CHARLESTON – West Virginia’s certificate of need laws harm patients and deter millions of dollars in health care investment in the state, according to a report released today.
The report, released September 14 by the Americans for Prosperity Foundation, says West Virginia is one of 35 states with CON laws, which require health care providers to gain approval from the government before adding or expanding health care services, building or acquiring new facilities or incurring capital expenditures above a specific dollar amount.
The report, titled Permission to Care, analyzed CON applications from 2017 to 2020. It found that at least 20 applications totaling almost $44 million in proposed expenditures were withdrawn after rival providers filed opposition. The report notes three more CON applications in 2021 were withdrawn after rival opposition was filed.
“West Virginia’s certificate of need law empowers incumbent providers with veto power over health care investment,” authors Kevin Schmidt and Thomas Kimbrell, both with AFPF said. “Providers can drag out CON applications for needed services for years and add thousands of dollars in legal fees.
“It’s no surprise that our review identified more than 20 providers who decided to forfeit their application fees rather than fight for approval in a rigged system.”
The state Health Care Authority, which oversees the CON program, did not return messages seeking comment for this story.
While officials say the purpose of the CON program is to control costs, improve quality, ensure access and encourage collaboration, the AFPF report says the law fails to do any of these.
“Rather than encourage collaboration, CON laws pit providers against each other to fight for the government’s favor,” the AFPF says. “West Virginia’s CON statute empowers providers to oppose others’ CON applications, potentially adding years of litigation, arduous discovery requests, and thousands of dollars in fees for attorneys, consultants, and expert testimony.”
As the report indicates, the state’s CON law also includes a moratorium on new opioid treatment facilities despite the state being known as the epicenter of the opioid epidemic. The report also says that without CON, West Virginians would have increased access and higher quality care, for which they would pay less.
“Certificate of need laws in West Virginia are harming patients who need medical care while deterring new jobs and health care investment in the state,” the report states. “It’s a bad deal.
“Health care entrepreneurs in West Virginia face serious barriers to entry: thousands of dollars in application fees, potential litigation from their competitors, moratoriums on specific sectors and the burden of navigating the process to gain approval. The CON statute empowers competing providers to challenge other providers’ CON applications, driving out health care investment.”
The report says the battles among providers over CON approvals actually result in patients paying the price.
“Research indicates West Virginia’s CON laws increase costs for patients and decrease quality of care,” the report states. “Restrictive need calculations and moratoria on adding new facilities and services, such as opioid addiction treatment, leave many West Virginians with reduced access to critical care, especially in rural areas. …
“In fact, CON is a scheme to protect incumbent care providers from competition by limiting the supply of health care in the state at the patients’ expense.”
West Virginia’s CON program requires health care providers to receive permission from the HCA before adding or expanding health care services, building or acquiring new facilities, or incurring capital expenditures with a value of $5,803,788 or more.
The HCA claims CON is a “regulatory element” to “control care costs, improve the quality and efficiency of the health care system, encourage collaboration and develop a system of health care delivery which makes health services available to all residents of the state.”
Rather than encourage collaboration, the report says CON laws “pit providers against each other to fight for the government’s favor.”
“The CON statute empowers providers to challenge others’ CON applications, delaying or preventing approval,” the report states. “This competitor’s veto drives out health care investments that would have happened without CON.
“Wielding ‘affected person’ status, competing health care providers can oppose other providers’ CON applications, potentially adding years of litigation, arduous discovery requests, and thousands of dollars in fees for attorneys, consultants and expert testimony.”
The report cites an example of when West Virginia University applied for a CON for a mobile lung cancer screening program known as LUCAS. Donations would cover a bulk of the operating costs, allowing WVU Health to screen individuals with no insurance and are unable to pay for services. The HCA approved the CON, but a competitor litigated HCA decision and kept the program in limbo for years.
Also, the report details a case when a hospital applied to add cardiac care services to its offerings. A competitor that already received transfer patients for cardiac emergencies opposed the application even though evidence showed it often was unable to accept patients in a timely manner.
The report even cites a recent objection to a CON application by two competing home health agencies because “a section of text in the home health standards did not apply because the conclusion — the threshold for unmet need for home health services — was indented further left than the preceding text.”
Litigation that went all the way to the state Supreme Court pushed final approval of the challenged projects nearly three years for one project and four years for the other.
“CON application fees are non-refundable, so these companies decided it was better to forfeit thousands of dollars than continue through the CON process when faced with competitor opposition,” the report states. “Indeed, applying for a CON is an expensive and time-consuming process. Application fees range up to $35,000. That does not include the cost of hiring consultants and lawyers to navigate all the red tape to gain approval.”
Meanwhile, the state raked in more than $1 million in CON application fees from 2017 to 2020.
The report says numerous studies find higher healthcare costs in states with CON laws.
The Mercatus Center estimates West Virginians would spent about $232 less per person per year on healthcare if the state didn’t have CON laws. Also, Mercatus estimates the state would have 26 more hospitals – half of those in rural areas – without CON laws.
“West Virginia’s CON laws harm patients and health care providers,” the report concludes. “Health care entrepreneurs face serious barriers to entry: thousands of dollars in application fees, political and public opposition from competitors, and the burden of navigating the arduous approval process. All while patients in West Virginia pay higher costs for reduced access and lower quality care. Not only is West Virginia losing jobs as a result of CON, it may also be losing lives.”
