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Mitchell

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•• Substance use treatment centers in states with CON laws are less likely to accept Medicaid patients 69 ; •• Uninsured patients are more likely to pay out of pocket in states with CON laws 46 ; •• A large black-white disparity in the use of angiogra phy disappeared when the procedures were exempted from CON 70,71 ; •• There is no evidence of cross-subsidization and no evidence that CON laws increase charity care 59 ; and •• Safety-net hospitals in states without CON had higher margins than similar hospitals in states without the regulation. 72 Future What options do policy makers have in addressing the defi ciencies of this regulation? Full Repeal One-in-three Americans live in a state without CON laws in health care. Most of what we know about the regulation’s effects comes from studies comparing outcomes in these non CON states with those in CON states. If CON benefits anyone, it benefits incumbent providers by enhancing their market share and profits. Interestingly, however, these benefits may be illusory or short-lived. Early research found that hospital profits fell following the enactment of CON. 13 More recent studies find that safety net hospitals have higher margins in non-CON states than in CON states. 72 And while hospital mar gins initially fell following Pennsylvania’s repeal of CON, hospitals soon regained profitability and were, in fact, more profitable than comparable hospitals within a few years. 73 Phased Repeal The earliest states to eliminate their CON laws did so imme diately. More recently, however, states have chosen to phase out their CON programs over time. In 2019, for example, Florida immediately eliminated several CON requirements, but phased out hospital CONs 2 years later. One benefit of phased repeal is that it reduces transition costs. For example, a provider who has recently purchased an expensive piece of imaging equipment may have been counting on having a near monopoly in the provision of imaging services. Lawmakers might immediately eliminate the CONs for ser vices with minimal capital requirements such as psychiatric care but then phase out the CONs for more capital-intensive services over a number of years.

underserved populations. For example, states might elimi nate CON requirements for psychiatric services, substance use facilities, or intermediate care facilities for those with intellectual disabilities.

Eliminate CONs for Low-Cost Alternatives to Care

Given the stated goal of encouraging low-cost alternatives to care, another option would be to eliminate any CON that lim its lower-cost modes of care. Prime candidates include CON requirements for ambulatory surgical centers (which are associated with savings of 17%-43%), 74 home health care services (which are widely found to save money), 75 and hos pice care (which can save $2309 per user). 76 And because the federal government currently pays higher rates for proce dures performed in hospital outpatient departments than it pays for the same services at ambulatory surgery centers, these savings could be amplified in the presence of federal reforms such as site-neutral payment, which could save up to $150 billion over a decade. 77 Eliminate CONs on Procedures That are Unlikely to be Over-Prescribed Since CON was originally conceived to stop providers from over-prescribing expensive and/or unnecessary procedures, another option for repeal would be to eliminate those CONs that limit the supply of services that are unlikely to be over prescribed. Good candidates include CONs for burn care, radiation therapy, dialysis, substance use treatment, cancer treatment, and neo-natal intensive care. Raise Thresholds A simple way to exempt more procedures from CON review would be to raise the thresholds that trigger a CON and require that these thresholds automatically adjust to inflation. In Illinois, for example, the threshold for such purchases is over $3.5 million and it is annually updated to account for inflation. 29(p. 57) Alter the Standards for Assessing Need Several of the standards used to assess need are problematic. I have already noted the problems that arise when regulators look at the utilization rates of current providers. In other cases, regulators are encouraged to consider the effect of a new facility on existing providers. This standard serves the narrow interest of incumbents and not the broader interests of the community. Statutes and regulations also often direct regulators to deny an application if it can be shown that a new provider will “duplicate” the work of an existing pro vider. Since duplication is another word for competition, this language serves no public purpose.

Eliminate CONs that Harm Vulnerable Populations

Another option for reform would be to eliminate those CONs that disproportionately limit care for vulnerable and