Plus Virginia Reform Efforts

Certificate of Public Need (COPN) programs are a fact of life in 36 states (Virginia included) as well as the District of Columbia. These laws require government consent before a health care facility may expand, offer a new service or purchase certain medical devices.

The Case for Certificate of Need Laws

The initial intent of COPN programs was to contain health care facility costs through coordinated government/private enterprise planning of facility construction and added services. The assumption was to limit facilities to provide only enough capacity to meet actual need or demand in a given geographical area. Presumably, that would avoid price increases by health care accommodations that were struggling to meet overhead not funded by sufficient patient loads.

Source: NCSL, August 2016

As an example, one result has been government mandated regulation of the number of beds in hospitals and nursing homes. That means that new or improved facilities or equipment would be granted approval based only on the government planning agency judgment of what was necessary in a given location.

 

One of the stated goals of COPN proponents was to encourage the use of ambulatory surgery centers (ASCs). Notably, the trend toward physician-owned ASCs has concentrated attention by regulators in states with COPN programs on these free-standing facilities that are an expanding element in delivering cost-effective out-patient services.

Additionally, the laws were to ensure adequate access to health care in less populated, rural communities as well as for patients lacking the ability to pay. Likewise, COPN programs were to increase the quality of care while limiting its costs.

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COPN in Action … and Unintended Consequences

So how are COPN laws working across America? That question was addressed by researchers at the Mercatus Center at George Mason University. Their study spanning 40 years of academic research, suggests some startling realities beginning with “… that COPN laws have not only failed to achieve their goals but have in many cases led to the opposite of what those who enacted the laws intended.”

Some remarkable conclusions about the effect of COPN laws include:

  • More limited supply of hospital beds and medical imaging equipment;
  • Less utilization of medical imaging equipment among non-hospital providers;
  • Fewer, not more, rural hospitals;
  • Lower, not higher, quality as measured along multiple dimensions;
  • Seem to limit the supply of both ASCs and traditional hospitals;
  • Higher healthcare prices and higher overall healthcare spending.

So based on this study and experiences expressed by Virginia proponents for reform, the COPN system is broken and needs significant reform.

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The State of COPN in the Commonwealth of Virginia

Opponents to Virginia’s COPN law have launched legal salvos alleging the statute is unconstitutional (rejected by a U.S. Circuit Court of Appeals three judge panel). Other efforts to reform COPN legislatively have been directed to the Virginia General Assembly. While the issue for reform has been considered by legislators at three consecutive sessions, no action was initiated until last month.

In January the General Assembly’s Joint Legislative Working Group on COPN Reform endorsed nine principles, the first of which acknowledges the need for substantial reform during the 2017 session. During the last year, members of the group heard at length from advocates on both sides of the issue. The principles endorsed by the Working Group are based on the fundamental premise that all affected parties can agree, “… ensure a comprehensive patient care system ensuring reasonable access and focused on lower patient costs and optimum conveniences.”

The 9 Principles of COPN Reform as Approved by the Joint Legislative Working Group

  1. Virginia’s current Certificate of Public Need system is broken as it currently exists and needs significant reform.
  2. The current system has left many Virginians with only a single source for many medical treatments.
  3. Any new system should have more transparency in pricing and quality, two of the fundamental aspects of patient choice.
  4. The current system does not fully recognize the varied economic, demographic, and patient access issues within our health care system.
  5. The current system acts as an impediment to efficient implementation new health modalities, and developments.
  6. The fundamental premise is to ensure a comprehensive patient care system ensuring reasonable access and focused on lower patient costs and optimum convenience.
  7. There are a number of process revisions that would prove beneficial to the current system, however, they shall be part of a comprehensive reform package.
  8. Given the above, we feel it is incumbent on the physician community, the hospital industry and others to recognize the need for change and present to the General Assembly their recommendations to do so during the 2017 session.
  9. Hospitals are the backbone of our medical treatment system and we want and need reform that will lead to strong hospitals throughout Virginia.

So it appears that reform is on the way … and in a form that will reflect the principles adopted by the Working Group. Ideally, the reforms will include consistency in how COPN is administered to avoid any real or perceived subjectivity based on political influence and always clearly focused on the best interests of the communities served. Additionally, the transition to a reformed system should reflect appropriate consideration for “legacy” hospitals and other health care providers currently serving under the existing laws.

 

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