NCHA Statement on Federal Medicaid Proposals

Medicaid is a lifeline for 3 million people in our state, including over 650,000 who have benefited from expansion efforts, as well as for our rural and safety net hospitals that provide essential health services to low-income families, children, seniors, and individuals with disabilities. While the North Carolina Healthcare Association (NCHA) supports efforts to improve the efficiency and effectiveness, including thoughtful examination to eliminate potential waste, fraud, and abuse, in our healthcare programs, we agree with the House’s stated commitment to do so without substantially reducing access to care or cutting Medicaid benefits for those most in need.

Efforts in the Senate to cut Medicaid more deeply through additional changes to provider taxes and state-directed payment programs (SDPs) would be catastrophic to North Carolina’s Healthcare Access and Stabilization Program (HASP) and impose significant financial burdens on state governments to make up for lost federal support. In either the proposed reduction of provider taxes to 3.5 percent of net patient revenue or reducing rates to 100 percent of Medicare, the benefit of HASP in North Carolina is virtually eliminated. This would be a loss of up to $6.5 billion for North Carolina, nearly $5 billion of which is federal funding, that the state is unlikely prepared to fill – and could only do so by deeply cutting from other necessary priorities.

HASP was established to close the current deficit North Carolina hospitals experience annually by participating in the Medicaid program. It has helped improve access to healthcare for Medicaid patients across the state to ensure safety net hospitals in our state are able to provide comprehensive services. The result of these changes would disproportionately affect the most vulnerable, and North Carolina may be forced to limit the range or quality of services covered by Medicaid, impacting beneficiaries’ access to essential care.

The Rural Health Transformation Program offered by the Senate as an intended protection for rural hospitals that will face resourcing concerns is inadequately conceived and constructed and would not replace nor supplement the benefit of HASP in North Carolina. It also shows that Senate leaders recognize that their Medicaid cuts will hurt the most vulnerable that the program is designed to serve.

The House’s approach to Medicaid financing in H.R. 1 in its treatment of provider taxes and SDPs offers workable proposals to address concerns about the current trajectory of federal Medicaid spending. While we have sought additional clarifications to the grandfathering language to ensure that HASP may continue to appropriately support access to and delivery of care, we understand that the intent of language is to hold states harmless and provide some flexibility to comply with potential future updates to Medicaid policies and the law.

On behalf of our 130-member hospitals and health systems, the North Carolina Healthcare Association is urging the rejection of the Senate’s proposed Medicaid cuts and a return to the more thoughtful approach to provider taxes and SDPs in the House-passed bill that support Medicaid programs here in North Carolina and across the country. We are grateful to Senator Thom Tillis and other members of our congressional delegation that continue to stand up in support of our hospitals and our communities throughout this process.

About North Carolina Healthcare Association

Founded in 1918, the North Carolina Healthcare Association (NCHA) is the united voice of the North Carolina healthcare community. Representing more than 130 hospitals, health systems, physician groups and other healthcare organizations, NCHA works with our members to improve the health of North Carolina communities by advocating for sound public policies and collaborative partnerships and by providing insights, services, support and education to expand access to high quality, efficient, affordable and integrated health care for all North Carolinians.