Senators Discuss Medicaid Hospital Reimbursement in Budget Debate

By Rose Hoban

As senators debated their budget bill Wednesday, more details emerged about cuts to hospital reimbursements from the Medicaid program.

In its budget, the Senate has called for almost $144.8 million in cuts to hospitals over the biennium: $51 million as a result of lower state payments to hospitals for care to Medicaid patients and $92 million in a “shared-savings” plan that will withhold 4 percent of Medicaid payments going to hospitals.

In addition, senators have proposed changing the Medicaid base rate paid to North Carolina hospitals and to create rates that will apply to all hospitals in one of four regions.

According to Health and Human Services Appropriations committee chair Sen. Ralph Hise (R-Spruce Pine), the base rate is an initial rate paid to hospitals to care for Medicaid patients.

Until now, that base rate has been based on cost reports individual hospitals submit to the state. As a result, each hospital then gets a slightly different rate.

But Hise said those current base rates don’t always reflect differences in, for example, costs of living between rural and urban areas, or the size of the hospital.

“Base rates in the east are greater than those in the west, or even much of the Piedmont,” Hise said.

For example, the base rate at Pitt County Memorial Hospital in Greenville is $3,808, while the base rate at Carolinas Medical Center in Charlotte is $3,221 (see attached document).

Still, under the new plan, five of the state’s largest hospitals – Carolinas, Pitt Memorial, UNC Hospitals, Duke University Medical Center and Mission Hospital – would lose a total of $18.9 million next year.

Hospitals with Medicaid Base Rate Cuts
Hospital	Location	Beds	Medicaid Admissions	Regional Net Impact
Carolinas Medical Center	Charlotte	435	13,076	-2,994,102
Mission Hospital	Asheville	730	7,981	-106,080
UNC Hospital	Chapel Hill	778	9,363	-9,113,692
Duke University Med Center	Durham	943	7,339	-2,396,379
Pitt County Memorial Hospital	Greenville	861	9,467	-4,299,832

Meanwhile, changing the base rate means that the rest of the state’s hospitals would gain between $1,585 (Davie Hospital, with 81 beds) and $2,389,262 (Cape Fear Valley Medical Center, with 600 beds).

According to Hise, that base rate is not the final amount paid to hospitals for patient care. The final payment also accounts for how sick patients are, what diseases they have and what procedures might be done in hospitals.

In sum, what hospitals get is usually higher; but with a lower base rate, they’ll get less than what they’re used to.

“This is a balance-out for the state,” Hise said in response to questions on the Senate floor.

HospitalRates P1 (PDF)

HospitalRates P1 (Text)

HospitalRates P2 (PDF)

HospitalRates P2 (Text)