Certificate of need laws decrease the quality of care and increase costs, say two newly released studies from George Mason University. The finding has implications for Vermont, which has the most extensive CON laws of any state. CON laws restrict entry for new practices to enter a state’s health care network by mandating that applicants prove the community need that their proposed service would fill.
In Vermont, the Green Mountain Care Board evaluates certificate of need applications and sets standards for facility use and the number of procedures allowed through a facility. As of 2016, Vermont leads all states(link is external) with about 30 CON laws.
Proponents of CON laws say the laws control wasted resources. Insurers make health care overly-available, some argue, and so the regulation of new facilities prevents excess.
Proponents say that by controlling the number of facilities, CON laws control wasteful over-access.
“Not all access to care is positive. (Studies show) about one third of health care is unnecessary,” Green Mountain Care Board Chair Al Gobeille told Vermont Watchdog.
In the first study(link is external) by George Mason University, researchers looked at health systems that spanned the borders of connected states, one side with CON laws, and the other without. The study found that hospitals in CON states have lower care in eight of nine categories, resulting in patient death rates between 2.5 percent and 5 percent higher than non-CON counterparts.
Death for inpatients with serious treatable conditions at CON facilities was between six and eight deaths higher than non-CON hospitals for every 1,000 surgical discharges. Pneumonia deaths increased six to eight patients for every thousand treated with the disease. Heart failure deaths and heart attack readmission rates were also significantly higher for hospitals in certificate of need states.
At the first all-payer health care public hearing(link is external) on Monday, Gobeille said balancing cost and quality is the most difficult job of the board. “We have to balance access, quality and cost … what point is (quality) too low?”
However, the second study(link is external) found no evidence that lower costs balanced out lower quality in CON states. After analyzing the findings of 19 academic studies spanning 40 years of research, George Mason researchers found that per unit costs of treatment go up, along with hospital investments and total patient expenditures.
The evidence, said researchers, pointed to an interest-group theory of regulation, meaning already established practices push lawmakers to limit new competition for the good of their own businesses, rather than the good of the public.
Amy Cooper, executive director of HealthFirst, believes special interest groups are behind Vermont’s proliferation of CON laws. Cooper has a certificate of need application before the board to open an ambulatory surgery center in Colchester. The center would be led by independent surgeons.
“There is a very strong lobby from the Vermont Hospital Association,” she said. “Incumbents are pressured to shape laws which shape monopolies.”
Cooper's practice would be in direct competition with hospital facilities, able to operate at about half the cost for patients with, she said, no sacrifice of quality.
The Medicare Payment Advisory Commission has vocally supported ambulatory surgical centers before Congress, citing convenience for patients and doctors as well as reduced reimbursement compared to hospital facilities. Vermont has only one such center in the state — the lowest ratio per-capita for any state in the nation.
However, MPAC has also cited studies(link is external) that show that there is an association between an increase in ambulatory surgery and an increase in ASCs. "Although none of these studies assessed whether the additional procedures were inappropriate," they suggest in a March 2016 report(link is external) that "the presence of ASCs might increase overall surgical volume."
In 2014, over 5,400 ASCs treated 3.4 million fee-for-service (FFS) Medicare beneficiaries. Medicare program and beneficiary spending on ASC services was over $3.8 billion.
MPAC also noted that from 2009 through 2013, the number of Medicare-certified ASCs grew by an average annual rate of 1.5 percent; in 2014, the number increased by 1.9 percent (the vast majority of new ASCs were for-profit facilities). From 2009 through 2013, the volume of services per beneficiary in ASCs grew by an average annual rate of 1.3 percent. However, in 2014 volume per FFS beneficiary decreased by 0.8 percent in ASCs and increased by 1.1 percent in hospitals, but the reasons for that were unclear.
“Vermont is an unfriendly environment to innovation,” Cooper said. Her group, ACTD LLC, has already spent hundreds of thousands of dollars on the required application components. These requirements make it incredibly hard for any health provider to start in Vermont, she said, because they have to have the initial capital to attempt the application process.
The George Mason study recommended free-market practices, letting consumers naturally weed out expensive or low-quality practices without government regulation through CON laws.
