Certificate of Need Provides Inadequate Oversight of Hospital Affiliations

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Hospitals have been consolidating at increased rates over the last five years. Merger and acquisition transactions grew from 66 transactions in 2010 to 112 in 2015. Earlier this month, the MergerWatch Project released the results of a national survey, which concluded that current state hospital oversight programs are inadequate to protect consumers’ access to needed health care services in their own communities.

By analyzing current Certificate of Need (CON) laws for hospital oversight, MergerWatch found that only 35 states and the District of Columbia actually have a Certificate of Need Program in place. California has a similar procedure through the Office of the Attorney General. In states that do have CON Programs in place, the majority do not require CON review for affiliations that do not involve formal sale, purchase, or lease or for hospital closures.

These less formal affiliations can still lead to a loss of access to critical health care services for consumers. In Sierra Vista, Arizona, for example, women lost access to many reproductive health services, including tubal ligation, when a nearby secular hospital joined a Catholic hospital system in 2010. Women in need of such services are sent to the nearest non-religious hospital, which is 80 miles away.

MergerWatch also developed a grading system based on whether a state’s hospital oversight program meets certain criteria including when CON review is required, CON review standards, and effective engagement with affected consumers and the public. Under this grading system only six states receive an A or A-. New York State receives a B grade overall.

Many existing CON Programs are not consumer friendly and make it difficult for consumers to access material information about hospital transactions and how they will impact their access to health care. Notably, only nine states require consumer representation on the CON reviewing body, and only six states require a separate public hearing for each CON application.

The final section of the report outlines model policies for state oversight of hospital transactions and action steps for advocates to take ensure that consumer interests are protected.

Access the full report here.

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Last month, we told you about the rate review process, which happens every year when health insurance companies submit requests for rate increase or decreases to the state Department of Financial Services (DFS). New York’s carriers were asking for some pretty big increases this year – about 18 percent on average across the individual and small group market. But as we explained, those are just requests. DFS has final say, and will release its decisions in the next few weeks.

The rate review process requires a tricky balancing act. Sometimes a rate increase is needed to make sure that the insurance company can stay in business. But consumers have to be able to afford coverage. In New York, consumers contribute to this process by telling DFS how premium costs affect their lives (you can look at all the comments people sent in on the DFS website).

HCFANY participates each year by reviewing all the applications and drafting formal comments. We will post the results as soon as they are released by DFS. But in the meantime, you can look through our letters, all of which are below.

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Guest blog by Max Hadler, Health Advocacy Specialist at The New York Immigration Coalition

Despite the major health care coverage gains achieved under the Affordable Care Act, more than 450,000 New Yorkers remain uninsured because their immigration status makes them ineligible for affordable coverage. As a result of the continued failure to approve federal immigration reform or lift health coverage restrictions on many groups of immigrants, it continues to fall to state and local governments to pick up the slack. Health Care For All New York has responded to the dire lack of coverage options for immigrants by launching the Coverage 4 All campaign under the leadership of two of the coalition’s member organizations, Make the Road New York and the New York Immigration Coalition.

The campaign’s mission is to obtain affordable coverage options for all New Yorkers, regardless of immigration status. A shorter-term goal is to expand coverage to a smaller group of immigrants who are “permanently residing under color of law” (PRUCOL). These are people whose presence in the U.S. is known and may be unauthorized, and who have received confirmation from the federal government that it has no intention of deporting them. In New York, immigrants who are PRUCOL are eligible for state-funded Medicaid when they meet the income requirements (less than $16,242 annual income for a single person). However, the same people are not currently eligible for the Essential Plan, New York’s low-cost, comprehensive coverage program for low-income residents whose incomes are too high for Medicaid (up to $23,540 annually for a single person). This restriction runs counter to New York’s history of providing coverage to many immigrants who are excluded from federally-funded programs.

Most immigrants who are PRUCOL are young adults who grew up in the U.S. and have Deferred Action for Childhood Arrivals (DACA) as a result of President Obama’s 2012 executive order providing them two-year work authorizations and a reprieve from deportation. These young people are encouraged to work as a result of their DACA status but are then faced with a dearth of affordable coverage options when their incomes increase beyond the Medicaid threshold because they are ineligible for the Essential Plan and prohibited from accessing tax credits through the New York State of Health insurance marketplace.

To begin to remedy these coverage gaps, the New York State Assembly is working to expand Essential Plan eligibility to include immigrants who are PRUCOL. The Assembly included $10.3 million in its 2016-17 budget to provide this coverage, but the funding was ultimately cut in budget negotiations. Assemblymembers Richard Gottfried and Marcos Crespo have since introduced legislation that would expand Essential Plan eligibility to include immigrants who are PRUCOL. Bill A10054 was successfully voted out of the Assembly Health Committee on May 17 and is now awaiting a vote by the Ways and Means Committee. HCFANY has submitted a memorandum of support for the bill. Others are encouraged to submit their own memorandums and to borrow language from the HCFANY memo as needed. Please contact me at the New York Immigration Coalition if interested in registering your support (mhadler@nyic.org).

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The pharmaceutical industry is feeling pressure from consumers and regulators to justify high drug costs. Here in New York, for example, two early budget proposals would have launched State review of large price increases and instituted price ceilings within the Medicaid program (see HCFANY’s comments on those proposals here). Now KaloBios Pharmaceuticals has released a pricing policy that promises the company will only seek reasonable profits and, most importantly, adopt a transparent price-setting process.

KaloBios was led by Martin Shkreli, who sparked public outrage and Congressional hearings by raising the price of Daraprim by 5,000 percent. There are many complicated reasons why prescription drug prices are increasing. Many of them are legitimate market issues that will require creativity and thoughtfulness to fix. But sometimes drug prices are unaffordable because of price-gouging, something that KaloBios addresses frankly in their new policy. Transparency about the actual costs of producing and selling medications could go a long way towards preventing future Martin Shkreli-style abuses, and allow more productive public discussion about drug prices.

If the company follows through on its promises, it could set an important precedent for other pharmaceutical companies. The fact that the company produced the policy at all shows that consumer voices matter. No law or regulation forced the company to do so – just pressure from the public to treat consumers fairly.