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Thread: Mixed results on state price-setting so far; North Carolina in trouble?

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    Mixed results on state price-setting so far; North Carolina in trouble?

    There's a small but growing movement in states to try setting or capping prices paid on behalf of state employee health plans (and soon the first state 'public option') at some percentage of Medicare rates.

    A few years ago the GOP governor in Massachusetts supported a proposal to cap prices in the state employee plan at 160% of Medicare, but the plan never got off the ground: GOP Governor Proposes to Regulate Health Care Prices

    Montana has been doing something like this, successfully so far, since 2016, though they set their prices at a higher percentage of Medicare than Mass proposed.
    Instead of starting with the hospital’s list price and negotiating down for discounts, the state began telling these facilities how much it was willing to pay — a “reference price” — for each type of hospitalization. State officials used generally conservative Medicare rates as a baseline and starting point for the discussion.
    When Bartlett’s team settled on paying an average of 234 percent of Medicare for inpatient and outpatient care, the decision involved a delicate balance: Set the bar too high and some hospitals would raise prices; too low, and some could cut back services or refuse to sign on.

    As the July 1, 2016, deadline approached, five hospitals were holding out — and the state didn’t want huge gaps in its hospital network.
    Ultimately Montana got every hospital to sign on and as of earlier this year had apparently saved over $13 million since starting this.

    North Carolina announced last October they'd be following in Montana's footsteps:
    (Raleigh, N.C.) – State Treasurer Dale R. Folwell, CPA announced today that the State Health Plan (Plan) will launch a new medical reimbursement strategy for North Carolina providers that care for Plan members. This effort is part of a longer term strategy to take advantage of the Plan's “largeness" to keep rising health care costs under control while promoting quality care, transparency and affordability. . .

    Starting on January 1, 2020, the Plan will move away from a commercial-based payment model to a reference-based government pricing model based on a percentage of Medicare rates to reimburse health care providers for their services. The Plan is a government payer like Medicare. Medicare is the largest health care payer in the country and the Plan is one of the largest in the state. Medicare also provides a standard reimbursement measurement that is transparent and adjusts for provider differences. Reference-based pricing is intended to provide transparency in provider rates by indexing fees to a published schedule. The movement to a referenced-based pricing model aligns the Plan appropriately as a government instead of a commercial payer.
    Now they've hit a snag.

    N.C. standoff could leave 700,000 without in-network hospitals
    That's because no hospitals have signed contracts to join the State Health Plan's new network in which providers will be reimbursed for their services at a percentage tied to the what Medicare pays for the same service. The deadline to sign a contract is Monday, July 1.
    Despite the deadline inching closer, there's no sign that the standoff between the hospital systems and the state treasurer's office, which oversees the State Health Plan and wants to move it to a reference-based pricing model, is close to being resolved.

    North Carolina Treasurer Dale Folwell insists that paying providers 182% of Medicare on average for inpatient and outpatient services is necessary to keep the State Health Plan from running out of money in the next five years. Professional services would be reimbursed at about 160% of Medicare.
    It'll be interesting to see what happens next.

    This also potentially has implications for Washington's recently passed 'public option,' which is supposed to reimburse providers at 160% of Medicare's rates if it can build a provider network at those rates. See: Washington passes 'public option'

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    Re: Mixed results on state price-setting so far; North Carolina in trouble?

    Quote Originally Posted by Greenbeard View Post
    There's a small but growing movement in states to try setting or capping prices paid on behalf of state employee health plans (and soon the first state 'public option') at some percentage of Medicare rates.

    A few years ago the GOP governor in Massachusetts supported a proposal to cap prices in the state employee plan at 160% of Medicare, but the plan never got off the ground: GOP Governor Proposes to Regulate Health Care Prices

    Montana has been doing something like this, successfully so far, since 2016, though they set their prices at a higher percentage of Medicare than Mass proposed.



    Ultimately Montana got every hospital to sign on and as of earlier this year had apparently saved over $13 million since starting this.

    North Carolina announced last October they'd be following in Montana's footsteps:


    Now they've hit a snag.

    N.C. standoff could leave 700,000 without in-network hospitals



    It'll be interesting to see what happens next.

    This also potentially has implications for Washington's recently passed 'public option,' which is supposed to reimburse providers at 160% of Medicare's rates if it can build a provider network at those rates. See: Washington passes 'public option'
    Good information. I would guess that a public option at 160% of medicares rates would be successful (barring other hoops etc that it places on that public option)...but a rate of 160% of medicare.. and the increase in volume.. as presumbably.. those taking the public option probably have the worst and worst paying insurances already.

    That's probably the problem with the state plans... they were too few (not enough volume to justify the rate cut)..and the rate cut was simply too much.
    So we should put you down as supporting putting GPS trackers in everyone to "save lives"?
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    Re: Mixed results on state price-setting so far; North Carolina in trouble?

    Thank you, Greenbeard.

    And, I must admit, your posts are one of the reasons I've decided to join the forum after lurking for awhile....mostly so I can ask you some questions as I try to form my own opinions on how we, collectively, can or should reform our health care system.

