This week’s Courier Herald column:
Reform of Georgia’s healthcare system stalled last week when
the Georgia House voted down the most sweeping reforms to Georgia’s Certificate
of Need (CON) laws in decades.
Certificates of Need are essentially state issued monopoly grants that
allow hospitals and some other health care providers to operate in a given
The measure, House Bill 198, failed by a vote of 94-72. It targeted many practices adopted by Georgia’s
non-profit hospitals that appear to some to be driven more by profit motive
than by delivering the maximum amount of care at the lowest cost. Given the amount of money that flows through
Georgia’s medical system, it also attracted full lobbying efforts on both
sides, pitting those wishing to protect the status quo against those who see
opportunity in a more deregulated, competitive system.
HB 198 would have increased the amount of transparency
placed on non-profit hospitals, with measures to require disclosure of
executive compensation, cash reserves, and real estate holdings. It would have prohibited non-profits from
purchasing “medical use rights” from commercial property owners, which prohibit
competitors from opening medical facilities on the designated premises.
The bill would have allowed for hospitals to open freestanding
emergency rooms and cardiology ambulatory surgery centers. Indigent care requirements for hospitals were
proposed to increase, while CON restrictions on substance abuse facilities and
mental health treatment centers would be lifted. Current nursing home CON restrictions would
not be affected under this bill.
If passed HB 198 would have increased Georgia’s tax credit
program for rural hospitals from $60 Million to $100 Million per year. This allows taxpayers to receive a credit on
their taxes for contributions made to struggling rural hospitals in the state.
The failure to pass the bill prior to the March 7th
“crossover day” makes passage of the measure this year difficult, as a bill
must pass either the House or Senate by that day to be considered by the other
chamber. Supporters of the measure
believe the reforms will be seen again this session, however, and are
considering attaching the proposals to other active legislation.
The House is still set to consider Senate Bill 106, the “Patients
First Act”, which creates a process for Georgia to apply for a Medicaid waiver
from the Federal Government. The waiver,
if granted, would allow Georgia to draw down federal Medicaid funds similar to
other states that have expanded the program under the Affordable Care Act. The purpose of the waiver would be to allow
Georgia policy makers to alter the program to match specific needs in the
An attempt to address Georgia’s disparity between cost of
service and reimbursement rates under the state’s Medicaid program is not
specifically addressed in either measure, but could be part of a Medicaid waiver
request. Many rural hospitals estimate that
they currently recover less than 90% of the cost of service on Medicaid
patients. Individual practitioners often
recover even less, virtually requiring them to associate with hospitals in
rural areas to ensure a private practice is viable in areas where they can
expect to lose money on the majority of their patients.
A recent estimate of rural Georgia patients that providers
will see include four out of five that are on Medicare, Medicaid, or
uninsured. Hospitals and doctors can
expect to lose money on each of these patients, and there is not enough margin
from those patients with private insurance to make up for these losses.
Whether parts or all of the CON reforms are successfully
attached to legislation that passes this year, the process of reforming Georgia’s
medical delivery system will remain a work in progress. The request for waivers under the Medicaid
program may ultimately complicate the issue.
It could also, by increasing reimbursement rates closer to costs of
services provided, make some of the proposed reforms more tolerable to those
organizations currently working against them.