There’s some interesting stuff going on in the Health and Human Services portion of the Senate’s proposed budget — including, but not limited to, allowing contracts to expire, dismantling protectionist regulation, and boosting Medicaid provider payments to levels equivalent to Medicare.
Here are some items worth paying attention to within the money report and special provisions text:
- The Senate would like to cut ties with Community Care of North Carolina (CCNC), the state’s primary care case management network for medical assistance patients. The rationale is that, under the Senate’s preferred Medicaid reform initiative, contracts will be made with both provider led entities (PLEs) and managed care organizations (MCOs). Neither of these entities would be paid under a fee for service model, but both would employ fully risk-adjusted capitated payments.
- According to Sen. Ralph Hise, funds that would otherwise be allocated to CCNC are now being redirected to increase Medicaid payments for primary care docs by 22 percent and obstetricians by 26 percent. These enhanced reimbursements undoubtedly act as an incentive for physicians to get on board with outside managed care companies tasked to compete for Medicaid patients and further slow the program’s growth in spending.
- Certificate of Need (CON) laws could be fully repealed in a series of three phases by 2019. The first phase out (effective January 2016) will liberate providers from needing a state-issued hall pass to change bed capacity in licensed health facilities such as acute care hospitals, inpatient psychiatric hospitals, and kidney disease treatment centers. By August 2017, diagnostic centers and ambulatory surgery center bed capacity will also be exempt from review. And, by 2019, the same would go for major medical equipment such as MRI scanners and other health facilities like nursing homes and hospice.
- The Senate also calls for a serious reduction in sales tax exemptions for nonprofit hospitals from the current threshold for avoiding sales tax on medical purchases of $666 million.
It would be ideal for ambulatory surgery centers and diagnostic centers to move up from the second phase-out to the first within the CON repeal process. Allowing for the development or expansion of these facilities without a CON starting in 2016 would not only give providers the green light to create a more competitive market sooner but could also play into the establishment of regional provider-led networks under the state’s Medicaid reform initiative — especially since the Senate anticipates that these systems will be subject to full-risk, capitated contracts by August 1, 2017. It’s an aggressive timeline, to say the least.
More broadly, it looks as if the Senate has made some pretty strategic maneuvers when it comes to solidifying CON reform. Their version of Medicaid reform, a full repeal of CON, and greatly reduced sales tax exemption limit is already throwing hospitals for a loop. Of course, you can’t achieve everything at the negotiating table, so it could very well be that the House (on behalf of the Hospital Association) may be more steadfast on only provider led entities being in charge of Medicaid reform and not having their sales tax exemptions touched.
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