    Now to my question(s) to you: How do you think the success (or failure) of these state plans bodes for a Medicare For All proposal. If the states are openly acknowledging that the medicare reimbursement rates are too low, what do you see happening if we went to M4A on a national scale? Would the rates have to increase? Otherwise, who will have to reduce their prices? The hospitals? Or will their staff (the doctors & nurses) get paid less?

    I read your thread on hospitals trying to trim their admin costs and how difficult a proposition that's been. But something's gotta give.

    ps...I will try to link to that thread. I need brush back up on my forum posting skills.

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    Re: Mixed results on state price-setting so far; North Carolina in trouble?

    Quote Originally Posted by Greenbeard View Post
    There's a small but growing movement in states to try setting or capping prices paid on behalf of state employee health plans (and soon the first state 'public option') at some percentage of Medicare rates.

    A few years ago the GOP governor in Massachusetts supported a proposal to cap prices in the state employee plan at 160% of Medicare, but the plan never got off the ground: GOP Governor Proposes to Regulate Health Care Prices

    Montana has been doing something like this, successfully so far, since 2016, though they set their prices at a higher percentage of Medicare than Mass proposed.



    Ultimately Montana got every hospital to sign on and as of earlier this year had apparently saved over $13 million since starting this.

    North Carolina announced last October they'd be following in Montana's footsteps:


    Now they've hit a snag.

    N.C. standoff could leave 700,000 without in-network hospitals



    It'll be interesting to see what happens next.

    This also potentially has implications for Washington's recently passed 'public option,' which is supposed to reimburse providers at 160% of Medicare's rates if it can build a provider network at those rates. See: Washington passes 'public option'
    No matter who tries to make government healthcare insurance affordable, they will never be able to. That would be like trying to make government housing free for all while costing nobody.

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    Re: Mixed results on state price-setting so far; North Carolina in trouble?

    Quote Originally Posted by SomeCents View Post
    Now to my question(s) to you: How do you think the success (or failure) of these state plans bodes for a Medicare For All proposal. If the states are openly acknowledging that the medicare reimbursement rates are too low, what do you see happening if we went to M4A on a national scale? Would the rates have to increase? Otherwise, who will have to reduce their prices? The hospitals? Or will their staff (the doctors & nurses) get paid less?
    I find it very unlikely that if we went to Medicare for All there would be much, if any, net decrease in reimbursement to providers. The political and economic implications are just too fraught. Any substantial reimbursement cuts would have to be accompanied by staffing or compensation cuts and other downsizing of capacity, which gets very dicey very quickly.

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    Re: Mixed results on state price-setting so far; North Carolina in trouble?

    Quote Originally Posted by Greenbeard View Post
    I find it very unlikely that if we went to Medicare for All there would be much, if any, net decrease in reimbursement to providers. The political and economic implications are just too fraught. Any substantial reimbursement cuts would have to be accompanied by staffing or compensation cuts and other downsizing of capacity, which gets very dicey very quickly.
    emphasis mine

    Here's my second attempt to post/reply. Not sure what I did wrong with the first one.

    Therein lies my greatest concern. If a state plan can't make it with a 160-180% medicare reimbursement rate, what will happen then? Just as you suggest...less staffing or capacity...precisely when we'd mostly likely need it because, presumably, more people...now with "coverage" could avail themselves of treatment. Scary.

    Of course, there are those, I suppose who think more efficiencies w/could lower "costs" or that the staff (at all levels) should be paid less...or the corporations (of for-profit providers) should make less. But I think it'll be very difficult to squeeze that financial pie.
    You can lead a horse to water, but you cannot make him drink. ~Ancient Proverb
    You can send a child to school, but you cannot make him think. ~s

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    Re: Mixed results on state price-setting so far; North Carolina in trouble?

    Just checking in on this, North Carolina has upped the payments offered from 182% of Medicare to 196% and re-opened the window for hospitals to join the state employees' network. When that window closes a week from next Tuesday, we'll see whether that concession moved the needle at all.

    Treasurer ups payments in attempt to land hospitals for State Health Plan
    Raleigh, N.C. State Treasurer Dale Folwell sweetened the pot Monday in an effort to get hospitals on board with the State Health Plan that serves hundreds of thousands of state employees, retirees and North Carolina teachers.
    The new window for hospitals to sign onto the State Health Plan runs from July 26 through Aug. 5 at midnight, Folwell's office said in a release. Like before, payments would be tied to Medicare, the federal insurance program for senior citizens. But reimbursement rates would be higher, moved from 182 percent of what Medicare pays to 196 percent, on average, Folwell's office said.

    That would still save taxpayers, who fund the lion's share of the state's health insurance plan for employees and retirees, $166 million, the treasurer's office said. Plan members would save $34 million. The total plan costs roughly $3.4 billion a year.

    Only three hospitals, of roughly 100 in the state, signed on at the lower rate by Folwell's initial July 1 deadline. The plan was to start the new structure in January, with open enrollment in September. Hospitals and other practices that don't sign on would be out-of-network for plan members, increasing their out-of-pocket costs.

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