FRANKFORT — A bill that opponents said would effectively repeal Kentucky’s certificate of need law failed in a bipartisan vote of the House Health Services Committee Thursday.

House Bill 204 would have blocked the ability of a dominant provider to sue a certificate of need (CON) applicant during the process. It failed as 13 committee members voted no, ?three voted yes and two lawmakers passed.

Both Republicans and Democrats voiced concern that the bill was premature and would place rural hospitals at risk.??

The sponsor, Rep. Marianne Proctor, R-Union, told lawmakers that her goal is to open the state to investment by health care providers. “What we are wanting to do is to make it so if somebody is wanting to invest in the state of Kentucky that they are able to do so.”?

“This bill does not change any of the process of certificate of need. You still must demonstrate that there is a need and you still must go through this nine step process,” she said. “What this bill does is just eliminates the dominant provider’s ability to sue you at step three and step nine.”??

The debate: ‘Mockery of the CON process.’?

Speaking in favor of the bill, Heather Lemire, the Kentucky director at Americans for Prosperity, said the CON process in Kentucky is “a very flawed system.”?

The certificate of need requirement mandates regulatory mechanisms for approving major capital expenditures and projects for certain health care facilities, according to the National Conference of State Legislatures.?

Sometimes called the “competitor’s veto,” certificate of need (CON) laws were in effect in 35 states and Washington D.C. as of December 2021.?

“This (bill) does not address repealing certificate of need,” said Lemire. “But this would at least make it a fair playing ground for people who are wanting to go through the process.”??

Among those who testified against the bill, Northern Kentucky lawyer Mark Guilfoyle, who represents St. Elizabeth Healthcare, said Proctor’s proposal “really makes a mockery of the CON process.”??

Instead of making a small change to the law, Guilfoyle said the bill would “effectively repeal CON in Kentucky.”?

Nancy Galvagni, the president of the Kentucky Hospital Association, agreed. The bill “effectively nullifies” the state’s CON process, she said.?

“House Bill 204 makes the certificate of need process just another licensing process,” she said. “Communities that are affected by a certificate of need application will be denied any process to question or challenge a certificate of need application.”?

The KHA pitched several reforms to the CON process last year, and seeks continued study of the issue. A task force met over the interim to study CON. Members concluded that they need to study it more. A resolution was introduced this session to reestablish it.?

This bill, Galvagni said, “sidesteps the task force’s recommendations and it seeks to undo” CON in Kentucky.?

What do lawmakers think?

Rep. Josh Bray, R- Mount Vernon, echoed concerns expressed in the interim that without CON, new businesses could “cherry pick” profitable services and hurt hospitals in rural areas that lack sufficient population to support multiple facilities.??

“While I support the idea of a free market, and at its core, the idea of a free market in healthcare … sounds great, but the bottom line is, in my part of the state in rural Kentucky, we don’t have free market healthcare. We’re heavily dependent on Medicaid reimbursement rates.”?

CON is “burdensome” and “extremely cost prohibitive,” he said, and needs modernization. But, he said, he worries this bill could harm rural hospitals.?

“It terrifies me that my hospital back home would have to start looking at reducing services they offer in order to be accommodated by another group coming in and cherry picking services,” said Bray, who later voted against the bill.?

Rep. Lindsey Burke, D-Lexington, also voted against House Bill 204.?

“Most of the legislators who I’ve spoken to do have an appetite for reform and I believe that the medical institutions also have an appetite for reform,” Burke said. “I know that the task force can do more research, bring more experts, and we can come up with better solutions than what’s been proposed here.”?