Bill Text: HI HR82 | 2024 | Regular Session | Introduced
Bill Title: Requesting A Study Of The Necessity For Hawaii's Certificate Of Need Program Under Chapter 323d, Hawaii Revised Statutes.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2024-03-21 - The committee(s) on HUS recommend(s) that the measure be deferred. [HR82 Detail]
Download: Hawaii-2024-HR82-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.R. NO. |
82 |
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THIRTY-SECOND LEGISLATURE, 2024 |
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STATE OF HAWAII |
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HOUSE RESOLUTION
REQUESTING A STUDY OF THE NECESSITY FOR Hawaii'S CERTIFICATE OF NEED PROGRAM UNDER CHAPTER 323D, HAWAII REVISED STATUTES.
WHEREAS, Certificate of Need programs are state-level regulatory programs that require approval from a state health planning agency for construction, expansion, or major capital expenditures by health care facilities and services; and
WHEREAS, Certificate of Need programs aim to control health care costs by restricting duplicative services and determining whether new capital expenditures meet a community need; and
WHEREAS, Hawaii's Certificate of Need law, codified as part V of Chapter 323D, Hawaii Revised Statutes, was established in 1975 in response to the National Health Planning and Resources Development Act of 1974, which conditioned the award of federal public health service grants upon a state's adoption of the regulatory measures; and
WHEREAS, in 1987, the federal mandate and funding provisions of the National Health Planning and Resources Development Act were repealed; and
WHEREAS, since the repeal of the National Health Planning and Resources Development Act, twelve states have fully repealed their Certificate of Need programs or allowed their programs to expire, while three other states do not officially operate a Certificate of Need program, but maintain several approval processes that function similarly to a Certificate of Need program; and
WHEREAS, Hawaii's Certificate of Need law requires the State Health Planning and Development Agency to approve a Certificate of Need for the construction, expansion, alteration, conversion, development, initiation, or modification of all health care facilities or health care services in the State; and
WHEREAS, like Certificate of Need laws in many other states, Hawaii's Certificate of Need law is intended to provide a coordinated system that links statewide planning for health services with facilities development; and
WHEREAS, Hawaii's Certificate of Need program, like other programs nationwide, has faced criticism in several areas, including that the program:
(1) Hampers the efficient performance of health care markets by creating barriers to entry and expansion, restricting free and open competition, and limiting consumer choice, resulting in higher prices;
(2) Hampers innovation and improvements in the delivery of better health care by limiting competition;
(3) Is inconsistently administered;
(4) Fails to meet its objective of controlling health care costs; and
(5) Specifically limits rural hospitals and alternatives for neighbor island residents; and
WHEREAS, throughout the years, measures proposing to repeal the Certificate of Need law have been introduced but not enacted, including House Bill No. 551, H.D. 2, Floor Amendment 3 (2003), Senate Bill No. 1354 (2010), and Senate Bill No. 858 (2011); and
WHEREAS, the most recent measure to propose repealing Hawaii's Certificate of Need law is Senate Bill No. 2123 (2024), which received strong opposition for a February 7, 2024, hearing from the State Health Planning and Development Agency stating:
"35 states and the District of Columbia continue to fund the CON process and still believe it has value as a planning tool in controlling costs by preventing unnecessary and wasteful investments in health care facilities and equipment.
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Empirical studies have shown both substantial economic and service quality benefit from CON regulation and related planning. In three separate studies conducted by the three major automakers, each reported lower per-person health costs in states with CON programs than in states without such programs, with costs in some non-CON states being nearly triple what they were in states having a CON program.
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[T]he largest study of CON regulation on quality and treatment outcomes published in The Journal of the American Medical Association found that open heart surgery mortality rates were 21% lower in states with CON regulation than in states without.
