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Repealing regulations could be the answer to cuts in Medicaid funds

By   /   March 17, 2017  /   News  /   No Comments

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FREEDOM TO PRACTICE: Opening up Vermont’s market to enterprising health professionals could cut costs and save Medicaid beneficiaries from taking a cut in coverage.

For lawmakers worried that Medicaid cuts in Washington could cause benefit cuts for Vermonters, there may be an alternative solution: repeal Vermont’s burdensome certificate of need laws.

“Gov. Scott could lower costs and help the vulnerable by calling for the repeal of Vermont’s certificate of need laws,” said Rob Roper, president of the free-market think tank the Ethan Allen Institute. “Repealing them would cost nothing and open the gates for competition and lower prices.”

Republican lawmakers in Washington have proposed an Affordable Care Act replacement plan that may result in trimming $200 million in federal Medicaid funds from the state of Vermont. That means lawmakers may need to find creative ways to cut costs.

Vermont’s certificate of need laws require expanding or start-up medical providers to prove to the Green Mountain Care Board that there is a need for their services in the community. Proponents of the laws say they reduce unnecessary health care spending and ensure quality through state regulation. Opponents say the lengthy application process can take years and cost applicants hundred of thousands of dollars, factors which discourage new growth in Vermont’s medical industry.

Todd Kummer, managing member of Vermont Open MRI, has spent the past six years slogging through the certificate of need bureaucracy.

“The whole process is littered with people who’ve never done what we do,” Kummer told Watchdog. “They’ve never run a business. They ask for information that is impossible to procure.”

Prices at Kummer’s facility in South Burlington are one-quarter of those charged at the University of Vermont Medical Center, evidence that more competition can give patients affordable health care options.

According to researchers at the Mercatus Center at George Mason University, Vermont has the most restrictive certificate of need laws of any state. While Vermont’s laws have become stricter over the years, other states have begun repealing the laws. Since 1980, about 15 states have dropped their certificate of need laws, opening markets to new competition. New Hampshire hopped on the bandwagon last summer.

Christopher Koopman, a senior research fellow at the Mercatus Center, says states that cut their certificate of need laws see real financial results.

“States see overall healthcare spending reduced by 0.8 percent per year after repealing certificate of need laws,” Koopman told Watchdog. “After five years, states see an overall decline of 4 percent. Specifically, this includes a decline in spending with physicians at 1.4 percent per year, and 0.3 percent per year in hospital expenditures.”

Roper said restricting the free market is a major factor driving up the cost of health care.

“These idiotic barriers to entry for practically every health-related service in the state drive up bureaucratic costs, keep out lower-priced competition and allow virtual monopoly status for Vermont hospitals, which they exploit with sky-high pricing,” he said.

Another benefit of repealing CON laws, according to research, is that the laws may actually increase patient deaths between 2 percent and 5 percent, so repealing them may directly save lives.

Reimbursement relief?

Repealing CON laws may be the only hope for private practices, especially compared with another solution put forward last week by Vermont health care officials: tweaking reimbursement rates.

In the world of health care, Medicaid, Medicare, and private insurance companies pay hospitals and independent practices different reimbursement rates for the same procedures. Since private practices have less negotiating power than hospitals, they get worse reimbursement rates from insurance companies. Kummer, for instance, said his reimbursements today are lower than in 2007, due to his lack of bargaining power.

Al Gobeille, secretary for the Department of Health and Human Services, told reporters last week that the state could cut reimbursement allowances to practices.

Amy Cooper, executive director of HealthFirst, an advocacy group for independent physicians in Vermont, said that option would hurt small practices significantly relative to large hospitals.

“[Hospital] monopolies are already charging higher prices than necessary. … It will be pretty difficult for independent care,” she said. “In 2016, there was a 20 percent cut to primary care, and that drove several pediatric practices out of business.”

Emma Lamberton is Vermont Watchdog’s health care and Rutland area reporter. Contact her at [email protected] or @EmmaBeth9. 

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Emma Lamberton is Vermont Watchdog’s health care and Rutland area reporter. She has written for the Rutland Herald and Times Argus, two of Vermont’s largest newspapers, and her work has published in The Washington Times, FoxNews.com and a number of local Vermont newspapers. She is also a member of Investigative Reporters and Editors. Emma is always looking for new stories. Readers are encouraged to contact her with tips and story ideas.