Politics & Government

Lawmakers want to block a change that’s about to save state workers millions at hospitals’ expense

MRI technologists move a patient from an MRI scanner at Wake Medical Center.
MRI technologists move a patient from an MRI scanner at Wake Medical Center. File photo

A plan to save state employees money on their health insurance expenses is facing opposition at the General Assembly over fears it could harm hospitals all around North Carolina, particularly in rural areas.

A bipartisan group of legislators are backing a bill that would stop changes to the State Health Plan that are set to start on Jan. 1, 2020. But if the bill becomes law it would put off the changes until at least 2022, if not permanently.

Robert Broome, the executive director of the State Employees Association of North Carolina, said his group “strongly opposes this bill, which is a clear attempt to put corporate interests over working families and deny taxpayers a cost savings of more than $300 million each year.”

At stake is a question over how hospitals and other health care providers are paid whenever one of the more than 700,000 people on the State Health Plan go in for medical care. Those include state employees, teachers, retirees and their families.

State Treasurer Dale Folwell, a Republican who won the 2016 election for that office, has backed reforms.

His plan, which is now being challenged by this bill, would create a system in which hospitals are paid 177 percent — or nearly double — of what they would’ve earned if the person had been on Medicare instead of the State Health Plan.

Hospital cuts, taxpayer savings

Folwell says his changes would save state employees and other members of the health plan more than $60 million a year in out-of-pocket costs, in addition to saving state taxpayers more than $300 million a year.

On Thursday he slammed the bill that would undo that cost-savings plan.

“As keepers of the public purse, we don’t have millions of dollars to spend on advertising and lobbying,” Folwell said in a written statement. “What we offer is devotion to good government and a promise to the people that we will do everything in our power to attack the problem and make health care more affordable and transparent for public employees.”

But hospital leaders say Medicare rates are too low for the plan to work, and that Folwell’s changes could be the final blow forcing some struggling hospitals in rural areas to shut down for good.

In an interview last month with The News & Observer, leaders of the North Carolina Healthcare Association — the state’s largest hospital lobbying group — said Folwell’s ideas simply don’t make financial sense for hospitals.

“The treasurer’s plan is to move the pricing model and essentially peg it to Medicare rates,” said Cody Hand, the NCHA’s senior vice president for advocacy and policy. “Medicare rates are historically underpaid rates. We don’t get to negotiate them with the federal government.”

Hand and NCHA President Stephen Lawler said they thought a compromise could be possible, and that they’d be interested in putting forward their own ideas. One way to save money while also improving health outcomes, they said, would be to further support telemedicine — technology that allows patients and doctors to talk remotely, using video chat software.

House Bill 184, introduced this week, is aimed at looking into issues just like that — in addition to stopping the changes that Folwell and SEANC want, but which the hospitals oppose.

Details of the bill

The bill has 26 sponsors and co-sponsors, and the lead legislators behind it are Republican Reps. Josh Dobson (McDowell County), Julia Howard (Davie County) and William Brisson (Bladen County), along with Democratic Rep. Gale Adcock of Cary.

The bill’s next stop is the House Health Committee, whose next meeting is Tuesday at 10 a.m. All four of the bill’s lead sponsors are members of that committee, as are many of the co-sponsors, and Dobson is one of the committee chairs.

In an email, Dobson said that to cut hospitals’ budgets but expect them to provide the same level of care as before simply doesn’t make sense. And he’s concerned that if the State Health Plan changes that Folwell and SEANC want go into effect next year, some hospitals will drop out of the State Health Plan altogether, leaving state workers in those areas without an in-network provider.

“Rural hospitals and doctors who work in these underserved areas like mine can’t take that kind of cut,” Dobson said. “... In addition, many providers will not sign these contracts. As a result, hard-working state employees will be hurt the most by having to drive further and pay more to receive care.”

Broome said thinks the bill actually “does nothing more than allow hospital executives to keep patients in the dark about the true cost of their health care.”

Dobson defended the bill, saying he agrees that there should be more transparency in health care but that he wants to “bring all the stake-holders to the table to come up with a more comprehensive strategy to address the budget shortfalls in our state health plan.”

If his bill becomes law, it would create a new state committee with a mission to “redesign the State Health Plan in a way that adopts new practices and payment methodologies that promote health while incentivizing participation from both enrollees and providers.”

The State Health Plan has a board of directors and paid staff, but the bill says it’s necessary to create a new committee to redesign the plan because it “does not take advantage of modern cost-saving technologies that also increase access to health care services.”

The new study committee would be made up of political appointees as well as members of pro-hospital groups and pro-state worker groups.

SEANC and the NCHA are both among the advocacy groups that would have a seat at that table, along with others like groups representing teachers, nurses, psychiatrists and government retirees.

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Will Doran reports on North Carolina politics, with a focus on state employees and agencies. In 2016 he started The News & Observer’s fact-checking partnership, PolitiFact NC, and before that he reported on local governments around the Triangle. Contact him at wdoran@newsobserver.com or (919) 836-2858.