66 REGULATORY AND REVIEW FUNCTIONS OF HEALTH PLANNING AGENCIES The need for regulating the expansion of services and facilities has long been recognized by planners and others involved in health policy development. The primary basis for regulation is cost containment. If, for example, an area has a health facility that is not fully utilized, it makes little economic sense to build another facility that provides the same service. The construction and operating costs of the first facility are, of course, reflected in the rates consumers pay. The second facility merely duplicates the costs and functions of the first. The result often is two costly, under-utilized facilities and higher costs for services rendered. HSAs are charged with performing the following regulatory and review activities: 1) review of new institutional health services; 2) review of existing institutional health services; 3) regulation of rates for provision of health care; 4) review of proposed uses of funds provided by federal programs. The success or failure of the new health planning legislation will depend in large part on the effectiveness of state Certificate of Need programs. The final federal regulations on these programs were issued in January, 1977. The legislation requires that: 1) sanctions such as the denial or revocation of license to operate or penalties be employed if Certificate of Need procedures are not followed; 2) only those new institutional health services which the state agency finds to be needed can be granted a Certificate of Need; 3) only those new institutional health services which are granted Certificates of Need can be developed; 4) no expenditure of over $150,000 may take place without a Certificate of Need; 5) no arrangements for financing new services can be made without a Certificate of Need. 75 Most of the HSA's authority rests on its review function under the state Certificate of Need legislation. This legislation varies 67 The from state to state, but in general it requires a demonstration of Because of the rising costs of health care and unnecessary and widespread duplication of services, the need for systematic review of new institutional services and facilities is critical. The Certificate of Need laws constitute an important step towards controlling the implementation of new services and the construction of new or expanded facilities by withholding a state license where a need cannot be justified. Under most of these laws, a Certificate of Need requirement applies even when federal funds are not directly involved. In the eleven-state South, eight states have Certificate of Need legislation in effect now. Because of federal requirements under the new health planning legislation, many of the existing state laws must be modified; states without CON laws must enact the legislation to comply with NHPRD requirements. Because of the importance of the Certificate of Need program, the final CON regulations are under close scrutiny by states, health care institutions subject to regulations under the law. and various other health interests. The CON requirement has been a part of federal health planning since 1972. An extended version was incorporated into the comprehensive health planning legislation in 1974. Largely because the final federal regulations were delayed, several states in the South postponed enacting Certificate of Need legislation or revising their existing laws. Presumably, state legislatures will now act to bring state laws into conformity with the federal requirements. order to get a better understanding of the overall impact of the CON legislation, it is necessary to examine the current status of the program in the individual states. In ALABAMA Alabama did not pass Certificate of Need legislation until June, 1977. Before that time the state, under Section 1122 of the Social Security Act, reviewed any proposed addition or deletion of a health facility or change in service costing $100,000 or more. But this review process did not affect licensure. Thus, it had little influence on eliminating duplication of services or unneeded expansion of facilities, and it had little effect on containing health costs. ARKANSAS The Arkansas CON law passed in 1975 requires that new or upgraded facilities and services meet approval by the state before being licensed. The state law covers construction, expansion, or alteration of any hospital or medical facility which increases bed capacity, adds major new facilities or categories of services, or changes license classification. Although no changes in the legislation are anticipated, substantive changes in the regulations are being proposed. FLORIDA In 1973, the Florida legislature adopted CON legislation by narrow margins in both houses. The Florida law is directly tied to the state's authority to grant or deny a state license. This aspect of the law aroused much controversy; some legislators argued that a CON law would weaken the "free enterprise" system. As a result, the legislation that passed was less comprehensive than that which was introduced. Many health planners believe that to be effective the CON program should be broadened. Under the legislation the state agency (the Office of Community Medical Facilities) can generally accept or reject an HSA's decision on an application for Certificate of Need. However, the law does give regional health planning agencies the specific power to control hospital expansion. This provision proved particularly important in areas such as Dade County (Miami) which, according to one 68 69 estimate, has some 3,000 excess hospital beds. GEORGIA 76 In 1974, Georgia passed a limited Certificate of Need law which applies only to nursing homes and does not comply with the mandate of PL 93-641. The Georgia Medical Association opposes more comprehensive CON legislation and has lobbied effectively against it. Until the law is amended to include other facilities and services, as described in federal CON regulations, Georgia's law will remain ineffective. LOUISIANA Louisiana has no Certificate of Need legislation. CON legislation was drafted and introduced during the summer (1976) legislative session. A health planning officer for the designated state health planning agency explained that the political scene was not ripe for passage. The state medical association strongly opposed the bill; the state hospital association nominally endorsed the legislation but did nothing to facilitate enactment. The opposition to CON legislation in Louisiana is organized and powerful, and it appears likely that CON legislation will be delayed as long as possible by the legislature. MISSISSIPPI The state of Mississippi, as of December, 1976, has been unsuccessful in passing Certificate of Need legislation, although some five CON bills have been before the state legislature. Organized opposition to the HSA legislation is intense in Mississippi, and failure to enact CON legislation is a reflection of that opposition. The HSAs are commonly regarded by health professionals as precursors of national health insurance. Although the State Health Planning and Development Agency helped draft CON legislation, former Governor William Waller regarded the SHPDA activities with suspicion and was less than enthusiastic about its involvement in drafting CON legislation. Waller's office took the same jaundiced view of the HSAs as do most of the physicians and hospital administrators. This also explains Waller's decision to have not four HSAS in the state, but only one, located in Jackson, where it could be strongly influenced, if not controlled outright, by the state agencies. The state medical association and the hospital association have resisted efforts to get CON legislation passed in Mississippi. NORTH CAROLINA The North Carolina General Assembly passed a Certificate of Need law in 1971. Generally the legislation required a Certificate of Need from the North Carolina Medical Care Commission before any new construction to increase hospital bed capacity be allowed. Early in 1973, the North Carolina Supreme Court declared the law unconstitutional; the state has been without a CON law since that ruling. The state of North Carolina, along with the American Medical Association, has filed suit claiming that the National Health Planning and Resources Development Act of 1974 is unconstitutional. One of the state's major contentions is that the federal law requires that the state pass Certificate of Need legislation legislation which has already been declared unconstitutional in North Carolina. The state further contends that the CON requirement is an intrusion of the federal government into the internal management of the state government. In the decision outlawing CON legislation, the North Carolina Supreme Court placed itself in direct conflict with the general assembly, which had asserted that health care is a right, not a privilege. As of December, 1976, no action had been taken by the general assembly to pass new legislation regulating medical services and facilities. 77 SOUTH CAROLINA It South Carolina passed CON legislation in 1971. The State Department of Health and Environmental Control (DHEC) and the hospital association worked together to draft the legislation. covers most large medical facilities except those operated by the state or federal government, student infirmaries at private educational institutions, and doctors' offices or clinics. The state law |