[A] law that governs hospital projects may be headed for an overhaul. The Green Mountain Care Board wants to “streamline” the so-called certificate of need process for hospitals and raise the financial cutoff for regulatory review.
Vermont’s certificate of need statute requires hospitals to seek regulatory approval for expenditures on buildings, equipment and technology projects. The rules for the CON process have not been updated in 14 years.
Kevin Mullin, a former state senator who was appointed by Gov. Phil Scott in May to chair the Green Mountain Care Board, says critics have suggested that the board drop regulation of health care capital projects.
“I can tell you that I believe strongly that there should be (regulation),” Mullin said in recent testimony before the House Health Committee. “If we’re going to try to bend the (health care) cost curve, we need to be able to have a discussion on the different projects that come before us.”
At the same time, the board wants to update the process. “I think it’s a little bit of a feeling that there might be some unnecessary red tape,” Mullin said.
The Green Mountain Care Board is an independent body with a mandate to boost health care quality while containing costs. The board’s regulatory authority extends to health insurance rates, accountable care organizations, hospital budgets and major investments made by health care providers.
Certificates issued in 2017 included a surgical center in Colchester; an opiate addiction treatment clinic in St. Albans; a merger of home health services in Rutland and Bennington counties; and a $22.7 million expansion at Brattleboro Memorial Hospital.
Certificates of need that are currently pending include a nearly $24 million project featuring a new medical office building at Rutland Regional Medical Center and a University of Vermont Medical Center electronic records project with capital costs topping $112 million.
A top priority, officials say, is to increase the financial thresholds for Green Mountain Care Board review. This change would apply only to hospital projects.
For example, the current statute says hospitals that are purchasing or leasing a piece of diagnostic or therapeutic equipment valued at $1 million or more must seek a certificate of need. The care board says that should be raised to $1.5 million.
In a similar vein, a new health care service or technology with annual operating costs exceeding $500,000 currently is subject to a certificate of need. That threshold should be doubled to $1 million, the care board recommends.
“The financial thresholds haven’t been raised in a while, and so it makes sense to reflect the inflationary increases,” Mullin said.
The board also is recommending that some projects be excluded from or expedited within the certificate of need process. For instance, routine replacement of non-medical equipment shouldn’t require a certificate of need, officials said.
“We can look at that in the hospital budget process, so we have another venue to take an easier, less-expensive look at it,” care board member Robin Lunge said. “Given the length of the (certificate of need) process, there’s a more efficient way to do that.”
Mullin said the GMCB has been looking generally at “what we can do internally to speed up the process once we get a request for a certificate of need.”
“But there are some things that we really need legislative changes on to move forward,” he said.
The Vermont Association of Hospitals and Health Systems is backing the changes in statute.
Jeff Tieman, president and CEO of the trade group, said “routine hospital maintenance … shouldn’t be subject to this kind of review process.”
Tieman said he understands cost containment is one goal of the care board’s review.
“From that standpoint, we certainly support these laws,” he said. “We just don’t think they were intended to be a check on every hospital expense item.”
The association also is on board with efforts to make the process run more smoothly. “I think that there’s a sense that this process takes a very long time, and it’s drawn out,” Tieman said.
The care board is seeking a number of other certificate of need-related changes, including:
• Increased penalties for those who violate the law by developing a qualified project without first obtaining a certificate of need.
The statute’s enforcement provisions currently call for a civil penalty of up to $40,000 for one-time violations and up to $100,000 for continuing violations. Those numbers should be raised to $75,000 and $200,000, respectively, the board says.
• Alignment of certificate of need criteria with the state’s current health care priorities and reform initiatives.
Certificate applicants have to show that their projects are consistent with the state’s Health Resource Allocation Plan. That plan’s revision is another legislative priority of the Green Mountain Care Board.
“We want to make that more dynamic and useful not only in the certificate of need statute, but also for all the work the board does,” said Susan Barrett, the board’s executive director.
• Clarifying that care board duties can be delegated to the board’s staffers.
A draft Senate bill, S.263, addresses this issue by ordering that a “member of the board, board officer or board employee may perform any service that is within the board’s jurisdiction and that the board delegates to the member, officer or employee.”
