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Certificate of Need Under Fire in North Carolina

December 16, 2014
By Katherine Restrepo

Some North Carolina legislators are gearing up to challenge the state’s certificate of need law, charging it limits patient access to care and drives up costs.

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Some North Carolina legislators are gearing up to challenge the state’s certificate of need law, charging it limits patient access to care and drives up costs. The law requires medical providers to seek approval from the State Health Coordinating Council (SHCC) if they want to build or expand an existing health care facility, offer new services, or update major medical equipment.

Opponents of the state’s certificate of need (CON) laws point to their history of driving up costs by limiting competition and otherwise restricting access to care, and they say reforming or eliminating CON will add more providers of needed care.

“For too long, the political agenda focused more on reducing the number of uninsured and not enough on prescribing ways that allow patients to access health care services in less expensive settings,” said Roy Cordato, Ph.D., vice president of research at the John Locke Foundation in North Carolina. “Now that Obamacare has supposedly added millions more to the public and private health insurance rolls, the supply side of health care cannot be ignored.”

Partial Repeal Saves Millions

The original federal CON law was repealed by Congress in 1987 after it was found the program did not effectively restrain health care costs. North Carolina and many other states retain CON laws, however.

North Carolina passed modest reforms to the state’s CON law in 2005, allowing gastroenterologists to perform colonoscopies in their own endoscopy units. As a result, patients and payers in the state saved roughly $225 million, according to the group Reform CON Now, which is promoting reform of North Carolina’s CON law. Savings result because procedures performed in freestanding facilities are reimbursed at a lower rate than those performed in full-service hospitals.

“This law is low-hanging fruit that could be easily picked away, saving hundreds of millions, as it already has with colonoscopy suites,” said Dr. Jay Singleton, an ophthalmologist with a private practice in New Bern, NC.

Reform Legislation in 2015

Rep. Marilyn Avila (R-Wake County) will push legislation in 2015 to further reform CON in North Carolina, she says. “Successful reform would be where we can open up access at a reasonable cost for patients that at the same time doesn’t threaten rural hospitals,” Avila said. “They are a critical need in their communities.”

Greensboro ophthalmologist Dr. Matthew Appenzeller says the fight to reform CON in North Carolina is about the patient.

“North Carolina has successfully maintained health costs at a higher level than they could be by protecting monopolies through CON,” Appenzeller said. “Those costs are shared by the patient through out-of-pocket expense and taxation.”

Katherine Restrepo (krestrepo@johnlocke.org) is the health and human services policy analyst at the John Locke Foundation.

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