Certificate of Need

38 states have certificate of need statutes.

The 1974 federal law requiring Certificate of Need (CON) for participation in the Medicare program was repealed in 1986. CON is opposed by pro-competition forces, like the Federal Trade Commission and supported by controlled access proponents like state Medicaid programs, some insurers and some providers. Advocates of managed competition believe that third party contracting can replace it. Florida has both CON and managed competition. Insurers, who once followed Medicare, are now establishing programs that work around Medicare requirements and use programs that do not require CON.

States that have CON struggle with regulatory enforcement. Limited state review resources are dedicated to Initial review and litigation of decisions. A few states, notably Florida and Georgia, have tight enforcement standards. Maryland, an all-payer state, tightly regulates hospital inpatient costs and charges. However, most states enforce CON by exception or through initial licensure and construction review.

State plan forecasts are driven by historical data, often lagging the forecast horizon by three to five years. Health reform changes will put stress on traditional planning methodologies. It is unclear how healthcare reform will affect the number of CONs allocated, and submitted, but it is clear that administrators are putting projects on hold while health reform structure is being developed.

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