Folwell, hospitals spar over state health plan pricing
Published April 11, 2019
Legislation that would halt N.C. Treasury Secretary Dale Folwell’s plan to implement cost savings on the State Health Plan passed the House on April 3. The bill, H.B. 184, passed 75-36 with bipartisan support, but Senate leaders are already signaling it is unlikely to move in their chamber.
Folwell’s plan was to pursue reforms that other states, like Montana, have used successfully to reduce their health costs for state employees. With “reference-based pricing,” the State Health Plan would require providers to pin their prices relative to the Medicare reimbursement rate. In this case, State Health Plan costs would average 182 percent of those rates.
Analysis by the nonpartisan Fiscal Research Division at the legislature found that H.B. 184, by failing to implement Folwell’s reforms, would cost between $63 million and $264 million annually, depending on the year. H.B. 184 creates a committee to study the issue of how providers and the State Health Plan should work out pricing. The committee would be required to produce a report by this December.
In the meantime, the bill explicitly prohibits Folwell from implementing his plan, saying, “[T]he State Health Plan, the Board of Trustees of the State Health Plan, and the Executive Administrator of the State Health Plan shall not implement or utilize any reference-based pricing model to reimburse providers during the period specified by this section.”
Those representing the hospitals, like the North Carolina Healthcare Association, which was known until recently as the North Carolina Hospital Association (NCHA), want this plan halted immediately because they say any cost savings the state might see would be at their expense. In NCHA’s view, H.B. 184 takes pricing issues seriously by setting up the study committee, but it avoids putting in place a plan they believe would threaten rural hospitals and cost providers in the state $450 million a year.
“We would ask that the Senate consider the bill ASAP because Medicare–referenced rates are not sustainable for either the provider community or the taxpayers,” Cody Hand of the NCHA, which represents health providers, told North State Journal. “The Senate should join the very large bipartisan majority of the House and provide the forum for stakeholders to design the best health plan for the state employees and the taxpayers.”
Leaders in the Senate, however, are not as enthusiastic about H.B. 184. The bill, after being read in, was sent to the Senate Rules Committee, a place often used to park legislation with an uncertain future.
Because there are supporters and detractors from both parties and both chambers, the issue is creating allies that don’t fall into the usual partisan lines. The State Employee Association of North Carolina is supportive of the reforms Folwell, a Republican, had planned, and Senate Leader Phil Berger, who has often clashed with the left-leaning organization, seems to agree that allowing the treasurer to do the job assigned to him is the right call.
“Sen. Berger thinks that the hospital industry and the treasurer should continue their negotiations, and he would be hesitant to involve the legislature in micromanaging a plan that we authorized the treasurer to manage just a few years ago,” Pat Ryan, a spokesman for Senate Leader Phil Berger, told NSJ.
Pressure will continue from hospital lobbyists to allow H.B. 184 to be given a chance to be debated and voted on, but if Berger and Senate leadership maintain their current position, the bill will remain halted in the Rules Committee.