The North Carolina Healthcare Association (NCHA) delivered a proposal to Senate President Pro Tempore Phil Berger, House Speaker Tim Moore and North Carolina Governor Roy Cooper during the first week of October in response to the Senate’s passage of House Bill 149, Expanding Access to Healthcare, and a subsequent stall in negotiations between the Senate and House on Medicaid expansion. 

In the proposal, health systems and hospitals would fund a majority of the state’s share of the expense of expanding Medicaid for 600,000 North Carolinians at an estimated cost of over $550 million per year, on top of absorbing a minimum projected loss in revenue of more than $700 million as a result of certificate of need (CON) law modifications involving ambulatory surgery centers. The proposal also suggests that the state repeal CON law for psychiatric inpatient beds and chemical dependency beds. The association is making this proposal in an environment where its members continue to be pressured by elevated costs, with most hospitals reporting year-to-date negative financial margins.

“NCHA and our members have urged elected leaders to expand Medicaid to improve the health of our neighbors and communities for over a decade. In fact, our members are offering to invest over $550 million per year to make expansion a reality,” said NCHA Board Chair Roxie Wells, MD, president of Cape Fear Valley Health Hoke Hospital. 

“In an effort to get stalled negotiations moving, and in response to Senator Berger’s and Governor Cooper’s requirement that Medicaid expansion be coupled with certificate of need reform, our board of trustees has made the difficult decision to propose certificate of need law reforms. CON law changes could threaten the survival of community hospitals if they are not implemented carefully. We are putting a lot of trust in legislative leaders to do this correctly. If this policy damages access to local healthcare services, we hope that government leaders will find the resources to preserve crucial healthcare services and facilities, including safety-net services that North Carolinians rely on.” 

North Carolina is one of only a dozen states that has not expanded Medicaid. The ability of health systems and hospitals to pay for most of the state’s share of the cost of expansion hinges on the General Assembly passing legislation that includes the Healthcare Access and Stabilization Program (HASP). HASP is a program available through the federal Centers for Medicare and Medicaid Services (CMS) that would help ensure hospitals have the financial fortitude to care for Medicaid patients. 

On average, hospitals receive only 72 cents for every dollar spent on providing care to Medicaid and uninsured patients, amounting to a $2.3 billion dollar reimbursement gap every year. In the association’s proposal, reforms to the CON law would begin after the effective date of the state implementing expansion and receiving HASP funds. If the HASP program ends, it could risk the financial viability of many of the state’s hospitals.

Dr. Wells explained that the association’s offer is generous but financially risky, since hospitals typically operate on thin margins and many services that they provide historically lose money, including emergency departments, behavioral health and labor and delivery services. For months, health systems and hospitals have been facing extraordinary challenges with inflation and skyrocketing labor expenses. NCHA data gathered from its members has indicated that for the first six months of 2022, the average operating margin for hospitals was negative three percent, with some faring better or worse. Few organizations can survive for an extended period when their total expenses exceed total revenue. 

Steve Lawler, NCHA’s president and chief executive officer, said he hopes that North Carolina is finally ready to expand Medicaid. “It’s time for elected leaders to get a compromise bill done to expand Medicaid and pass HASP. Each day the General Assembly waits is a day that harms 600,000 North Carolinians. We hope that any legislation crafted will be done in a thoughtful way that protects healthcare facilities that take care of people and improve community health. We are fortunate to have world-renowned healthcare in North Carolina and hope that elected leaders agree that we want that to continue.”  

The story behind NCHA 

Founded in 1918, North Carolina Healthcare Association (NCHA) is the united voice of the North Carolina healthcare community. It represents more than 130 hospitals, health systems, physician groups and other healthcare organizations, 

NCHA works with members to improve the health of North Carolina communities. By advocating for a goal of sound public policies and collaborative partnerships and by providing insights, services, support and education to expand access to high quality, efficient, affordable and integrated health care can be available for all North Carolinians.  

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