Hospital regulation bill could clear path for Medicaid expansion

Sen. David Lucas, D-Macon, sponsored a bill that would ease the rules governing the establishment of hospitals in rural areas. (Natrice Miller/

Credit: Natrice Miller/AJC

Credit: Natrice Miller/AJC

Sen. David Lucas, D-Macon, sponsored a bill that would ease the rules governing the establishment of hospitals in rural areas. (Natrice Miller/

Supporters of legislation introduced in the state Senate to change how the state regulates health care facilities say their bill would allow more hospitals to open in rural parts of Georgia.

Senate Bill 442 would repeal the requirements for a certificate of need, or CON, that determines whether hospitals can operate in counties with a population less than 35,000. The bill, filed Wednesday by state Sen. David Lucas, a Democrat from Macon, has bipartisan support, including from the Republican chairs of the Senate Rules Committee and Health and Human Services Committee.

Originally, Lucas said he saw the value of CON as a way to protect small, rural hospitals from being pushed out by big hospitals that would “cherry-pick their patients and leave the nonpaying patients to the public hospital.”

But now, those rural hospitals are “hanging on by a limb,” said Lucas, whose district includes Hancock County, which has a population of less than 9,000 and has struggled to keep hospitals in business. In rural communities, “you do not have the big corporations who can turn around and donate money and receive credit,” he said.

To really address the health care needs of rural Georgians, though, he said the state needs to fully expand Medicaid under the Affordable Care Act and “CON has to be part of that conversation.” Democratic supporters believe the bill, if passed, could entice Republican lawmakers to support Medicaid expansion in exchange.

Medicaid is the government health insurance program for low-income people. Georgia has not accepted federal funding to expand Medicaid under the ACA, remaining one of just 10 states in the nation not to do so.

If Georgia expanded Medicaid, the federal government would cover 90% of the cost of the expanded population, plus the state would qualify for an added incentive that would create a financial surplus.

As of now, Georgia only provides Medicaid to low-income adults who meet certain criteria, such as those who are pregnant or on disability. Gov. Brian Kemp launched Georgia Pathways to Coverage last year, which expanded eligibility for low-income people who work at least 80 hours per month or perform certain specified activities. But some 300,000 adult Georgians remain uninsured.

Some Republicans, including Lt. Gov Burt Jones, have expressed a willingness to consider expanding Medicaid if changing CON rules is on the table.

However, Monty Veazey, president of the Georgia Alliance of Community Hospitals, said the bill was built around faulty reasoning. “It’s not going to help rural hospitals,” he said. “The only thing it would do is hurt them.”

Large, wealthy hospitals would be unlikely to establish themselves in rural areas, Veazey said, because there wouldn’t be enough patients to justify the costs. An easing of CON rules would be more likely to attract ambulatory surgical centers, which provide free-standing outpatient surgical care. Those centers, which are often backed by private equity, typically only accept patients who can pay for services or have private insurance plans.

That setup, he said, then leaves the rural hospitals to care for patients who have Medicaid and Medicare insurance, as well as those who don’t pay at all, instead of serving a diverse clientele.

Eventually, those rural hospitals often close, leaving low-income patients with fewer options for health care.

Senate Minority Leader Gloria Butler, who signed onto SB 442, explained before her colleagues Thursday the reversal of her “deepest held and most profound belief” to preserve the CON law.

While the Stone Mountain Democrat said she has felt that CON laws ultimately protect patients, Butler said changes in the health care market have reduced access for rural patients. Those changes have her considering relaxing the state’s CON rules to “give rural patients new, innovative health care options.”

Still, she wants to see the conversation in concert with Medicaid talks.

“Only when combined with full, traditional Medicaid expansion will reforming CON help our rural Georgians access health care without losing more hospitals in the process,” she said.

Butler’s counterpart in the state House, Minority Leader James Beverly, backed down on demanding full-scale Medicaid expansion, saying he would be open to a waiver plan that could involve purchasing private insurance plans for eligible recipients on the ACA marketplace.

Beverly, a Democrat from Macon, said he also saw an opportunity, by agreeing to ease CON requirements in rural areas, to improve maternal mortality rates, a Democratic priority.

Certificates of need were established to control the amount of money the federal government pays hospitals for their services. However, over time, the efforts imposed to keep costs down, such as limiting the number of hospitals that can operate in a certain area, has made the market “anti-competitive and monopolistic,” said state Sen. Ben Watson, R-Savannah. Easing CON rules would provide more access to health care, he said.

Staff writer Ariel Hart contributed to this article.