NC lawmakers are looking to crack down on these health care fees
AI-generated summary reviewed by our newsroom.
- Lawmakers examine hospital facility fees charged for routine outpatient care.
- Insurers warn facility fees drive up claims costs and push premiums higher.
- Hospitals argue fees recover overhead and elimination would affect rural clinics.
Good morning and welcome to today’s edition of Under the Dome. I’m politics reporter Luciana Perez Uribe Guinassi.
Hospitals vs. insurers: That was the setup earlier this week during a joint health care committee hearing at the General Assembly, where lawmakers debated hospital facility fees, particularly those charged for care in hospital-affiliated clinics.
Josh Dobson, president and CEO of the North Carolina Healthcare Association, which represents hospitals, said those fees cover overhead costs “much the same way these costs are built into the pricing structure of any business.”
Medicare, Medicaid and some private insurers require clinics tied to hospitals to show facility fees separately from provider fees, while independent clinics can combine those costs into a single bill, Dobson said. That means patients at independent clinics still pay those overhead costs — they just don’t see a separate line item. Eliminating the fee would also heavily affect rural clinics, Dobson said.
But Peter Daniel, executive director of the NC Association of Health Plans, which represents some of the state’s insurers, told lawmakers that while facility fees make sense in certain settings — such as hospital emergency rooms — patients are increasingly being charged the fees for routine care delivered in hospital outpatient offices that look “no different than independent practices in many cases, but the cost difference is dramatic.”
These fees also raise premiums, Daniel said, because premiums paid by customers go into a pool used to pay for medical claims. If the total cost of claims rises, premiums must also increase; if costs fall, premiums can decrease. By law, insurers must spend between 80 and 85 cents of every premium dollar on medical care, Daniel said.
Daniel added that as independent practices consolidate into larger hospital systems, facility fees become more common “and routine care becomes more expensive.”
Only about 6% of consolidation involves hospitals and health systems, Dobson said. The rest is driven by other entities, including private equity (65%), physician medical groups (14%) and insurers (11%).
More than 20 states have adopted some form of facility fee protections.
Last year, legislation prohibiting facility fees in outpatient settings such as clinics passed the Senate but languished in the House. Daniel said passing such a policy would reduce health care costs for North Carolina families by at least $200 million per year.
Rep. Timothy Reeder, an Ayden Republican who chairs health committees, told The News & Observer after Tuesday’s committee hearing that there’s “an interest in understanding what are the drivers of costs. Facility fees are one of those issues that there is a lot of interest in.” Collectively, the House and Senate are trying to understand “how different hospitals are using (the fees).”
“There are a lot of things we need and are looking at to bend the cost curve,” he said. “When we see the trajectory of health care costs, it’s not sustainable.”
Budget, Medicaid and key race pending
Another area where we’ll see if the House, Senate and the executive branch can come together is on funding for state Medicaid costs.
Reeder said the House was still in discussions with the Senate and the state’s health and human services department on how much money should be provided. “We’re still trying to understand what the needs are going forward,” he said.
The General Assembly’s Fiscal Research Division had a different number last year than the Department of Health and Human Services, which said it needed $319 million. On Tuesday, DHHS broke down that $319 million. One way the agency’s analysis differed from the Fiscal Research analysis, said Melanie Bush, interim deputy secretary for NC Medicaid, is by counting on less state revenue from fees charged to hospitals.
On Monday, Gov. Josh Stein, a Democrat, called on the GOP-controlled legislature to spend $1.4 billion now — before a big budget deal — on what he calls “critical needs,” including $319 million for Medicaid. Lawmakers have been unable to agree on a budget for the fiscal year that began in July.
Both the House and Senate passed bills funding Medicaid last year based on Fiscal Research numbers but could not reach an agreement on other policy areas.
The General Assembly is not back for a full session until April 21.
What else we’re working on
One final quick thing — keep an eye out for reporting from our team Friday on what happens during the canvass of ballots (the official tally of votes) in Guilford and Rockingham counties for the close race for state Senate District 26 between Senate leader Phil Berger and Rockingham County Sheriff Sam Page.
If you need a refresher on why that race is consequential, read Capitol Bureau Chief Dawn Baumgartner Vaughan’s story that previewed that race: ‘For NC, it’s Senate leader vs. sheriff. But in Rockingham, it’s just Phil vs. Sam’
Also follow Danielle Battaglia, who covers federal politics and government, for her coverage of Vice President JD Vance’s visit to Rocky Mount on Friday afternoon.
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- Autism therapy costs soar for NC Medicaid. Auditor and lawmakers take closer look
- Orange County state senator stepping down. What’s next for Graig Meyer and his seat.
Thanks for reading Under the Dome
That’s all for today, but we hope to see you right back here on Sunday. Ideas or feedback about our Under the Dome newsletter? Email our politics team at dome@newsobserver.com.
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