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Kirk Kovach: Folwell, hospitals face off over health plan changes

By Kirk Kovach

One of the most fascinating stories simmering in the background for the past few months is the ongoing battle between Republican State Treasurer Dale Folwell and the North Carolina Healthcare Association over how the State Health Plan works.

Though it hasn’t been a sexy topic to cover, it may soon come to a head.

As Folwell is responsible for managing, among other things, the State Health Plan, which amounts to $3.3 billion annually and covers 700,000 North Carolinians. As it works today, the state does not actually know how much certain visits to the doctor or hospital costs. To correct for that lack of transparency, Folwell is proposing that hospitals are paid 177 percent of what Medicare would have paid for the same trip.

The hospitals, of course, are outraged. The North Carolina Healthcare Association has been the lead opposition to Folwell’s proposal. They posit that Medicare has traditionally underpaid and that hospitals are not able to negotiate prices with the federal government. They have a point.

And pushback has not only come from NCHA, but from some of Folwell’s party members in the General Assembly. Numerous Republicans are openly concerned about the way Folwell is approaching negotiations, or, more correctly, how he isn’t negotiating at all. The proposed changes to the State Health Plan would cost North Carolina hospitals around $450 million per year, according to NCHA. What Folwell does not seem as interested in is where those cuts are being transferred.

There are a number of negative ramifications to Folwell’s plan. One, the higher costs hospitals face will not only affect the companies running them, but the countless North Carolinians that are not covered by the State Health Plan. Costs will undoubtedly rise for others as hospitals try to correct for less money coming in from the state.

Another effect will be an increased burden shouldered by rural hospitals, especially in the eastern half of the state. Our rural hospitals are closing at an alarming rate, creating a vacuum of coverage that leaves thousands without easy access to caretakers. Even those lucky enough to have insurance will be force to drive untold miles and hours to get simple procedures and appointments fulfilled.

All told, both sides have valid points, and legislators have acknowledged as much. Folwell is right to seek transparency in the way that our State Health Plan is administered, and hospitals are right to want a seat at the table in hashing out a compromise.

The problem for Republicans and for the hospitals is that Folwell does not have any interest in reaching a compromise. He’s known for his no-nonsense personality, and it doesn’t seem like he would bow down to the biggest fight of his career at its peak.

Republicans in the legislature have introduced a bill that would create a study committee with a number of relevant parties to work through differences and find a viable solution.

It all sounds nice and reasonable, but its real purpose is to snatch the power to do the negotiating away from Folwell and give it to the legislature. It would also push back any sort of changes to the State Health Plan until 2022, whereas Folwell wants to update it the first day of 2020. Folwell has the backing of the State Employees Association, SEANC, whereas NCHA is allied with opponents of Folwell’s plan as-written.

While all of this jockeying takes place, Republican leaders in the General Assembly have wisely taken a hands-off approach.

It appears they will allow Folwell to hash it out with the hospitals without injecting the legislature into the fight, at least for now. If it appears that he is willing to sink us all for a Pyrrhic victory, they ought to step in.

Kirk Kovach is from Rowan County and contributes to politicsnc.com.

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