A state agency has tabled a controversial proposal to eliminate state requirements for Cancer Treatment Centers of America’s hospital in Newnan.

Clyde Reese, commissioner of the Department of Community Health, said at the agency board meeting Thursday that the CTCA proposal had triggered a reaction from the Georgia hospital industry that was “overwhelmingly negative.”

Given that response, Reese said, he decided his agency was “not the proper venue to vet the proposal.”

The Community Health’s board had been expected to vote Thursday on the plan.

If approved, the proposal would have allowed CTCA’s Georgia facility to reclassify as a general acute-care hospital — and thus shed the current restriction of having no more than 35 percent of its patients come from Georgia.

Separately, Reese said that he had yet to review an updated proposal by Atlanta-based Grady Health System to apply for a Medicaid “waiver’’ to cover more uninsured people.

He added that a Georgia Chamber of Commerce effort to study alternatives to Medicaid expansion will have to come up with a proposal that Gov. Nathan Deal sees as not too burdensome on the state budget.

Deal and state legislative leaders have already blocked expansion in Georgia because of cost concerns.

Politics and regulations

The Georgia hospital industry, which has been critical of Cancer Treatment Centers of America and was united in opposition to the proposed loosening of restrictions, applauded the agency’s move.

“We’re encouraged by the decision today,’’ said Earl Rogers, president of the Georgia Hospital Association. “I think the board saw the overwhelming opposition to the proposal.”

But Rogers suggested that CTCA might take its bid for fewer restrictions back to the Georgia Legislature.

Reese, speaking to reporters after the meeting, indicated the same expectation. “I think it became clear that the issue and argument need to occur back at the General Assembly,” he said.

A CTCA executive told GHN that he was “definitely disappointed’’ by the agency’s decision.

“It’s too bad to see politics get in the way of patients’ choice,’’ said David Kent, chief operating officer for the Newnan cancer facility.

Kent said the hospital industry “used the political system to restrict consumer choice [and] block competition.”

He added that he was not sure of CTCA’s next move on the issue, including whether to pursue new legislation in the General Assembly.

“We have [Georgia] patients who are trying to get access to us,’’ Kent said.

Last month, GHA chief Rogers said at a public hearing on the proposal that CTCA has the reputation of “cherry picking’’ patients with the best insurance coverage.

He called the reclassification idea “an end-around”’ the General Assembly’s authority over health care. And Rogers noted that if CTCA converts to a general hospital, it would not have to offer emergency room services.

“Not one [other] hospital supports this rule change,’’ Rogers declared.

If the board had approved the plan, the cancer hospital would still have had to win a “certificate of need’’ (CON) for that change in classification.

CON is the regulatory apparatus in Georgia, as in some other states, that governs the construction and expansion of health care facilities. Under Georgia law, hospitals are required to obtain CON licenses for major construction projects and expansions of service.

Not a new battle

Cancer Treatment Centers of America is a for-profit company known for its sophisticated marketing. It operates five regional cancer hospitals: the one in Newnan, south of Atlanta, which opened in 2012, as well as centers in Philadelphia, Tulsa, Phoenix and Chicago.

Other Georgia hospitals were wary of CTCA’s entry into the market, and they have fiercely fought efforts to expand its footprint here.

The Newnan hospital has operated under certain state-imposed restrictions in Georgia since it opened. Those rules were set by the Georgia General Assembly to satisfy the concerns of critics of the chain.

CTCA has been lobbying state lawmakers to ease the restrictions, but it dropped that effort this year after its support for new legislation was unsuccessful. The proposal for a Community Health reclassification reflected a new avenue toward achieving the same goal, but on Thursday it proved a dead end.

Speaking to reporters after the meeting, Reese said Grady’s new version of its Medicaid waiver plan, at his request, contained information on including people who are classified “aged, blind and disabled,’’ along with people whose incomes are below 100 percent of poverty.

Matt Hicks, a Grady executive, told GHN that the safety-net organization’s waiver plan “has shown it has no cost to the state, and that there’s federal precedent’’ for the move.

Reese noted that Gov. Deal had set firm guidelines for the Georgia Chamber’s study on an alternative to Medicaid expansion that would increase access to care.

Any proposal must leave the state “in a fiscally sound position and leave the Department [of Community Health] and Medicaid fiscally solvent,” Reese said.