proctor (R-Union) — were among those who voted to accept the recommendation report. But Schickel told LINK nky after the meeting that the task force report does not preclude lawmakers from proposing changes to certificate of need in bills during the 2024 legislative session or beyond.
“It doesn’t preclude that at all,” Schickel said. Before Thursday’s vote, Schickel emphasized in comments before the task force that he will “continue to be an advocate for the issue in the future.”
Proctor – who filed legislation in 2023 that would have repealed certificate of need in NKY — told LINK nky that she intends to once again file certificate of need reform legislation in the 2024 legislative session that begins Jan. 2.
“I’d say there’s that path forward to continue to evaluate this,” Proctor said.
Certificate of need program in Kentucky broader than in some states
Certificate of need is a statutory requirement in Kentucky that mandates state approval for new or expanded health care services statewide.
According to the National Conference of State Legislatures, certificate of need programs “aim to control health care costs by restricting duplicative services and determining whether new capital expenditures meet a community need.” Currently, 35 states and Washington DC have certificate of need programs, although some laws are more restrictive than others.
For example, Kentucky’s certificate of need law requires certificates of need for 18 types of health care facilities. Neighboring Ohio and Indiana only require certificates of need for long-term care facilities.
Today’s recommendation of the legislative Certificate of Need Task Force for further study was based on opposing positions on the state’s existing certificate of need law and regulations. Those positions are:
– “Certificate of need laws limit competition by protecting incumbent providers and creating a burdensome approval process for establishing new or expanding health services and facilities, and that there is little evidence that certificate of need laws control costs, improve quality, or ensure access to healthcare.”
– “Healthcare service delivery does not operate in a free market, thus certificate of need laws are necessary to control costs, improve quality, and ensure access to healthcare for all people in all geographic areas. The existing certificate of need program may be improved with modifications for some healthcare facilities and services.”
The recomendation for further study may allow Kentucky lawmakers and stakeholders – including those in NKY – to find room for agreement, or not. As stated in the recommendation, more study “may provide additional information to guide statutory and regulatory changes.”
A rural versus urban issue?
Sen. Donald Douglas (R-Nicholasville) who co-chairs the task force presented the recommendation for approval. Douglas, a physician, said the future study may include “listening to more information or at least taking a deeper look at who, and how, (change) is going to affect people. I think we need to look at what components need to be continued or what component need modification or what components need to be eliminated on an individual basis.”
Douglas said he wants to ensure that the solution works for everyone in the state “regardless of whether they are in an urban setting or in a rural setting.”
The issue of rural versus urban access to health care has been central to Kentucky’s certificate of need debate. Rural lawmakers have expressed some concern that doing away with certificate of need would allow new facilities to “cherry pick” or siphon off private pay patients, straining services for the uninsured and Medicaid patients.
So-called safety net hospitals, including those in urban areas that receive majority funding from non-private pay patients, have also cited cherry-picking as a potential outcome of certificate of need reform or repeal.
St. Elizabeth Healthcare Senior VP Sarah Giolando told the task force at its Aug. 21 meeting that 75.5% of her company’s market share in 2022 was from Medicaid, Medicare, and self-pay. Only 24.5%, she said, was from commercial insurance.
“St. Elizabeth is a safety net hospital,” she said.
Others claim, however, that certificate of need hurts health care overall by inflating health care costs and access. University of Kentucky Professor Emeritus of Economics John Garen testified at the August meeting that his “assessment, after reviewing the evidence, the arguments in favor of (certificate of need) do not rebut its anti-competitive harmfulness.”
Schickel said he thinks the rural versus urban health care issue is something that lawmakers should continue to look at more closely.
The senator said testimony he’s heard over six months of task force meetings this year has revealed more about “the difference between rural and urban problems in health care and how the solutions may be very different. So that’s one thing to continue looking at in the future.”