North Carolina Senate Republicans on May 15 outlined a budget proposal that could shut down certain hospitals if they do not hit a savings target for reducing costs for the state health plan, which serves teachers and state employees, according to The Herald Sun.
Under the proposal, urban hospitals would be required to reduce "healthcare costs to the citizens of this state as a requirement for hospital licensure," Senate Republicans said in a press conference, according to The Herald Sun.
The provision would be for hospitals in counties with a population of more than 210,000 — of which there are 12. It would also include hospitals recognized as academic medical centers, such as UNC Medical Center in Chapel Hill.
Under the "state health plan hospital savings initiative," lawmakers would have until July 1 of each year to set an annual target for hospital savings for the following year, according to the report. The state health plan's board would be able to assign individual targets for hospitals based on the portion of claims they were paid by the plan in the previous five years.
Hospitals would also need to agree with the board or the plan's claims processor on the cost cuts they plan to make to hit their specific targets, The Herald Sun reported. According to the provision, HHS would not issue or renew licenses for urban hospitals that do not prove that they have entered into a savings agreement with the state health plan board or claims processor.
The annual statewide savings target for 2026 — the first year that the provision would be implemented if passed into law — is $125 million, according to the report.
The North Carolina Hospital Association told Becker's that there are certain elements of the Senate's budget that are helpful — including increases in funding for education and behavioral health and salary increases for state employees — but it "does not support language that mandates state health plan savings at the risk of losing the ability to operate as a licensed hospital."
"This approach not only places healthcare at risk for over 10 million North Carolinians, it also looks like government intrusion into private business, which we believe is bad for North Carolina and a dangerous precedent," according to the NCHA. "Hospitals across the state are ready and willing to work with the state health plan and its beneficiaries to improve the health of members and reduce costs through care management of chronic conditions and enabling healthier lifestyles. This requires empowering and supporting those who are responsible for delivering care, rather than creating additional bureaucracy and administrative burden that would empower insurance companies versus care givers. We know that a healthier workforce is more productive, happier and costs less. It is time we look to support those care givers who care for all North Carolinians."