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House of Representatives
Session of 2013 - 2014 Regular Session

MEMORANDUM

Posted:	January 7, 2013 09:05 AM
From:	Representative Phyllis Mundy
To:	All House members
Subject:	Reintroduction of Legislation: Reinstatement of the Certificate of Need Program (Formerly HB 225 of the 2011-2012 Legislative Session)

I will soon reintroduce legislation to reinstate the Commonwealth’s Certificate of Need program and to prohibit physician self-referrals. As you may know, the PA Department of Health currently licenses health care facilities in our state. However, since the sunset of the state’s Certificate of Need program in the mid-1990s, there has been no statutory authority requiring health care facilities to prove that they are providing needed services to their communities in order to operate. In the absence of such a program, there has been a sharp increase in the number of ambulatory surgical centers (ASCs) statewide. In September 2012, a report published by the PA Health Care Cost Containment Council indicated that the number of licensed ASCs in our state has grown from 44 to 271 since 1996 – an increase of over 600%. The Council also reported in 2000 that procedures at ASCs only comprised 10% of the total outpatient procedures in Pennsylvania. In 2011, this figure was 32.5%. This upsurge in ASCs reflects an increased acquisition of expensive medical equipment, as well as a heightened pressure to pay for this equipment, often resulting in physician self-referrals. A physician self-referral is the practice of ordering tests on a patient to be performed by a facility with which the referring physician has a financial interest. In fact, the federal Government Accountability Office (GAO) recently investigated the role of physician self-referrals with regard to MRI and CT services from 2004-2010. It found that the number of self-referred MRI services increased by more than 80% compared to a 12% increase for non-self-referred MRI services. For CT services, the growth of self-referred services more than doubled, while non-self-referred CT services increased by about 30%. The GAO report also revealed the serious financial impact that self-referral driven overutilization has had on America’s health care system. GAO estimates that Medicare spent approximately $109 million more in 2010 than it would have without self-referral incentives. Physician self-referrals and unnecessary duplication of services have adversely impacted the efficiency, quality, and cost of health care, the consequences of which are ultimately borne by health care consumers. My proposal would allow for the creation of a regional, cooperative approach to health care services, where – instead of competing with each other for patients and profits – facilities would each have their own specialized health care niches. PRIOR CO-SPONSORS: Pashinski, Santarsiero, Bishop, Brennan, Buxton, Caltagirone, Carroll, D. Costa, DeLuca, Frankel, Freeman, George, Hornaman, Josephs, Kortz, Matzie, Murphy, M. O’Brien, Readshaw, K. Smith, and Heffley

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