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But we note that in response to [a paper suggesting ending CON programs in the United States as anti-competitive,] the American Health Planning Association (AHPA) published a strong rebuttal in 2005, calling the FTC report a 'largely political treatise,' and concluding that the CON is 'a useful market balancing tool, and that under current and expected health system market conditions, community-based planning and CON regulation are useful in promoting competition.'
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Most importantly, for the State of Hawaii, the CON program serves as a regulatory framework to prevent for-profit investors from entering the health care marketplace with the sole purpose of realizing the revenue from the lucrative service lines, such as cardiology, oncology and orthopedics when not in short supply, to the detriment of Hawaii's public safety-net hospitals, which rely on the revenue from these service lines to subsidize all the necessary, but unprofitable, services to their communities. The direct results would be reduced access for the underserved population and further significant state subsidies to support these hospitals."
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WHEREAS, the Healthcare Association of Hawaii also opposed the repeal of Hawaii's certificate of need program at the same hearing and submitted written testimony stating:
"The certificate of need (CON) process in Hawaii works efficiently and serves as a critical tool to keep down healthcare costs and protect patients in the state. There are real benefits to the CON process: first, the process inhibits the unfettered growth of expensive services that cannot realistically be supported in smaller communities; and, second, by ensuring that dubious and bad actors are not able to gain a foothold among vulnerable populations as can happen in other states.
The CON process works efficiently in Hawaii—while opponents of the CON may paint the process as cumbersome, our members’ experiences are the opposite. Further, the findings of this measure allege that the CON process increases costs and reduces quality, which is simply not true in the case of Hawaii. We have one of the lowest spends per beneficiary in the state for the Medicare and Medicaid programs, yet we consistently rank as one of the top—if not the top—state in terms of health and quality of care in several studies and reports."
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WHEREAS, at the same hearing, additional opposition to repeal of Hawaii's Certificate of Need law or support for the law was expressed in written testimony by the Hawaii Primary Care Association; Kauai Hospice; Hawaii Pacific Health; Kokua Mau, A Movement to Improve Care; Hawaii Care Choices; U.S. Renal Care; two medical doctors; a former State Administrator of the State Health Planning and Development Agency; and one individual; and
WHEREAS, based upon the locally divided opinions on this issue, national health care reform, and other changes taking place in the health care marketplace, it seems appropriate to examine the relevancy of Hawaii's Certificate of Need program and its effects on health care access, quality, competition, and costs; now, therefore,
BE IT RESOLVED by the House of Representatives of the Thirty-second Legislature of the State of Hawaii, Regular Session of 2024, that the Legislative Reference Bureau is requested to conduct a study of the necessity for Hawaii's Certificate of Need program under chapter 323D, Hawaii Revised Statutes; and
BE IT FURTHER RESOLVED that the study is requested to examine:
(1) The role of the Certificate of Need program in Hawaii;
(2) Whether certain facilities, types of facilities, or services should be exempt from the Certificate of Need program;
(3) Whether modifications made to the Certificate of Need program in other states may be beneficial to implement in Hawaii;
(4) What the average cost of a certificate of need application in Hawaii is and whether certificate of need requirements have discouraged healthcare providers from constructing or expanding facilities in the State;
(5) Whether the "competitor's veto"--that is, the ability of marketplace competitors to testify against the granting of a certificate of need‑-should be eliminated;
(6) Whether reform of the Certificate of Need could help reduce strain on healthcare facilities and improve the number of available beds in a future healthcare emergency, similar to that experienced during the COVID-19 pandemic; and
(7) Whether reducing or eliminating Certificate of Need requirements may improve health care access on neighbor islands and for vulnerable populations; and
BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to submit a report of its findings and recommendations regarding the Certificate of Need program, including appropriate recommendations to eliminate or modify the existing Certificate of Need program and any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2026; and
BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of Health, Administrator of the State Health Planning and Development Agency, and Director of the Legislative Reference Bureau.
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OFFERED BY: |
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Certificate of Need; Repeal; State Health Planning and Development Agency; SHPDA; Health Planning and Resources Development and Health Care Cost Control
