REGULATORY REVIEW


Massachusetts Proposes DoN MAASC labels the proposal disappointing and contrary to the goals of the Commonwealth BY NAWA ARSALA


Background


Massachusetts has pro- posed a Determination of Need (DoN) regulation that would prohibit free-


standing ASCs from applying for a DoN for any proposed project unless they are affiliated with or in a joint venture with an acute care hospital. The affiliation described in the proposed regulation broadly includes: capital expenditures, substantial change in service, origi- nal license, DoN-required service or DoN-required equipment. Massachu- setts enacted a moratorium on DoNs for ASCs in 1994. Since then, the number of Medicare-certified ASCs in the state has decreased from 63 to 56. The pro- posed regulations would lift this mor- atorium, which prevented ASCs from applying for DoNs. This type of “con- trolled expansion” has been proposed only in Massachusetts. Moreover, ASCs in the state are the only stakeholders subject to such a restriction.


What is a Certificate of Need? Certificate of Need (CON) or DoN requirements exist in 36 states, as well as Washington, DC, and Puerto Rico. Massachusetts first put its DoN requirements in place in 1971. CON and DoN laws require approval from the state before new health care pro- viders can enter a market or expand their services. The regulations are intended to regulate costs, encourage equitable geographic access to health care and ensure that the market is not saturated with duplicate services. Their value in restraining health care costs and coor- dinating the planning of new services, however, is highly contested by state leg- islatures and other stakeholders across the country. For more information on the history of DoNs, see the article on page 30 of the October 2016 Focus.


How Did We Get Here? The


Massachusetts Health Policy


Commission, an independent state agency, established in 2012 by the state legislature, has worked to rein in the rising costs of health care in the state, while raising quality. Despite its efforts, health care spending in Massa- chusetts rose to $57.2 billion in 2015, growing 3.9 percent over the previous year, according to a 2016 annual report by Massachusetts’ Center for Health Information and Analysis. The per cap- ita health care costs per resident rose to $8,424, up from $8,010 in 2014. Many in the ASC community believe that the newly proposed DoN require-


Track the Latest Regulatory and Legislative News for ASCs


Visit ASCA’s web site every week to stay up to date on the latest government affairs news affecting the ASC industry. Every week, ASCA’s Government Affairs Update newsletter is posted online for ASCA members to read. The weekly newsletter tracks and analyzes the latest legislative and regulatory developments concerning ASCs.


www.ascassociation.org/ GovtAffairsUpdate


ments were introduced in response to the recent closures of two community hospitals in Massachusetts. Accord- ing to the Massachusetts Health Policy Commission, cooperation amongst the health care providers and state regula- tors can ensure the viability of com- munity hospitals, while lowering costs for patients and ensuring high-qual- ity care. In response to this report, the Massachusetts Department of Public Health found that requiring ASC open- ings and expansions to be tied to acute- care hospitals would alleviate the con- cerns of the community hospitals and lower costs. Somewhat contrary to that finding, a recent study released by Healthcare Bluebook found that pay- ers in Massachusetts saved $793 mil- lion between the years 2007 to 2011 by choosing ASCs instead of hospitals. According to the Department of


Public Health, the proposed regulations entail an extensive overhaul of a bur- densome, extremely lengthy and out- dated process for obtaining a DoN, and have been supported by all stake- holders, including ASCs. ASCs sup- port simplifying the process and removing the moratorium. The addi- tion requiring ASCs to be affiliated with their competitor, some in the ASC community believe, is anti- competitive. ASCs support the lift- ing of the moratorium and the simpli- fying of the DoN process. However, the new restriction requiring ASCs to be affiliated with their competitor is something that has not been seen in any other state, and ASCs oppose that requirement.


Anti-Trust Issues In 2008, the US Department of Justice and the Federal Trade Commission released a joint statement stating that


ASC FOCUS JANUARY 2017 21


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