Gov. Tate Reeves signed a bill Monday that would temporarily ease state approval requirements for rural hospitals, allowing them to add new services or make costly upgrades as lawmakers try to help struggling facilities expand care and increase revenue.
The new law establishes a pilot program that will benefit about 55 rural hospitals in Mississippi by loosening the state’s certificate of need laws. These laws require providers opening new services or making costly improvements — over $20 million for nonclinical upgrades, $10 million for clinical upgrades and $3 million for major medical equipment — to first demonstrate they are needed in order to prevent duplication of services.
With the newly signed law already in effect, the program will continue through June 2027.
A hospital in a small community will now be allowed to open one new facility within five miles of its main campus or make an improvement above the threshold, and those located in the Mississippi Delta will be allowed two exemptions. The facilities will also be allowed to open geriatric psychiatric units without seeking approval first.
Modifying certificate of need laws could also help Mississippi secure additional funding through the federal Rural Health Transformation Program in the coming years. Half of the program’s $50 billion funding is allocated using a formula that considers each state’s level of rurality, the quality of its application, and how well it aligns with Make America Healthy Again policies, including certificate of need reform.
The House and Senate traded bills altering certificate of need requirements for rural hospitals this session, nearing consensus as the session went on.
Senate Public Health and Welfare Chairman Hob Bryan, a Democrat from Amory, said March 5 that, while he has been slow to support changes to the state’s certificate of need law, he believes there is merit in implementing a pilot program to see if loosening restrictions could help rural hospitals.
“I know for sure there are going to be unintended consequences,” Bryan said. “I don’t know what they are…but I think the time has come, as I phrased it from time to time, to do something in this general area.”
Reeves also signed a bill Feb. 4 that will make it easier for health facilities to make costly improvements and limit where the University of Mississippi Medical Center can open new locations without state approval.
Certificate of need laws aim to lower costs and improve the quality and accessibility of health care by reducing duplication of services, but stakeholders are divided on whether or not it accomplishes its goals.
Critics argue the law stifles competition and fails to decrease costs. Advocates say it ensures that communities have access to a range of health services, not only those that are profitable. In Mississippi, where more than half of rural hospitals are at risk of closure, some people argue the law harms rural hospitals by restricting the services they are allowed to offer.
Under the law, Humphreys and Issaquena counties are removed from certificate of need requirements entirely, and the state health officer receives the authority to issue licenses to eight dialysis facilities across the state.
It also aims to speed up the certificate of need process by implementing a “loser pay” provision, which would require a party appealing the state’s approval for a new facility or improvement to pay the applicant’s legal fees if the ruling is not overturned.
Certificate of need law has long been criticized as cumbersome and time-consuming, often slowing the opening of new health care services when competing health providers appeal the state’s issuance of a certificate.
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