Bills Would Slightly Ease, Not Repeal, Anti-Competitive Hospital Rationing Law

Sen. Curt VanderWall, R–Ludington, introduced legislation last week that could take a small step toward expanding Michigan residents’ ability to obtain potentially lifesaving medical care. The change could be especially useful for mental health patients and people in rural areas.

The proposals come just a month after the Michigan Legislature vetoed an action by a state Certificate of Need Commission, which would have limited access to a new cancer treatment to a handful of facilities. This was the first time a Certificate of Need (CON) action has ever been rebuffed since the law creating the certificate of need requirement was enacted in the 1970s.

Michigan’s Certificate of Need law gives a panel of individuals representing existing medical care providers and unions the power to prohibit new or existing hospitals or clinics from opening or expanding. The panel can also limit investments in expensive diagnostic and other tools such as MRI and CAT scan machines.

The commission raised eyebrows earlier this year by moving to restrict access to a new cancer treatment, known as immune effector cell therapy, to just four of the state’s largest hospital systems. These interests claimed the new treatment is too complicated and expensive to be administered at smaller clinics. But patients in rural areas and their advocates complained the restriction would impose unnecessary burdens on them. They also pointed out that the treatment was approved by federal regulators more than two years ago.

The big downstate hospitals argued that federal oversight would be inadequate for smaller providers. In the past, however, actions by Michigan’s CON commission had been limited to restricting new or expanded facilities, not the availability of specific treatments.

VanderWall was also the author of Senate Concurrent Resolution 14, the October measure blocking the CON commission from limiting access to the new treatment.

“This treatment ... is bringing patients back from the brink of death and giving them a new chance at life — a chance that shouldn’t be taken away by bureaucratic hurdles and unnecessary regulations,” VanderWall said.

“I have spent a great deal of time working to understand the certificate of need requirements in Michigan and ways to improve upon them,” the senator said in a press release.

VanderWall's bills are limited in their effects. Senate Bill 669 would repeal the CON commission’s authority to ration capital investments by hospitals and clinics. But as the Senate Fiscal Agency explained in a bill summary, “As the capital expenditures almost always are used to finance expansions of facilities and those expansions themselves require a certificate of need, the bill would have no meaningful fiscal impact.”

Other provisions of the package would slightly ease restrictions on rural hospitals. And Senate Bill 672 could have a more substantial effect on the availability of treatment for acute mental health conditions. Under current law, the CON commission is authorized to halt hospital and clinic plans to add more beds or change the purpose of existing beds. The bill would exempt licensed psychiatric beds from this restriction, though with a catch.

Under Senate Bill 673, half of the beds in psychiatric hospitals or units would have to be reserved for “public patients,” which MichiganVotes.org describes as “individuals in a county-level mental health mental health social welfare program, or subject to a treatment order signed by a clinical psychiatrist, or deemed by a court to be a threat to themselves or others.”

According to VanderWall, “There is a mental health shortage in Michigan that we must address. Opening additional beds by eliminating the certificate of need requirement can only help improve access.”

Lindsay Killen, vice president of communications at the Mackinac Center for Public Policy, applauded the bills.

"These CON laws have resulted in fewer hospitals across our state, reduced the amount of hospital beds available, arbitrarily limit access to vital services such as MRI and CT scans, and increase the cost of receiving care for patients across our state," Killen said.

Michigan and other states enacted CON laws in the 1970s under a federal mandate that originated with the Nixon administration. The mandate was later repealed, and 15 states have also repealed their CON laws. But repeal efforts elsewhere have run into the power of the hospital industry, which has members and employees in most legislative districts.