State lawmakers voiced concerns with Connecticut’s certificate of need (CON) program during a recent informational session with the Office of Health Strategy (OHS), many of which focused on ways enforcement of the law could be changed to address concerns about access to healthcare and rising costs.
According to Dr. Deidre Gifford, the agency’s executive director, the information session was part of a “listening tour” OHS is conducting to understand stakeholders’ perspectives on what parts of the program are and are not working and may need modification.
Connecticut is one of 35 states, plus the District of Columbia, with a CON program, defined by OHS as a “regulatory program requiring certain types of health care providers to obtain state approval prior to making major changes in the healthcare landscape.” Healthcare providers are required by state statute to submit a CON application in a number of circumstances, including the establishment of a new facility, transfer of ownership of a facility, the termination of inpatient or outpatient services, the acquisition of imaging equipment, an increase in licensed bed capacity, and more. According to a presentation preceding comments from legislators, OHS receives about 25 new CON applications each year and makes about 50 to 60 determinations. In 2022, the most common CON request was for the acquisition of imaging equipment.
State statute also dictates circumstances in which some healthcare providers are exempt from CON requirements, such as facilities owned and operated by the federal government, nursing homes and rest homes, certain types of nonprofits, and others. According to OHS’ presentation, the most frequent exception to CON it sees is related to nonprofits licensed to provide services for the government. It also sees multiple determinations annually submitted related to relocation.
A common theme of legislators’ comments and questions was related to consolidation among hospitals, as well as larger health care providers’ acquisition of rural health care facilities, and the ability of CON to regulate this. Sen. Saud Anwar, D-East Hartford, noted that CON creates barriers for healthcare providers, some of which are needed but most of which may not be. According to Anwar, CON should erect barriers that prevent private equity companies from implementing schemes to select only well-paying patients. He also described a “trend” in insurance trying to enter into delivery of healthcare, which he says creates inherent bias.
Anwar also noted that these types of barriers of entry created by CON need to be balanced with making sure care is equally accessible to all areas of the state. As an example, Anwar cited a cardiac patient who, if required to be transferred from a rural area to an urban hospital, would likely not receive the same level of patient care as a cardiac patient who lived in the area because the transfer time could result in the deterioration of their condition. Anwar suggested implementing a 5-year-memorandum that would exempt healthcare providers and services in some parts of the state from CON requirements.
Anwar further suggested that CON should be used to stop hospitals from ending services, such as the provision or emergency or maternity care.
Other legislators also mentioned issues of facility consolidation and ways CON could be used to prevent it. Rep. Kerry Wood, D-Rocky Hill, suggested capital expenditures be reviewable in new CON applications and in cases of consolidation. Wood noted she sees a lot of money being spent on healthcare spaces and said she believed the “building of new buildings as billboards being 100 percent occupied” is driving up healthcare costs. Wood noted OHS used to review this, but stripped it from its standards for review in the 1990s. Gifford said this was a concern OHS has been hearing from other quarters and would look at what used to be in the statute.
Rep. Susan Johnson said she was concerned hospitals have become monopolies and suggested CON should look more closely at how to regulate them by looking at the definition of what constitutes a hospital. She also suggested reviewing the Emergency Medical Treatment and Active Labor Act, a federal law prohibiting participating hospitals from discharging or transferring patients needing emergency medical care. Johnson referenced several births she said had occurred on the side of the road in her district after hospital maternity units had turned away women in labor. She suggested giving the attorney general more authority to make determinations about existing laws and address cease and desist.
Gifford noted that the legislature enacted a law giving OHS the authority to impose civil penalties on healthcare facilities when they violate conditions of an agreed settlement in the most recent session but that this is different from situations where a CON application is approved and representations that were made are changed.
Rep. Maria Horn, D-Canaan, said she would like legislators to work on specifically defining the community value nonprofits provide in exchange for receiving an exemption for paying income taxes.
Several other legislators questioned whether CON laws are driving issues around increased costs and consolidations.
Rep. Mark Anderson, R-Barkhamstead, questioned whether monopolies in healthcare driving up costs were the unintended consequence of some CON applications. Gifford noted CON approval is good for two years, though it can be extended under some circumstances. If an applicant doesn’t take action to implement services, that approval is no longer valid. Anderson notes he believes the state should repeal CON as a whole.
Rep. Tom Delnicki, R-South Windsor, noted that California, which he called one of the “largest burdened states when it comes to regulation,” doesn’t have CON and questioned whether Connecticut is unintentionally driving up the cost by creating impediments through CON when California doesn’t see the value in it.
Gifford noted research reviewed by a 2017 legislative task force studying CON found no firm conclusions about whether CON brings down costs. Delnicki further suggested looking at the differences between states that do and do not have CON laws and that the state would “maybe learn something.”
Sen. Ryan Fazio, R-Greenwich, stated that there is a lot of evidence CON limits supply and said the most telling example he can think of was that Connecticut, as well as other states, waived CON during the pandemic, in order to ease supply and increase access
Other comments and questions focused on OHS’s process for reviewing CON application, many prompted by long review times. According to Gifford, the agency struggled to review applications during the pandemic due to a loss of staff. Since then, the agency has received legislative funding and is working on hiring personnel to speed up the review and approval process.
At the close of the session, OHS staff noted they would follow up on deliverables and with a meeting on the subject of enforcing CON for those interested. OHS will hold a public meeting on September 6 to allow the public and those in the health care industry to weigh in on issues surrounding CON.