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Certificate of need challenge moves forward in Mississippi

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Physical therapist Charles “Butch” Slaughter helps Frances Champion with exercises at his clinic in Jackson, Miss., Tuesday, Feb. 1, 2022. Credit: Eric Shelton/Mississippi Today

A Jackson physical therapist challenging a state law and regulations preventing him from opening a home health care business will get his day in court, a federal judge ruled. 

Charles “Butch” Slaughter has been a physical therapist in Mississippi for decades and has developed a niche for ankle and foot injuries. During the pandemic, patients were canceling their appointments to avoid potentially being exposed to COVID-19. 

He decided then that he wanted to open a home health agency so he could take care of patients directly in their homes, and was excited about how he’d be able to better serve Jackson’s older population. 

“As people get older, they have a tendency to fall and break hips,” Slaughter said. “And if we can prevent that in the beginning, then they won’t have those big bills. We can keep people at home and they don’t have to go to a nursing home. And most people don’t want to go if they don’t have to.”

But what Slaughter soon realized was there was a mountain of red tape to overcome before he could expand his business. A 40-year-old law bans the Mississippi Department of Health from issuing certificates of need (CON) to new home health agencies. There are only 50 CONs for these providers statewide, so Slaughter would have to buy one from an existing provider. 

If he were to open a home health agency without a CON, he’d face misdemeanor charges and a fine of $500 per day. 

Physical therapist Charles “Butch” Slaughter helps Frances Champion with exercises at his clinic in Jackson, Miss., Tuesday, Feb. 1, 2022. Credit: Eric Shelton/Mississippi Today

Even if the ban on new CONs wasn’t in place, Slaughter would likely face resistance from existing providers, who could argue in court that a new home health agency isn’t needed.

CON laws became widespread in the 1970s after The National Health Planning and Resources Development Act of 1974 required states to adopt CON programs to receive federal funding. The theory was that restricting the supply of health care providers would help lower costs. 

The Mississippi legislature passed its CON law in 1979, and though Congress repealed the federal CON law in 1987, Mississippi’s is still on the books.

“These certificate of need laws are a relic of a failed experiment by the federal government to control health care costs that did not work,” Aaron Rice, director of the Mississippi Justice Institute and Slaughter’s attorney, said. 

Rice says that though there are 50 home health agency CONs, he estimates there are only around a dozen or so providers in the state that are actually using them, as many are owned by subsidiaries of a larger organization. 

In December 2020, Slaughter sued state health officials in federal court, arguing the ban on new CONs being issued, and the overall CON requirement for home health agencies, are unconstitutional. 

Though he didn’t rule on the constitutional challenges, U.S. District Judge Carlton Reeves agreed Slaughter had a valid argument in his order denying the state’s motion to dismiss the lawsuit. 

“It is no secret that significant financial interests are at stake when it comes to CON laws … In practice, plaintiff alleges, current operators do exactly that: expand their offerings to absorb any purported ‘need,’ and eliminate the opportunity for any new competitors to enter the market,” Reeves wrote.

Numerous studies have shown that CON laws have not improved. One study published in 2020 found the laws increase health care costs and elderly mortality rates. A 2016 joint report from the Federal Trade Commission and the U.S. Department of Justice said the laws “can prevent the efficient functioning of health care markets,” for reasons including that they “limit consumer choice, and stifle innovation.”

Now, just over a year after Slaughter filed his lawsuit, he’s feeling energized going into the discovery phase of the suit, and is eager to make his arguments at trial.

“This gives us hope that we can bring this about and solve it so that not only I can open a home health agency but that other people can throughout the state … This is for the people of Mississippi.”

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