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Novant, other hospitals speak out against Senate’s budget proposal

Hospitals across North Carolina are criticizing three provisions in the State Senate’s budget proposal that they say could disrupt health care for all patients.

Novant Health Rowan Medical Center, Carolinas Medical Center-NorthEast and other members of the North Carolina Hospital Association say they’re specifically concerned about the creation of a new organization to oversee Medicaid, a reduction in sales tax exemptions and the elimination of North Carolina’s certificate of need law. The Senate on Wednesday began discussions outside of committees on its budget, passing it on its second reading by a 30-19 vote. Both of Rowan’s state senators — Tom McInnis, R-25, and Andrew Brock, R-34 — voted for the budget.

A final vote on the Senate’s budget proposal is expected today.

Individually, the proposed changes would be concerning, said Novant Health Rowan Medical Center President Dari Caldwell. Together, Caldwell said, the proposals could dismantle health-care infrastructure in North Carolina.

“This budget will irreparably damage our ability to respond to unexpected emergencies, care for the indigent, the frail elderly and others with serious health complications,” Caldwell said in an email to the Rowan County Chamber of Commerce.

In a separate statement, Novant said, “The healthcare industry is at the height of transformation and cannot sustain further reductions in the safeguards that allow community hospitals, physician practices, clinics and advanced practice clinicians the ability to provide affordable health care services.”

In the Senate’s budget, Medicaid administration would shift from the Department of Health and Human Services and to a “Health Benefits Authority.” It would be run by a board appointed by N.C. Gov. Pat McCrory, Senate President Pro Tempore Phil Berger, a Republican representing Rockingham and Guilford counties, and House Speaker Tim Moore, a Republican representing Cleveland County.

Once appointed by state officials, the board would hire a Medicaid director who would be responsible for the daily operations of the Health Benefits Authority.

In the current Medicaid system, doctors and medical professionals get paid for each office visit and procedure. The budget measure’s goal would be to provide funding that pays providers a set amount for each person to manage overall care. The “Health Benefits Authority” is a method of Medicaid reform — to reduce costs — but hospital officials don’t believe it’s the right way.

Martha Ann McConnell, Carolinas Healthcare System vice president of government affairs, said the hospital system would prefer a provider-led reform effort.

The second concern shared by hospitals relates to a measure that would sharply decrease sales tax refund amounts that can be claimed by nonprofit entities — including some hospitals.

Presently, charities can claim a maximum of $45 million in sales and use tax refunds per year. In the Senate budget, the refund would be cut to $1 million per year in state and local taxes., or roughly the amount of refund available on $15 million worth of purchases. The refunds are frequently used by hospital systems as a source of money to pay for community programs, said N.C. Hospital Association spokeswoman Julie Henry.

“We feel like this will just be another blow to hospitals in terms of our ability to provide all the services we do in our communities,” Henry said. “For many smaller hospitals, it might mean choices between what services are offered if sales tax refunds are capped.”

The Senate’s budget would also phase out current certificate-of-need laws. Certificates of need restrict unnecessary increases in health care costs, services and facilities based on geographic, demographic and economic considerations, according to the Department of Health and Human Services.

Starting in January, certificate-of-need laws wouldn’t apply to changes in the number of beds at a number of facilities, including acute-care hospitals; the offering of services such as open heart surgeries; the purchase of certain kinds of equipment and construction, establishment, or relocation of an operating room in a licensed health service facility. Additional categories of certificates of need would subsequently be progressively repealed.

McConnell and Henry said it wouldn’t create a more competitive health-care marketplace. Instead, McConnell said, the repeal of certificates of need could result in the “cherry-picking of profitable patients.”

Speciality providers could open and offer one specific service at a lower cost to customers, Henry said.

She said the three changes combined would have an effect on all of patients, not just a select few.

“Eliminating sales and use refunds, certificates of need and transforming Medicaid in a way that’s based on a financial model rather than a clinical model only causes further disruption in our industry,” McConnell said. “And, that has an impact for all patients — not just uninsured, not just medicaid, not just medicare.”

Once the Senate’s version of the budget passes, it will go to a conference committee of N.C. House and Senate members to sort out differences in the two proposals

Contact reporter Josh Bergeron at 704-797-4246

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