Medical professionals in Nebraska and North Carolina challenged the constitutionality of the states' certificate-of-need laws, alleging in lawsuits filed Thursday that they reduce access to care and inflate costs.
A North Carolina ophthalmologist and the owner of Nebraska healthcare transportation and home health companies filed lawsuits claiming that CON laws unlawfully prevented them from expanding or establishing their businesses. They allege certificates of need violate the anti-monopoly clause in the Constitution and its prohibition on special privileges, among other provisions. They've asked that the state governments lift the regulations.
The Institute of Justice, which is representing the plaintiffs, pointed to several states have waived CON laws amid the COVID-19 pandemic including Nebraska, which waived its certificate of need law to add or convert beds to prepare for coronavirus cases.
"It shouldn't have taken a worldwide pandemic to realize that putting arbitrary limits on the availability of medical facilities and equipment is a shortsighted policy," Renée Flaherty, an attorney at the Institute of Justice who filed the North Carolina lawsuit, said in prepared remarks. "Certificate of need laws are a relic of a policy abandoned by the federal government decades ago. At this point, their only purpose is to protect healthcare conglomerates' monopoly on care."
Dr. Jay Singleton, who owns Singleton Vision Center in New Berth, N.C., alleged that city planners have projected no "need" for a new surgical facility in the area through at least 2022, which is preventing his adequately equipped clinic and staff from performing more surgeries.
Singleton provides all of his non-operative services at the center, but is legally required to perform the vast majority of his eye surgeries at CarolinaEast Medical Center. The facility fee alone for a cataract surgery at CarolinaEast is almost $6,000 while the total cost is less than $1,800 at his facility, Singleton claims.
"Banning Dr. Singleton from offering surgeries to all patients at his clinic services one purpose only: protecting established providers from competition. That is unconstitutional," the complaint reads.
North Carolina state officials declined to comment and Nebraska state officials did not respond.
M'Moupientila N'Da, who owns Dignity Non-Emergency Medical Transportation based in Douglas County, Neb., allegedly had has application for his business denied because he did not prove that "public convenience and necessity" "required" more competition, despite meeting other provisions of the CON law.
A subsection of the "public convenience and necessity" rule states that even if there is unmet demand, new businesses will not be able to start if any of the existing non-emergency medical transportation companies could possibly expand in the future, according to the complaint. If none of the existing non-emergency medical transportation companies object to the application, it is typically granted—although that wasn't the case, N'Da alleged.
N'Da, a refugee of the African nation Togo who also owns Dignity Care Group and Dignity Home Hospice, can take more than his 100 elderly and disabled patients to the grocery store, but not to the pharmacy or a doctor's office.
"Plaintiff N'Da does not believe that the existing non-emergency medical transportation companies should be allowed to keep him from competing," the complaint reads.
Thirty-five states and the District of Columbia have certificate-of-need regulations, which require a state-appointed board to review new providers that look to enter a market, as well as existing providers' new services. The intent was to control costs by restricting the supply of healthcare services and dividing them among discrete geographical regions, but they have effectively limited competition, critics claim.
The Trump administration has described certificates of need as "one of the worst" of states' anti-competitive regulations.
A 2018 report urged states to scale back the laws, blaming state governments and commercial insurers for reducing access and limiting price transparency. The administration, similar to many economists, pointed to CON laws as facilitators of hospital and physician consolidation that often raises prices.
Certificates of need protect stakeholders and limit competition, which leads to higher costs without improving quality, contrary to proponents' claims, healthcare policy experts argued in 2017 study. A 2016 study found that rates for pneumonia, heart failure and heart attacks are significantly higher in hospitals in states with CON laws, as were deaths from complications after surgery.
States should eliminate them, or allow them to sunset, experts said. If a CON law is not repealed, it should at least be amended to require the review board to explicitly assess impacts on competition and consumers and justify the reasons for denying a certificate of need, researchers posed.
If a hospital thinks it needs more beds, it should be able to add those beds without getting permission from the government, said Will Aronin, Institute of Justice attorney.
"Research demonstrates that CON laws fail to control routine healthcare costs, and, in many cases, patients pay significantly more because a few companies monopolize services," he said in prepared remarks. "At the same time, CON laws also limit the growth of medical providers and their ability to respond to market forces. It is time for states to let hospitals, doctors and entrepreneurs bring more competition and choice to the healthcare marketplace."
