How CON Laws Influence Hospice Quality, Program Integrity

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Variations in hospice certificate of need (CON) state laws are raising program integrity concerns.

However, this coin has two sides. CONs have a big role to play when it comes to quality and utilization, according to Susan Ponder-Stansel, president and CEO of Florida-based Alivia Care.

“What ends up happening in states without CON is actually lower hospice utilization with way too many hospices in one service area, and often fragmented care without all four levels of hospice offered,” Ponder-Stansel told Hospice News. “In states with CON, we see much higher utilization rates and more scaling down on quality. You can’t create an unlimited demand or more demand without understanding consumer preferences and regulatory barriers. You have to walk in line with the [patient] demand and regulatory requirements.”

Alivia Care emerged in 2020 when Community Hospice & Palliative Care, now an affiliate, formed a larger company with a wider range of services. Headquartered in Jacksonville, Florida, the nonprofit hospice and palliative care provider has since expanded its geographic reach across the Southeast region to include Georgia.

Florida is among the states with hospice CON laws in place, while Georgia’s CON programs predominantly pertain to other health care facility types such as hospitals and long-term care facilities. Operating in both regulatory climates has come with challenges around program integrity, Ponder-Stansel indicated.

“Those bad actors interested in setting up poor operations know which states have enough good oversight to avoid going into,” Ponder-Stansel said. “They tend to migrate to states that don’t have as many barriers of entry against setting up those fraudulent or low quality providers. The CON laws work to eliminate that game from being played out among poor actors who aren’t committed to quality care. The CON process does eliminate a lot of those folks without a clear background and understanding in hospice.”

Balancing quality concerns

To date, 35 states and Washington, D.C. operate some form of CON programs, with “wide variation by state,” according to most recent data available from the National Conference of State Legislatures (NCSL).

Some of the states without CON laws in place include those that have become hot beds for fraud, waste and abuse such as California, Nevada and Texas. A fourth, Arizona, has a CON law for ambulance services, but not hospices.

Hundreds of newly licensed hospice operators have popped up in those four states — far exceeding national growth rates. Many of these organizations have been on regulators’ radar following numerous reports of unethical and illegal practices. In some instances, multiple hospices have been operating out of the same addresses without a corresponding rise in eligible patient populations, as well as lying to patients about being terminally ill and providing substandard care or none at all.

Other states without certificate of need laws include Colorado, Idaho, Kansas, New Mexico, Pennsylvania, Utah and North and South Dakota.

However, needs determination requirements in CON laws can in some ways help safeguard against malfeasance in the hospice space, according to Paul Ledford, president and CEO of the Florida Hospice & Palliative Care Association. The absence of such policies can heighten risks around fraud, waste and abuse, he added.

“What’s happening in states without CON is that unscrupulous people are recognizing vulnerabilities in the system [and] creating billing machines where the money keeps flowing,” Ledford said. “Without that specific statutory authority to say ‘no,’ it’s this flood of operators outstripping any sort of market need. These regulatory agencies, even in states with CON, are not equipped to have the unenviable job of keeping track of criminal enterprises.”

Providing end-of-life care in a state without CON policies in place can bring its own challenges, according to Eddie Belluomini, COO of 1Care Hospice & 1Care Kids. The hospice and palliative provider launched services in the Las Vegas region in 2020. The hospice market in Las Vegas has vastly changed with a swell of new providers within the last decade, according to Belloumini.

“Las Vegas was much different in terms of much lower hospice provider numbers, now in the present day we have something between 150 to 180 hospice companies,” Belluomini told Hospice News.

With untapped growth potential, the hospice market can become crowded in some areas, with negative impacts on the stability and sustainability for quality providers, Belloumini said. This can make it difficult to stand out as a quality hospice provider in terms of recruitment and retention efforts and referral sources, he stated.

Having a firm grasp of a region’s underserved populations and offering services that address unmet needs is among the keys to thriving in a state with CON policies, Belloumini said.

“CON policies can be good and bad,” Belloumini told Hospice News. “On one hand, there’s a lot of patient choice, but on the other it can be bad when markets get too oversaturated. With that growth, you really need to understand what underserved needs exist in a community. Every market is different, and it’s important to be aware of the unique challenges and what’s needed in an area before launching hospice services in it. You have to learn the provider and regulatory landscape.”

Needs determinations are crucial

States approach needs determination requirements differently, but a common theme among these policies is that supply of providers should be responsive to the community’s needs, Ledford stated.

For instance, CON laws in Florida include a numerical need formula based on population growth projections, hospice utilization rates and different types of deaths occuring in a specific region. CON applicants are able to apply for hospice licensure in regions with greater provider volumes if they can prove a special demographic or geographic circumstance exists, according to Ledford.

Determining a need for a new hospice in a state without CON can largely fall on the shoulders of the provider, according to Paula Sanders, executive director of the Georgia Hospice and Palliative Care Organization (GHPCO).

Georgia does not have a hospice needs determination program. Hospices seeking to enter a region as new providers determine a need based on their own evaluation and services provided, according to Sanders. Providers typically utilize Medicare beneficiary data and population statistics to determine which counties they choose to serve, Sanders said.

“The downside of not having a certificate of need is that hospices can proliferate rapidly, and some markets become congested. Meanwhile, more rural areas continue to be unserved or underserved,” Sanders told Hospice News in an email.

Quality assurance and program integrity in Georgia is determined by the state’s Department of Community Health’s Healthcare Facility Regulation Department (HFRD). This oversight is also provided alongside clinical and leadership education available through GHPCO, Sanders stated.

“GHPCO provides clinical and leadership education available to the program leadership and interdisciplinary team,” Sanders said. “Hospices that are serious about quality take advantage of those educational opportunities.”

If a state does not have a CON program in place, then local governing bodies are often unable to play a direct role in the hospice needs determination process, according to Matt Hansen, deputy director of the Home Care and Hospice Association of Colorado (HHAC). Hansen also serves as executive director of the Homecare & Hospice Association of Utah (HHAU).

“They may be aware of a need due to reports from referring parties that they aren’t able to find a provider. However, approving a new license is not based on how many providers are already in an area,” Hansen said.

Without having a role in the determination process, it can make it difficult to balance quality with supply and demand of hospice in a region, according to Hansen.

“Demand and supply of hospice resources is balanced by market conditions,” Hansen said. “If there are too many hospices in an area to meet current demand, those hospice agencies that do not have a large enough referral base and patient census will typically flounder until they sell to another provider or close.”