By Rose Hoban
Leaders of the North Carolina Senate and House of Representatives announced Thursday morning that they had reached an agreement on how to expand the state’s Medicaid program to cover hundreds of thousands of mostly low-income workers with health care.
“We reached this deal late last night, but put the finishing touches on this morning, and felt like we needed to go ahead and get it out there,” said House Speaker Tim Moore (R-Kings Mountain).
Senate leader Phil Berger (R-Eden) said that the proposal agreed upon Wednesday night will build upon a bill that passed the House of Representatives on Feb. 16 with a wide bipartisan majority. The negotiated bill will be amended to include revisions to the state’s certificate of need laws, which regulate how much hospitals can expand, how much they can spend on capital projects, where they can build and whether the private market can offer services in their regions to compete for health care dollars.
The two men said they had not yet spoken with Gov. Roy Cooper about their agreement. The governor, while commending their work, quickly questioned their timeline.
The Medicaid program will not be expanded unless a state budget for the coming biennium is passed and enacted. That is unlikely to happen until late spring or early summer, closer to the July 1 start of the next fiscal year. Any budget proposal put forward could put Cooper in a difficult negotiating spot if the Republicans leading the General Assembly include fiscal items and policy statements the governor is loath to support.
“Since we all agree this is the right thing to do, we should make it effective now to make sure we leverage the money that will save our rural hospitals and invest in mental health,” Cooper said in his statement about the Medicaid expansion agreement. “I look forward to reviewing the details of the bill.”
Medicaid expansion has been a priority for Cooper since he came into office in 2017. He vetoed several budgets from the General Assembly during his term, in part, because Republicans, until recently, have been vehemently opposed to adding more North Carolinians to the Medicaid rolls.
The agreement announced Thursday bookends a decade in which the legislature — with Berger in the lead — quickly rejected Medicaid expansion after Republicans gained a supermajority in both General Assembly chambers in 2013. Slowly, conservative support built in recent years for the policy born in the Affordable Care Act championed by President Barack Obama. In 2022, many members of the North Carolina Republican leadership embraced it.
Part of that embrace has to do with an approximately $1.5 billion no-strings-attached bonus offered by the Biden administration to get holdout states such as North Carolina to adopt the policy. North Carolina is one of only 11 states that have yet to expand Medicaid.
But the deal is not done yet.
Hospitals win, lose
An overhaul of certificate of need laws has long been at the top of a Senate legislative priorities wish list, but it’s been vehemently opposed by hospitals with powerful lobbying associations. In the past, any such proposals from the Senate hit dead ends in the House of Representatives.
Now, though, the state’s hospitals stand to both gain and lose under the expansion deal.
The sweetener for hospitals is that the legislature would be greenlighting the Healthcare Access and Stabilization Program, or HASP, which could result in the direction of a total of $2.3 billion in federal dollars each year to North Carolina hospitals to help offset costs.
But much of that will end up going back out the door.
The federal government would pick up 90 percent of the cost to expand Medicaid in North Carolina, leaving the state with a 10 percent share. Under the negotiated agreement that Berger and Moore discussed on Thursday, the state’s hospitals would have to contribute to paying North Carolina’s share, a cost estimated at nearly $550 million per year.
Under the Affordable Care Act, which made Medicaid expansion possible, the federal government pays 90 percent of the cost just for the new expansion beneficiaries. For North Carolina Medicaid beneficiaries already in the system — children in families with low incomes and some of their parents, low income people with disabilities and some low income seniors — the federal government will continue paying about 67 percent of the tab with the state picking up the rest.
While Senate leaders who are staunch advocates of free market enterprise would have preferred to do away with certificate of need rules altogether to expand competition, they softened their stance during negotiations both last fall and more recently — as did hospitals.
“We appreciated that it seems they took the input from our proposal from last fall into consideration as part of the process,” said Cynthia Charles, a spokesperson for hospitals’ lobby North Carolina Healthcare Association.
One of the biggest sources of concern for hospitals has been the possibility that ambulatory surgical centers would open nearby and compete with hospitals in the lucrative fields of orthopedic surgery, eye surgery and colonoscopy centers. Hospitals have said they worry that these freestanding centers would siphon away well-paying patients, leaving them with poorly reimbursed — but essential — services such as labor and delivery, emergency room care and pediatrics with little way to make up for their losses.
Last year, hospitals projected a minimum loss in revenue of more than $700 million a year as a result of the rules changes involving ambulatory surgery centers, Charles said. “The information today indicates [certificate of need] changes would be more far-reaching, so the loss should be more than that, but we haven’t analyzed it yet based on what they said today.”
The bill would roll back the certificate of need requirements for the freestanding centers after two years, and only in counties with populations greater than 125,000. Surgical centers there would be exempt from certificate of need requirements, but they would be required to set aside four percent of their revenue for charity care cases.
“I would say that this is probably somewhere between what the hospitals had suggested and what was in the Senate bill,” Berger said Thursday. “I believe that this agreement represents the most significant modification of [certificate of need] law in North Carolina since we began having certificate of need requirements, and it is a markedly positive step in the right direction.”
The agreement includes these additional changes to the state’s health care system:
- Will eliminate certificate of need review for behavioral health beds and substance use treatment beds.
- Will raise the threshold on the requirement for the state to approve hospitals’ replacing equipment like expensive scanners from $2 million to $3 million and index that threshold to inflation.
- Will increase the cost threshold for diagnostic centers — such as freestanding colonoscopy clinics — to $3 million and index that to inflation.
- Will eliminate the need for certificate of need approval for MRI machines in counties with a population of 125,000 or more. There are 23 counties that are large enough to qualify for this exemption, which will go into effect in three years.
Still hope for nurses
Though giving advanced practice nurses more autonomy so they are not required to work under the supervision of a physician has been a part of the Medicaid expansion discussion over the years, the agreement negotiated between the House and Senate does not include such a provision.
Berger previously had insisted on including scope of practice changes for more highly trained nurse practitioners, nurse anesthetists and nurse-midwives. The House rejected that idea.
Berger said on Thursday he still believes there’s a need for more providers to take care of the new beneficiaries.
“I remain convinced that giving 600,000 people a card that says that their health care is going to be paid for is going to be somewhat problematic if we don’t increase the supply of folks that can treat them,” Berger said, adding that he still supports the SAVE Act.
Sen. Gale Adcock (D-Cary), a retired nurse practitioner, has been advocating for the SAVE Act for years. She remains optimistic that it still could be adopted.
“I’m delighted that our state is making this incredible decision to expand Medicaid and give hundreds of thousands of working adults health care coverage,” Adcock said. “While it’s not part of this deal, I know we have Sen. Berger’s commitment and support of what we’re trying to achieve.”
“This is not the end of the conversation,” she added. “I believe Sen. Berger when he says that he’s interested in the supply side.”
Advocates for Medicaid expansion quickly flooded reporters’ email inboxes with statements of praise and excitement.
“I was, like, holding my breath all day,” said Abby Emanuelson, who leads Care4Carolina, a coalition of 172 community organizations that have supported expansion since 2016. “We have been praying and putting all our resources into it. We just cannot be more pleased that the North Carolina Senate and the House have reached an agreement.”
It was not lost amid the celebration, however, the number of years and the amount of federal dollars that North Carolina lost by not expanding Medicaid sooner.
“We should have done this over a decade ago,” Adcock said. “People have died, people have suffered, the state has lost money. Hospitals have closed, or are near closure.
“We had to get on with this.”
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