Making Health Care Facilities Easier to Build (H.96 / Act 15) - Overview & Analysis

The bill proposes amendments to the Certificate of Need (CON) requirements for health care facilities in Vermont, specifically increasing the monetary thresholds that trigger the need for a CON. This bill aims to streamline the process for health care facilities while ensuring that significant projects still undergo necessary oversight while allowing smaller projects to proceed without intervention and added cost.

The Details:

• The amendments redefine what constitutes a "new health care project" undertaken by providers.

• Significantly raise the capital cost thresholds from $1,500,000 to $10,000,000 for non-hospitals and from $3,000,000 to $10,000,000 for hospitals

• The cost threshold for purchasing diagnostic and therapeutic equipment is increased from $1,000,000 to $5,000,000

• The annual operating expense threshold for new health care services is raised from $500,000 to $3,000,000
  
  
• The bill also introduces a new threshold of $50,000,000 for projects requiring a conceptual development phase certificate of need.
  
  
• Excludes certain routine replacements of equipment from CON requirements, as well as emergency and nonemergency ground ambulance services.
  
  
• Some projects that previously required a CON without a monetary threshold (like ambulatory surgical center) no longer have a $0 threshold.
  
  
• Routine replacement of medical equipment that is "fully depreciated" is also now exempt from CON review, as well as ambulance services and any health care facility owned by the State of Vermont.
  
  
• For ongoing CON applications, existing thresholds apply if "interested parties" are involved.
  
  
• Board Oversight and Adjustments:
  • The Green Mountain Care Board may periodically adjust monetary thresholds based on the Consumer Price Index (CPI) to account for inflation.
  • The Board can require a CON for projects split into components to evade thresholds, with decisions subject to appeal.
    
    
• These changes shall take effect upon passage of the bill, applying to all new health care projects initiated on or after that date.
  

Analysis:

Certificate of Need (CON) laws, in place in 35 states and Washington, D.C., require healthcare providers to obtain state approval before expanding facilities, offering new services, or acquiring major equipment. These laws aim to control healthcare costs, improve quality, and ensure access, but their impact on spending and the thresholds triggering them vary.

Impact on Healthcare Spending - The evidence on CON laws’ effect on healthcare spending is mixed, with research highlighting both potential cost increases and limited cost containment: Many studies suggest CON laws increase per-unit healthcare costs by restricting supply and competition. By limiting the number of providers, facilities, or beds, CON laws can lead to higher prices due to reduced market competition. For example, the Kaiser Family Foundation found states with CON laws had 11% higher healthcare costs than those without.

Some research indicates CON laws may reduce specific spending categories but not overall expenditures. A 2020 systematic review found that stringent CON programs were linked to a 1.8% reduction in Medicare spending per eligible person and lower hospital spending, but overall per-capita expenditures were unaffected.

However, CON laws are linked to increased costs for specific services like home health and nursing home care. For instance, Medicare spending per rural beneficiary is $295 higher in CON states, and Medicaid costs for community-based care are elevated. A study on home health agencies found total costs were significantly higher in states with CON laws (e.g., $3.5 million in states with both nursing home and home health CONs vs. $1.5 million in non-CON states), driven by larger caseloads rather than per-patient costs.

CON laws can create barriers to entry into the health care market, protecting incumbent providers and allowing monopoly-like pricing. The Federal Trade Commission and Department of Justice have noted that CON programs often fail to contain costs and pose anticompetitive risks, potentially entrenching oligopolies. By limiting supply, CON laws may reduce the quantity of services consumed, which could lower total spending in some cases. However, this is often offset by higher per-unit costs, and the balance of evidence leans toward increased total spending. The consensus from decades of research leans toward them increasing costs or having negligible impact on cost containment.

The increase in trigger thresholds in this bill is a welcome change; it may provide the right balance of increased service availability for less specialized (and lest costly) medical facilities to allow new entries into those markets while still controlling large hospital investments. However, it remains to be seen whether or not the new thresholds will be effective at doing this, however our neighbors in Maine have set their CON threshold at $12.4M and New York has theirs at $30M

Current Status:

The legislation was signed by the Governor on May 13, 2025.

Last updated: 5/20/2025

DISCLAIMER: Generative AI used to assist in the production of this report.