Does certificate of need reform make sense for Kentucky?

BY MARK PAYNE | LINK nky REPORTER

It’s a question Kentucky legislators are digging into this interim legislative session – the time between sessions when legislators explore topics to potentially consider next year.

In Northern Kentucky, two legislators filed bills last session to reform certificate of need, as some in the region say that St. Elizabeth holds a monopoly. Hospital officials argue that it isn’t legally a monopoly but has been designated to have dominant health care status.

The Kentucky Legislature’s certificate of need task force met for the first time on June 19 and heard testimony on what exactly Kentucky’s certificate of need is and how some other states are changing their systems.

So what is a certificate of need?

“Certificate of need laws require health care facilities to seek state approval prior to major capital expenditures or new projects, so this could include a nursing home expanding their bed capacity or a health system opening a new ambulatory care center or initiating new services like a burn unit,” said Samantha Scotti, program manager for the National Conference of State Legislatures, which provides policy research and training resources to all 50 state legislatures.

Scotti said that each state has a health planning agency, such as a health department, that reviews proposed projects and determines whether there’s a need based on a myriad of factors or criteria.

According to Kentucky’s state health plan, certificates are issued by the Kentucky Cabinet for Health and Family Services, and there are 21 medical services that require certificates of need.

In the Northern Kentucky counties of Boone, Campbell and Kenton, there are 109 certificates of need, and St. Elizabeth holds nine. Regarding hospitals, they hold four of the NKY counties’ seven total certificates, for St. Elizabeth Florence, St. Elizabeth Fort Thomas, St. Elizabeth Edgewood and St.

Elizabeth Covington.

The other three hospitals in the region that hold the certificates are Encompass Health Rehabilitation Hospital of Northern Kentucky (formerly HealthSouth Northern KY Rehabilitation Hospital; formerly American Hospital for Rehab); Gateway Rehabilitation Hospital at Florence (formerly River Valley Rehabilitation Hospital); and SUN Behavioral Health (aka Northern Kentucky Behavioral Health Hospital; formerly NorthKey Community Care Intensive Services; formerly Children Psychiatric Hospital).

In the 2023 legislative session that ran from January until the end of March, Sen. Gex Williams, R-Verona, and Rep. Marianne Proctor, R-Union, filed legislation to challenge certificate of need laws in Kentucky and how they apply to NKY. None of the legislation moved in the Legislature, though House and Senate leadership signaled they would be willing to discuss the issue in the interim.

Proctor filed House Bill 312, which would have allowed any health care provider to operate in the three northernmost coun- ties – Boone, Campbell and Kenton – without first requiring a certificate of need.

Williams filed two pieces of legislation. The first is Senate Bill 146, which would have allowed local governments to provide an exemption to the certificate of need to a health care facility. The second, Senate Bill 26, would repeal the Kentucky statute certificate of need in the state.

The topic has also come up at local city meetings. St. Elizabeth CEO Garren Colvin has spoken at the meetings, where he characterized St. Elizabeth as a “safety net hospital,” which is not an official, legal designation but refers, instead, to St. Elizabeth’s policy of accepting all patients regardless of their ability to pay.

While the Kentucky Legislature continues to explore changing its certificate of need laws, Florida, Montana and South Carolina have enacted laws to limit certificates of need for long-term-care facilities.

Further, some states have certificate of need laws that apply specifically to as many as 26 types of health care facilities or activities, and some have laws that apply only to one.

“Comparing two state certificate of need programs is kind of like comparing apples to oranges,” Scotti said.

The committee will meet again in July.