Controversy surrounding Georgia’s 38-year commitment to certificate of need laws continues after Senate Bill 123 was introduced less than two weeks ago.
The bill, sponsored by Sen. Hunter Hill, R-Atlanta, could change need laws in the state, specifically lifting restrictions imposed on the Cancer Treatment Centers of America at the time the hospital proposed building a center in Newnan.
Though the main focus of the newly introduced bill, according to the Coweta cancer center, is to lift restrictions on the local facility, the topic of need laws, also known as CON regulation, in the state is a much larger discussion.
According to the National Conference of State Legislature (NCSL), 34 states, including Georgia, currently maintain some form of need-based regulation, which aims to restrain health care costs by restricting the building of health care facilities, services offered and equipment purchased based on the need in a given area. Many of the laws were put into effect as part of the federal “Health Planning Resources Development Act” of 1974.
Georgia’s CON regulation program was established by the General Assembly in 1979 (O.C.G.A. Title 31, Chapter 6). The program is administered by the Georgia Department of Community Health’s Office of Health Planning.
The regulations were originally established to prevent an excess of competition, the overbuilding of facilities and the duplication of services. Supporters of the concept say medical costs rise if there are more facilities than the local market needs. They say it happens as doctors and hospitals seek to cover their added overhead cost of the surplus equipment and facilities. For example, if a hospital has more beds than are needed, patients are charged more than otherwise to cover the cost of the unused beds.
A secondary reason for the establishment and continued enforcement of need laws in the state is in an effort to cross-subsidize health care for the poor, according to a report created by members of the Mercatus Center, a George Mason University scholarly research organization. The report, created in March 2015, states that CON regulations were also meant to encourage and support charity and treatment of the uninsured and underinsured, by requiring a specific amount of such care under the certificate of need laws.
According to the Mercatus report, there is little evidence to support claims that CON regulation effectively controls costs or increases the amount of health care provided to the poor. Health care professionals and hospital lobbyists throughout Georgia and more than 30 other states maintain the usefulness and benefit of the need-based program.
Projects requiring a certificate of need in the state of Georgia include new general, acute-care and specialty hospitals, new or expanding nursing homes, certain ambulatory surgery centers, radiation therapy centers, open-heart surgical centers and neonatal care centers, according to a certificate of need fact sheet provided by Georgia’s Department of Community Health. Major medical equipment purchases must also be approved in addition to major hospital renovations, patient beds and any health care service not offered on a regular basis during the previous 12 months.
Once approved for need, the health provider company must then comply with a list of regulations, including provisions of charity care.
In 2008, Senate Bill 433 was passed during the Georgia legislative session which resulted in several changes being made to the state’s need laws. Though additional reporting requirements were made to ensure compliance of CON regulations, many exceptions were added, such as the inclusion of a “destination cancer hospital.” This provision allowed for the establishment of the Cancer Treatment Centers of America, later built in Newnan in 2012.
A specific list of restrictions were created for the cancer center in order for the facility to serve the needs of the community without duplicating services already provided in the area. Per the certificate of need restrictions, officials representing the facility agreed to accept only 35 percent of the center’s patients from the state of Georgia. In addition, the number of available patients beds was limited to 50.