The powerful council overseeing North Carolina’s health care CON

The state of North Carolina requires that health care providers obtain a certificate of need prior to acquiring, replacing or adding to their facilities and equipment, except in specified circumstances. Last year, the General Assembly passed some significant changes to CON regulations, but more reform is needed. To understand why, consider the legal framework of CON and the people in power over it.

To obtain a CON, health care providers apply to the North Carolina Department of Health and Human Services, which determines whether to grant a CON for a proposed project based on certain statutory criteria.

The first of these criteria requires the proposed project must be consistent with the “applicable policies and need determinations in the State Medical Facilities Plan, the need determination of which constitutes a determinative limitation on the provision of any health service, health service facility, health service facility beds, dialysis stations, operating rooms or home health offices.”

The State Medical Facilities Plan is annually developed by DHHS “under the direction of the North Carolina State Health Coordinating Council,” whose 25 members are all appointed by the governor. The plan includes medical facilities across the state, including private facilities and equipment for adult care homes, dialysis facilities, operating rooms and much more.

Once approved by the governor, the plan becomes a barrier to market entry. If a CON application does not fit in the council’s approved plan, even if an application meets all other statutory criteria for approval, DHHS will either deny the CON or approve the application with conditions DHHS finds necessary to bring the CON application in line with the plan.

The council and its members wield extraordinary power to determine the number, type and location of new institutional health services in North Carolina. Without a prior need determination in the plan, health care providers are effectively barred from upgrading or expanding their facilities or from offering new medical services to better treat their patients — unless the upgrade or expansion fits into an exemption.

The council operates without adequate guidance from the General Assembly as to the criteria and procedure used to make the need determinations set forth in the plan. Other than stating certain requirements for public notice and hearing, the legislature has specially exempted the council from the comprehensive procedural safeguards contained in the Administrative Procedure Act, which are otherwise applicable to the promulgation of rules having the force and effect of law.

Additionally, the need determinations promulgated by the council in the plan are not subject to challenge in hearings before the Office of Administrative Hearings because one of the DHHS’ administrative rules provides that the “correctness, adequacy or appropriateness of criteria, plans and standards shall not be an issue in a contested case hearing.”

Against this backdrop of unusually broad discretion and power, the council is not composed of neutral and independent civil servants. Instead, many of the council’s members also serve as officers, directors or employees of entities engaged in providing health care services in North Carolina. These members’ businesses provide services that may be protected from competition by provisions of the plan they collectively develop.

Despite their actual or apparent conflicts of interest, however, the council and its members are not subject to the stringent requirements of the State Government Ethics Act, which was enacted to ensure “that elected and appointed State agency officials exercise their authority honestly and fairly, free from impropriety, threats, favoritism and undue influence.”

Council members could participate in the consideration of proposals to adjust the need determinations for particular health care equipment, facilities or services in the following year’s plan, even when such proposals would directly affect the market share and financial performance of the health care provider with which they’re affiliated or by which they are compensated.

Because council members do not file the same Statements of Economic Interest filed by most other public officials and members of commissions, the public cannot readily look for such potential conflicts of interest.

This unholy convergence of circumstances raises serious questions about unconstitutional delegation of legislative authority, unconstitutional violations of procedural and substantive due process rights and an unconstitutional denial of access to the courts for redress of grievances.

The CON law results in a plan annually crafted by entrenched health care providers in the state. The law risks a State Medical Facilities Plan that includes strategic determinations of need that help entrenched providers “win” the CON or that protects the entrenched providers against potential competition from other providers seeking a CON.

Both ends disadvantage the North Carolina patient population.

Jeanette Doran is president and general counsel of the North Carolina Institute for Constitutional Law. This piece was originally published on CarolinaJournal.com .

The post The powerful council overseeing North Carolina’s health care CON first appeared on Restoration NewsMedia .