Libertarians want to repeal 'certificate of need' permit process for health-care facilities; they say it needs reform, not repeal

Kentucky Health News

Should Kentucky have a permitting process for health-care facilities or allow free-market competition? Or something in between? The General Assembly has begun debating the question, amid lobbying from a national libertarian group and health-care facilities that say unfettered competition would further complicate heath care and put some of them out of business.

When stand-alone birthing centers wanted an exemption from the state's "certificate of need" law this year, the legislature said no, but created a task force to examine the law and how it works. The task force heard July 17 from lobbies for hospitals, nursing homes home-health services and hospices, who think the law should be improved but not repealed, Sarah Ladd reports for the Kentucky Lantern. (This article is based mainly on her story.)

Nancy Galvagni

Without certificate of need, some facilities could close or stop offering services that don't make money, Kentucky Hospital Association President Nancy Galvagni told the task force. She said most services “are provided at a loss and must be subsidized by the few services from which hospitals derive revenue, such as elective surgery and . . . outpatient imaging. This is how hospitals pay for services such as behavioral health, obstetrics, emergency care, trauma care, and oncology, just to name a few.”

Noting that government programs pay about three-fourths of hospital bills in Kentucky, Galvagni said that without certificate of need, “Out-of-state entities would quickly swoop in to cherry-pick the few commercially insured patients away from hospitals for the most profitable services hospitals provide. Meanwhile, Medicare and Medicaid and the uninsured would be left to the hospitals. Access would soon end because hospitals will be forced to close unprofitable services and some facilities could close entirely.”

Tim Veno, president of Leading Age Kentucky, a lobby for nonprofits that provide aging services, told lawmakers that “over-duplication of health services can have multiple negative effects” on nursing homes. Too many nursing-home beds in an area could cause a home to close, or make staffing challenges worse, he said.

Home-health services also have staffing issues the inability to compete with hourly wages offered by places like Amazon and Target, said Evan Reinhardt, executive director of the Kentucky Home Care Association.

Hospitce executive Liz Fowler said certificate of need prevents fraud in her industry, which serves people have six months or less to live, usually at home. Fowler, chief executive officer of Bluegrass Care Navigators, said “bad actors” may shortchange vulnerable patients on their benefits.

The week before the task force met, Americans For Prosperity promoted repeal of the certificate-of-need law at an event in Northern Kentucky. AFP is one of the groups funded by energy mangnate Charles Koch of Wichita, known for his spending on libertarian, conservative and Republican causes.

"Both sides of the argument — those seeking to reform or repeal certificate of need and the health care groups in favor of keeping it — have spent large sums of money lobbying Congress and the Kentucky legislature in 2023, so it could impact election and lobbying spending in Kentucky for the foreseeable future," Mark Payne reports for Link NKY (republished in the Kentucky Lantern).

AFP says it recently got the process repealed in South Carolina after 10 years of lobbying. "Kentucky is one of 35 states and the District of Columbia that operate certificate-of-need programs, which vary widely among the states, according to the National Conference of State Legislatures," Payne reports.

State Rep. Marianne Proctor

One speaker at the Northern Kentucky event was state Rep. Marianne Proctor, R-Union, who has field a bill to repeal certificate of need for Boone, Kenton and Campbell counties.

“To have competition always breeds excellence,” Proctor said. Earlier this year, she said, “In Kentucky, we have 23 regulations that require permission from the state to open such as ambulatory care services, dialysis centers, substance abuse, mental-health services.”

The lobbying groups that favor the certificate-of-need process did tell the task force that it needs changes. Galvagni suggested some, including:

• Reform the application and appeals process to save time, allowing providers to apply at any time, and have shorter hearings.
• In formal-review cases, require written statements saying why an application shouod be rejected.
• In expedited-review cases, limit challenges to the issue of need and whether the applicant qualifies for expedited review.
• Allow hospitals to provide services at an additional location in the same county without an additional certificate.
• Allow hospitals to get expedited review for converting beds to adult psychiatric care if the county has no such hospital.

The next meeting of the task force is scheduled for 10:30 a.m. Aug. 21. It is seeking public input by Sept. 1; to submit a written statement, email DeeAnn Wenk at deeann.wenk@lrc.ky.gov.