Hospitals group pushes back on NC Treasurer’s proposal to change healthcare reimbursement

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RALEIGH, NC (WBTV) - A proposal from North Carolina State Treasurer Dale Folwell to change the way in which the State Health Plan pays for medical treatment for state employees and retirees is getting push back from the organization that represents hospitals in the Tar Heel State.

Last fall, Folwell proposed a new plan that would pay healthcare providers the Medicaid rate plus 77 percent for services rendered to state employees and retirees who have health insurance through the state.

The move came as Folwell tried to ascertain how much one health system—UNC Health Care—actually spent to provide treatment.

Folwell sent the system a public records request seeking information on how much the system actually paid to provide treatment. He got hundreds of pages of blacked-out documents.

“I was surprised that someone that we spend $300 million a year with would send me back a stack of papers where all of the numbers were completely blacked out,” Folwell said.

The Treasurer said the information was important to establish a baseline for how much taxpayers should be paying providers for healthcare for state employees and retirees.

“We know what we’re spending: over $3 billion a year. But we don’t know what we’re supposed to pay,” he said.

The North Carolina Healthcare Association, a group the represents hospitals across the state, has pushed back on Folwell’s efforts to change the reimbursement model.

A bill is currently pending in the North Carolina General Assembly that would pause any change to the reimbursement method used by the state health plan while a panel studied the issue.

Cody Hand, a lobbyist for the NCHA, said his group is opposed to Folwell’s proposed reimbursement model but isn’t opposed to changing how healthcare is paid for altogether.

“The Treasurer’s plan would just cut rates and keep the old fee for service model,” Hand said. “And, so our problem is he’s cutting and we’re still providing the services as opposed to reforming the plan and making the care comprehensive and better the first time.”

Hand said the problem with the proposed ‘Medicare plus 77 percent’ model is that, he said, the CMS reimbursement rate doesn’t always cover the full cost of treatment.

“It would be plenty of profit if Medicare paid anywhere close to cost. And, depending on the service, Medicare pays anywhere from 52 percent to about 89 percent of cost,” Hand said.

But Hand said his group is opposed to releasing information about how much a hospital’s cost actually is.

“Cost for us is—it’s a number that we don’t necessarily like to make public because that’s what we use to compete in the market,” he said. “I think what people want to know, what our patients tell us they want to know, is what they’ll be paying out of pocket.”

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