Connecticut's Certificate of Need Statute: Time for Reevaluation
| Pages | 405 |
| Publication year | 2021 |
69 CBJ 405. Connecticut's Certificate of Need Statute: Time for Reevaluation
Certificate of need (CON) programs require that health care providers obtain a government determination of PUBLIC need before undertaking major capital expenditures or adding or deleting beds or services. Thus, " [elach certificate of need proceeding is an exercise in the inherently inexact science of determining how a society's scarce health care resources might best be allocated." (fn1)
CON has at one time been adopted by all but one state (fn2) and, until 1986, was supported by federal legislation. (fn3) As of 1985, the most recent year for which national data are available, state CON programs across the country reviewed an average of 127 applications per year, with the applicants proposing an average expenditure of $1.27 million. (fn4)
Connecticut first embraced CON in 1969 (fn5) and the General Assembly expanded it in 1973,A4th the creation of the Connecticut Commission on Hospitals and Health Care (CHHC). (fn6) The current Connecticut CON statute provides that providers must obtain prior approval of CHHC for capital expenditures exceeding $1 million in cost and major equipment purchases exceeding $400,000 in cost. CHHC is directed to CONSider the application in light of "community or regional need for such capital program . . ., the possible effect on the operating costs of the health care facility ... and such other relevant factors as the commission deems necessary. (fn7)
A number of recent events make this an opportune time to reCONSider CON in Connecticut. In February of 1994, the General Assembly's Legislative Program Review and Investigations Committee published a critique of the CON program and urged the creation of an Agency for Health Systems and a Bureau of Health Planning and Certificates of Need to administer a substantially modified CON program. (fn8) In apparent response to the report, the General Assembly subsequently enacted legislation creating the Office of Health Care Access (OHCA), slating CHHC for abolition on July 1, 1995, and ordering OHCA to make recommendations to the General Assembly regarding which, if any, of CHHCs functions should be transferred to 0HCA. (fn9) After some debate, OHCA recommended in a January 1995 report that the General Assembly should retain the current CON program, to be administered by OHCA. (fn10)
Following CHHCs recommendation, a number of legislative actions obscured the future of OHCA and CON. Governor John G. Rowland proposed in Senate Bill 969, his budget proposal, that OHCA be abolished and that its functions, including CON, be transferred to a Health Commission. (fn11) In March of 1995, the PUBLIC Health Committee sponsored House Bill 6981 that would re-establish OHCA and all of its functions, but this bill failed to mention CON. (fn12) Finally, also in March of 1995, the PUBLIC Health Committee sponsored Senate Bill 1145 that made no reference to the OHCA/CHHC/Health Commission dispute, but explicitly proposed "strengthening ... the state's certificate of need laws." (fn13)
In June 1995, at the close of the 1995 legislative session, the General Assembly acted to preserve the status quo: it failed to enact any of the pending proposals. Instead, the General Assembly preserved and funded OHCA, (fn14) resulting in the abolition of
CHHC and the retention of CON as it now exists, to be administered by OHCA. (fn15)
The issue will not likely remain dormant, however, beyond the 1995 legislative session. OHCA has recommended that CON be reCONSidered in light of Connecticut's "rapidly changing health care environment." (fn16) In addition, the PUBLIC Health Committee has formed a study group to complete a report on CON to be presented to the 1996 legislative session. The study will CONSider all aspects of CON, including its impact on the cost and quality of medical care. The Committee also expects to sponsor legislation CONSistent with its. (fn17)
This article reviews the evidence available regarding the effect of CON on the provision of health care, offers its findings to the General Assembly and the PUBLIC Health Committee, and urges the General Assembly to abolish the program. Section I outlines CON's history, with subsection A chronicling state adoption of CON programs and subsection B describing federal CON legislation and its impact on the state programs. Section 11 critiques CON in light of the goals espoused by the federal CON legislation (the National Health Planning and Resources Development Act of 1974 (NHPRDA)) (fn18): cost of, quality of, and access to health care. Section III reviews Connecticut's apparent decision to retain the program. Finally, section IV concludes the article with a recommendation that the Connecticut General Assembly abolish CON.
A. Pre-1975: state action.
1. The origin of CON.
At least three theories have been offered for the genesis of state CON laws. For example, Curran has contended that legislators added CON provisions to voluntary health planning pro
grams in response to PUBLIC concern about increasing hospital costs. (fn19) Havinghurst, on the other hand, has contended that states adopted the programs to strengthen voluntary health planning and to limit the expansion of proprietary hospitals. (fn20) Payton and Powsner offer what is perhaps the most intriguing explanation for CON laws. (fn21) They contend that CON was originally promoted in the late 1950s by "Blue Cross, the voluntary hospital establishment, and leading PUBLIC health officials in both the PUBLIC and private sectors" as serving three goals: "(1) to restore PUBLIC confidence [that had eroded with rising costs] in the voluntary hospitals and their financing arm, Blue Cross ... ; (2) to protect the dominance of the existing large teaching hospitals; and (3) to channel hospital growth in the developing suburbs into large, full-service, general hospitals." (fn22)
Whatever the reason for the creation of the laws, the process that would lead to widespread enactment began in 1960. It was then that Blue Cross in Michigan began to refuse to reimburse hospitals for new capital costs "that could not be justified by PUBLIC need." In apparent recognition of both the appropriateness of the action and Blue Cross's market power, Michigan " [S]tate governmental agencies endorsed the closing of existing small hospitals and agreed that no additional ones would be built." (fn23)
In New York, on the other hand, Blue Cross felt that it could not "control hospital CONStruction solely through [its] own market power." (fn24) Thus, it turned to the New York legislature, which had promoted voluntary regional hospital planning since 1946.(fn25) Blue Cross's lobbying efforts were rewarded in 1964 when the legislature enacted the nation's first CON statute. (fn26)
Two phenomena soon led most other states to follow New York's lead. First, the New York legislation demonstrated that "government regulation, if unavoidable, could be designed to reinforce and legitimize elite voluntary hospital decision making." (fn27) Second, the enactment of Medicare and Medicaid in 1965 indicated that government regulation of some type loomed on the horizon. CONSequently, insurers and hospital organizations across the country began urging state legislatures to enact CON legislation. (fn28)
2. CON in Connecticut.
Connecticut history represents a synthesis of the Michigan and New York experiences. In 1969, Connecticut Blue Cross followed the lead of Blue Cross of Michigan and created a voluntary "certificate of need" association. Formed jointly with the Connecticut Hospital Association, the Connecticut Hospital Planning Commission, Inc. reviewed capital expenditures in excess of $150,000 and Blue Cross refused to reimburse hospitals for non-approved projects. (fn29)
That same year, the General Assembly followed New York's lead in creating the Council on Hospitals. (fn30) Recently characterized as a "puny" certificate of need commission by John A. Doyle, a legislative aid to then-governor Thomas A Meskill, (fn31) the Council reviewed capital expenditures in excess of $250,000, but apparently had no authority to block non-approved projects. (fn32)
In 1973, Connecticut joined most other jurisdictions (fn33) in vesting CON authority in a comprehensive health planning agency, the CHHC. (fn34) The statute required a CON for capital expenditures exceeding $100,000 and equipment expenditures exceeding $25,000. (fn35)
Connecticut's statute then, as now, applied to any "health care facility" or "institution" "engaged primarily in providing services for ... human health conditions," including nursing homes, (fn36) making it "one of the most...
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