The Trump administration may start using approval of 1332 waivers as a means to spur states to unwind healthcare regulations, including certificate-of-need laws.
Technically, the federal government can't force states to overhaul CON laws, but it has both a powerful bully pulpit and leverage to spur repeals, specifically through its final sign-off on 1332 state innovation waivers that state governments are increasingly depending on to shore up their health exchange markets. These waivers are used to funnel federal money into reinsurance pools and other measures.
A White House official told Modern Healthcare late last week that there is no "black and white" discussion of trading waiver approvals to move reforms of CON laws. However, he pointed to the administration's recent guidance on so-called innovation waivers and its assurance to states that their efforts to deregulate could help them secure the pass-through funding to finance insurance market reforms.
Influential Washington analysts who have urged CON overhaul for years said the administration's willingness to wield this leverage is the real test for how serious they are about pushing the policy.
"Given that they've gone pretty far with the guardrails on waivers, why don't they do something for the right reasons?" said Thomas Miller of the American Enterprise Institute. "If you think the markets work better (than regulation), and you want to allow competition, and if competition improves the market, find a way to measure that and use waiver authority to go that direction."
The administration raised the stakes on CON last week in its "Reforming America's Healthcare System Through Choice and Competition" report. In the 120-page document, HHS and the Labor and Treasury departments contend that CON laws are "frequently costly barriers to entry for healthcare providers rather than successful tools for controlling costs or improving healthcare quality." They urged states to consider repealing, or at least scaling back, the scope of CON regulations.
On the state level, where CON repeal proposals have long been simmering, hospitals are on the alert.
"It's interesting the administration would suggest that all states comply with this mandate or recommendation," said Ethan James of the Georgia Hospital Association. "I always thought the administration was going to push states' rights issues."