North Carolina proposes setting hospital payments for state employees on Medicare rates
- North Carolina wants to control rising healthcare costs by eliminating the secret negotiations health plans use to set reimbursement rates with doctors and hospitals, North Carolina Health News reports.
- Under a plan released last month, hospitals and doctors who join a new state health plan provider network would be paid based on a percentage of Medicare rates. State Treasurer Dale Folwell estimates the new payment system will save the plan $300 million a year and enrollees about $60 million.
- The state health plan's board of trustees endorsed the plan last week, setting the stage for a battle with hospitals and the N.C. Medical Society, which contend that higher charges for employer-based health plans help offset losses stemming from Medicare and Medicaid patients and charity care.
When the plan was unveiled, Folwell said it had for years "paid medical claims after the fact without knowing the contracted fee." He added: "It is unacceptable, unsustainable and indefensible. We aim to change that." The new scheme would better control costs and increase transparency around pricing for medical care, he said.
Hospitals elsewhere will likely be watching the proposal closely, worried it could set a precedent for how payments are set for other state health plans.
The move comes as providers are pushing back against CMS price cut proposals and on the defensive against complaints about high prices generally.
In a recent letter to Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, the American Hospital Association challenged a recent article in The Wall Street Journal that implied contract negotiations between hospitals and commercial payers are a primary cause of rising healthcare costs.
"The contract provisions hospitals and health systems are able to secure in negotiations typically have precompetitive and pro-consumer purposes, such as enabling the hospital or health system to successfully offer value-based care alternatives or protecting the hospital and its patients from unwarranted denials," AHA wrote.
Providers have also pushed back against a CMS plan to flatten E/M codes starting in 2019. The change, which establishes a single rate for E/M visit levels 2 through 4 for both established and new patients, will now take effect in 2021. AHA said Friday it plans to bring a legal challenge to the agency's final Outpatient Prospective Payment System rule instituting site neutral payments. The hospital lobby is already suing over cuts to the 340B drug pricing program.
Farzad Mostashari, founder of Aledade, took to Twitter over the weekend to suggest other states could follow North Carolina's example and nix contract negotiations as well. "As state government healthcare costs continue to grow unsustainably, and simply shifting costs to teachers and other employees reaches its limit (see WV teacher's strike), expect to see a lot more of this," he posted.
- North Carolina Health News No More Negotiations: State Health Plan Wants Clearer Process, Lower Prices
- The Wall Street Journal North Carolina Faces Hospital Fight Trying New Tack to Set Health-Care Payments