Medicaid, hospital funding may rise

A new payment plan the N.C. General Assembly passed last week could bring some hospitals more money from the federal government.

But UNC Hospitals will not benefit.

If the bill is signed into law, hospitals will be required to pay the state a fee based on their Medicaid costs, which will be used by the state to draw more money from the federal government.

“Most hospitals will gain from this fee,” said Rep. Jim Crawford, D-Granville, one of the bill’s sponsors.

“The public hospitals don’t gain as much from the bill,” Crawford said. “Duke Hospitals is the largest gainer.”

Legislators expect Gov. Bev Perdue will sign the bill, Crawford said.

He said he anticipates the plan will go into effect soon after it is passed and certainly by the start of the state’s fiscal year — July 1.

UNC Hospitals and other hospitals across the state annually lose money on uncompensated care and shortages in Medicaid reimbursements. UNC expects $306 million in uncompensated care losses for 2011.

The federal government is required to match Medicaid payments at least at 50 percent, depending on the state, said Karen McCall, spokeswoman for the hospital.

The goal of the bill is to generate more state funding for Medicaid that will then be used to draw a proportional increase in federal funding for Medicaid. The extra revenue from the federal government will also provide $43 million in additional funding for the state.

The payments hospitals make to the state as part of the plan will be based on their existing costs.

“Some hospitals will do better and some will do worse,” said Pam Silberman, a professor in the UNC health policy and management department.

This is a payment plan and not a tax, because the majority of hospitals are non-profit organizations and so cannot be taxed.

But as the state hospital, UNC Hospitals does not qualify for this extra funding because of federal guidelines, nor will it be required to pay into the plan, McCall said.

“UNC Health Care is not a part of the assessment,” she said.

“UNC Health Care is applying for upper payment limit funds to also draw more federal funding for Medicaid,” McCall said.

It’s a different methodology of getting federal funds for state hospitals because of federal guidelines, she said.

Upper payment limits are the maximum payments that can be made to Medicaid providers.

“We won’t be making money off of Medicaid,” said Don Dalton, spokesman for the N.C. Hospital Association. “Never have, never will.”

“It should allow us to break even, but we’re not able to do that either,” he said.

“Hospitals will be assessed and the state will use that money to draw down matching federal dollars and both of those pools will be paid back to hospitals with the exception of a little bit that the state keeps,” Dalton said.

“It will enable hospitals to come that much closer to recuperating money on Medicaid patients.”

He said the plan will be very helpful and that the association lobbied extensively for it to pass.

“We had 88 hospital boards of trustees pass resolutions supporting this proposal,” Dalton said.

“We are delighted with the support we got on this from the legislature and think it will be a great help to our hospitals.”

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