May 29, 2012

PHHPC Focuses on Cost-Savings in CON Streamlining

On Wednesday, May 24, the Public Health and Health Planning Council (“PHHPC”) met to further discuss the streamlining of the Certificate of Need (“CON”) process in New York State.

The PHHPC produced documents that explain the mission and vision for the CON, as well as a report of its recommendations for streamlining the CON program.  Over the next six to nine months, the PHHPC plans to re-design the CON program given the recommendations it announced on Wednesday.  With a few additions, these documents confirm the information that the PHHPC released at its meeting on May 10, which we previously reported here.

The major theme to emerge from this streamlining is cost-consciousness.  The PHHPC outlined the CON program’s purposes, including:

  • Preserving and expanding access to needed health care services
  • Containing the costs of health care
  • Improving the cost-effectiveness of services offered
  • Increasing health care quality and reliability
  • Increasing New Yorkers’ health as a population
  • Eliminating health disparities among New Yorkers

Consequently, the PHHPC recommended that CON be necessary only when it is likely to be cost-effective when compared with other regulatory tools.  The PHHPC reflected that CON should be limited to projects for which the supply and distribution of health care services must be assessed and regulated.  Specifically, the PHHPC affirmed that CON should not be necessary for:

  • Projects that do not require major capital investment
  • Projects that do not involve health care resources that are supply- or volume-sensitive
  • Projects that do not generate high operating costs
  • Projects that do not compromise access to care
  • Projects that do not involve emerging medical technologies

In addition to the still-certified services, the PHHPC added chemical dependence and certified mental health services.  Additionally, the PHHPC clarified that diagnostic and treatment centers (“D&TCs”) for certified mental health services, chemical dependence, and methadone maintenance no longer required certification.

The PHHPC borrows the terms “supply-sensitive” and “volume-sensitive” from the Dartmouth Atlas, which defines supply-sensitivity as the nature of a health resource that will be used more and more so long as it is available.  By contrast, a volume-sensitive resource that is used frequently will increase health quality or care outcomes.  This citation may signal that the PHHPC is concerned with maximizing value in health care spending.

Reflecting upon the potential for relaxed CON review to drive up Medicaid spending, the PHHPC recommended that the Department of Health (“DOH”) develop mechanisms to monitor and address any increased Medicaid spending stemming from this relaxed CON requirement.  The PHHPC also recommends that DOH develop some mechanism to regulate health care providers who are financially fragile and which might not be able to undertake large capital projects without running themselves out of business.  Businesses that cannot meet financial metrics of some kind might be subject to DOH review in lieu of CON.

Also, the PHHPC recommended that CON information submitted through NYSE-CON be accessible to the public, including automated notifications of status changes in projects.