What to know about the certificate of need debate in Kentucky

Published 10:38 am Tuesday, January 23, 2024

For the past four years, at least one lawmaker has annually tried to reform Kentucky’s certificate of need (CON) laws.

In 2023, a legislative task force set out to understand the issue and talk about reforms — and it is slated to continue that work in 2024.

But what is the complicated CON debate all about?

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Here’s what to know.

What is certificate of need?

Think of CON as a “government mandated permission slip,” as Sen. Donald Douglas, R-Nicholasville, recently called it.

The process does just what the name suggests – it attempts to certify that there is a need for a service, be that extra beds in a hospital, an extra MRI machine or a new facility altogether, like a freestanding birthing center.

CON laws are meant to control health care costs by limiting duplicate services, according to the National Conference of State Legislatures (NCSL). Without CON, hypothetically, a community could have many duplicates of the same service. That could force a facility — such as a hospital — to raise prices to compensate for underutilized services brought on by that competition.

What are the arguments in favor of reforming CON?

People in favor of reforming CON say that, as it stands, it can lead to monopolies and is the antithesis of a free market.

This point of view says that by limiting competition, CON is also limiting the quality and accessibility of health care in Kentucky. People with this position also are more likely to site studies saying CON laws do not in fact keep health care costs down.

Proponents of opening freestanding birth centers in the state, for example, cite the fact that hundreds of Kentuckians travel out of state for low-intervention birthing experiences at such centers in Indiana and Tennessee.

Home births in the state also greatly increased between 1988 and 2021 — from 177  to 900 annually — which some reform advocates cite as evidence that many Kentucky women will choose at-home births over hospital births if there are no in-between options.

But, without CON reform, the state is unlikely to have freestanding birthing centers, meaning Kentuckians seeking alternatives to hospital births will need to travel or stay home, both of which come with complications.

What are the arguments in favor of keeping CON as is?

Some lawmakers and industry experts are worried that ending  CON requirements – and even reforming the law – could kill off hospitals in a state already riddled with health care deserts.

Without CON, some in the health care industry warn staffing shortages would worsen and some facilities may have to close, as the Lantern previously reported.

Hospitals generally oppose ending  CON, though the Kentucky Hospital Association president has said she doesn’t oppose some reform.

KHA has said ending CON would jeopardize hospitals because most – up to 80% – of Kentucky’s hospital patients are covered by some kind of government insurance. As a result, “community needs are provided at a (financial) loss,” KHA President Nancy Galvagni said in July.

Hospitals need the revenue they make from services like elective surgeries to subsidize their income, according to Galvagni. Without it, she has said other, new businesses could “cherry pick” patients covered by commercial insurance and leave only the uninsured and those on Medicaid and Medicare for hospitals to serve.

“Access would soon end because hospitals will be forced to close unprofitable services and some facilities could close entirely,” Galvagni previously said.

Is CON reform strictly a partisan issue?

No. Both Republicans and Democrats have supported reform pitches, and members of both parties have spoken against them.

However, a national conservative group with ties to the Koch brothers called Americans for Prosperity has lobbied big to reform Kentucky’s CON law, LINK NKY previously reported.

What are some of the suggested reforms?

The Kentucky Hospital Association pitched several reform ideas over the summer, including:

  • Reform the application and appeals process to save administrative time and bureaucracy. Do so by letting providers apply any time. Shorten the length of hearings in formal and expedited review processes.
  • For formal review cases, require opposing parties to state in writing why the application does not meet criteria or lose appeal rights.
  • For expedited review, limit challenges in hearings to the issue of need, and whether the applicant qualifies for expedited review.
  • Allow existing acute care hospitals to qualify for expedited review so they can convert beds for adult psychiatric care if there isn’t a freestanding psychiatric hospital in the county.
  • Allow existing acute hospitals to qualify for expedited review to convert existing acute beds to adult medical psychiatric beds.
  • Allow Kentucky hospitals to provide services already approved under CON when the hospital operates a split campus in the same county without an additional CON.

Other reform pitches include: