The Cabinet for Health and Family Services’ Office of Health Policy is in the midst of modernizing Kentucky’s certificate of need program. Comments are due June 30 on a critical piece of this modernization effort.
History of CON Laws
Kentucky was an early adopter of the certificate of need program instituted in the 1970’s. The program was predicated on the fact that healthcare has unique aspects to it that make typical market forces not necessarily apply.
Recognizing these unique aspects of healthcare, and in a decade rife with inflation, the certificate of need (CON) laws were designed in an effort to reduce duplication of services in order to increase efficiency in delivery of quality services at lower costs.
The federal government incentivized states to adopt CON laws by providing federal dollars if those laws were adopted. Even after the federal funds ended, most states that had adopted CON laws continued their respective programs.
In Kentucky, the CON program is administered by the Cabinet’s Office of Health Policy. That Office promulgates regulations necessary to implement the CON laws and serve the policy of lowering costs by increasing efficiency.
A significant part of this regulatory process is the State Health Plan or “SHP.” The SHP determines whether an application receives formal or nonsubstantive review.
If a healthcare provider is proposing to establish or expand operations that are addressed by the SHP, then its application will receive formal review. Under formal review, an application is reviewed pursuant to the following five criteria:
- Consistency with the State Health Plan;
- Establishment of need for the proposed service and ability to meet that need;
- Having or having the ability to establish interrelationships and linkages with the existing health system;
- Demonstrated cost feasibility of proposed health service; and,
- Evidence that applicant provides quality service.
Conversely, if the operations are not addressed by the SHP, and they are otherwise not exempt, those applicants will receive nonsubstantive review. Nonsubstantive review focuses on whether there is a need for the proposed service and need is presumed by both statute and regulation.
Whether a proposed service is regulated by the SHP, then, is a significant matter. If it is, then an applicant is required to prove five criteria, whereas if it is not in the SHP, only one criterion is required, and it is presumed.
Comments due June 30 on proposed changes
The proposed SHP is a voluminous document, running 70 pages with revisions noted. It covers services as wide ranging from Organ Transplant Programs to Positron Emission Tomography Equipment. New or revised review criteria are made for a number of services, with exceptions being added for certain type of health care providers, such as hospitals interested in opening a home health care program.
Further, several services that had been regulated by the SHP, in some cases for decades, are being proposed to be removed from the SHP, such as ambulance services and Megavoltage Resonance Image (MRI) equipment. Whereas these services previously had had to satisfy the five criteria of formal review, if the proposed changes are accepted, they will be reviewed under the more lenient nonsubstantive review standard where need is presumed.
On Monday, June 22, 2015, a public hearing was held where the number of attendees required expansion of the hearing room. Health care providers and public officials stated their support for some of the proposed changes and opposition to other proposed changes.
If you are in a health care service that may be affected by the proposed changes, the Cabinet is accepting written comments on the proposed changes through Tuesday, June 30, 2015. Comments may be submitted by email, fax, or via postal mail. Specific delivery information can be found at this webpage.
These comments are the way the Cabinet receives feedback to consider whether to adopt the proposed changes. Submitting comments can literally change the way CON is administered in Kentucky. If you wish to submit a comment, do so by June 30, 2015.