North Carolina General Assembly Week in Review

April 15, 2022

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This week, legislators on several Joint Legislative Oversight Committees discussed healthcare policy and potential changes to how North Carolina regulates insurance and medical services. These meetings are part of a series of healthcare-related committees that are conducting hearings prior to the start of the legislative short session in May.

Access to Healthcare Committee Meeting

Since their first meeting in February, the Joint Legislative Committee on Access to Healthcare and Medicaid Expansion has discussed a wide array of topics and their impact on North Carolina, including expanding Medicaid eligibility to low-income individuals, transitioning to a managed care system for Medicaid, and allowing advanced practice registered nurses (APRNs) to practice without physician supervision. All of these are topics that have been closely examined by both legislators and outside groups in recent legislative sessions. This week, the committee discussed North Carolina’s Certificate of Need (CON) laws, another topic that has generated differing views throughout the legislature.

CON laws require hospitals and medical providers to seek approval from state regulators at the Department of Health and Human Services (DHHS) to add services, medical equipment, or beds. From its inception, the goal of the law has been to limit unnecessary services and increase competition. But opponents of the state’s CON laws argue that the laws prevent critical services, which require expensive equipment, from reaching disparate and rural communities. In 2021, the legislature passed Senate Bill 462: CON/Threshold Amnds. & Certificate Expirations, which significantly raised the dollar threshold for equipment and services before needing to undergo a certificate-of-need CON process.

Earlier this week, the committee heard from healthcare experts who presented data and anecdotes on the effectiveness of CON laws. Dawn Carter, a Senior Partner at Ascendient, a healthcare consulting firm, gave a presentation arguing that North Carolinians have better access to hospitals than those in states without CON laws, citing statistics on hospital density. Carter also argued that CON laws provide more efficiency in hospitals and compared inpatient bed occupancy in North Carolina to states without CON laws. She said that North Carolina’s CON status did not impact the availability of hospital beds during pandemic peaks and suggested that non-CON states should have had more available capacity to meet pandemic needs. Brian Floyd, President of Vidant Medical Center and Chief Operating Officer of Vidant Health Hospitals, took a similar approach as Carter in his presentation and spoke about the impact of CON on the health of rural North Carolinians. Vidant operates medical facilities in eastern North Carolina, which is predominantly rural. Floyd argued that health care disparities in North Carolina have decreased, in part due to the federal and state requirements for CON laws. He made the point that because rural hospitals rely on revenue from outpatient surgeries to offset losses from other hospital operations, like indigent emergency room care, the competition that CON laws bring allow them to continue operating in good standing. That is good, he said, because rural hospitals are the main economic engine in many rural counties, and often one of the largest employers in those counties.

Matt Mitchell, a Senior Research Fellow at the Mercatus Center at the George Mason University, presented detailed studies on quality of care and spending per service. Mitchell reasoned that there were no studies that find clear evidence that CON reduced spending per service, instead suggesting that the cost of services like spinal surgeries fell faster in non-CON states. Mitchell cited a study that showed that states who eliminate CON laws experience a five-percent reduction in real per capital health spending. Allison Farmer, the CEO of EmergeOrtho, which operates outpatient orthopedic care in both urban and rural areas of North Carolina, gave a presentation on the impact of CON laws on access and cost for services. She focused on advanced imaging and ambulatory services, which are some of the most expensive services in rural North Carolina, as well as some of the most disperse. She argued that CON laws limit access to MRIs, for example, and increase wait times for patients. She also compared the cost of MRIs in a rural community versus an urban community, performed by the same facility, and showed that the cost was normally higher in the rural facility.

The committee will meet again Tuesday, April 26 at 9:30AM.

Health and Human Services Oversight Meeting

Members of the Joint Legislative Oversight Committee on Health and Human Services were in town for a meeting earlier this week that covered a variety of topics from COVID trends to NC Pre-K funding. 

Susan Gale Perry, Chief Deputy Secretary for Opportunity and Wellbeing at the Department of Health and Human Services (DHHS), kicked off the committee meeting with a presentation on the current status, metrics, and trends of COVID-19 throughout North Carolina. Deputy Secretary Gale Perry emphasized that the best protection against the virus continues to be vaccines and booster shots. The Deputy Secretary also noted the flexibility provided to DHHS through the continued state of emergency, which was extended through July 15, 2022, by Governor Cooper in the issuance of Executive Order 256 earlier this month. Through the state of emergency, health care facilities and emergency medical services agencies are able to increase their staff and other resources to better manage case surges, the State Health Director is able to issue standing orders for testing and treatment, and professionals credentialed to perform asbestos management and lead abatement and renovation are able to work additional time to complete required in-person trainings. 

Director of the Division of Social Services, Susan Osborne, and Senior Director of Child, Family and Adult Services, Lisa Cauley, provided members of the committee an overview of North Carolina’s current foster care system. Over the course of the 2020-2021 fiscal year, 15,239 children spent at least one day in foster care throughout the state. Of the children that entered foster care, 83% did so due to neglect, with the three main causes being parental drug use, domestic violence, and inadequate housing. Over 40% of the children in foster care are five years old or younger and the average length of stay for a child in foster care was 720 days. Both Director Osborne and Director Cauley emphasized that there were a few key elements that would help bring about positive outcomes for the children that enter the foster care system, including ensuring that there is statewide availability of wraparound services for kinship caregivers to keep children with their families, ensuring the availability of quality behavioral health services, and an investment in a robust, resilient child welfare workforce to supper better consistency in practice throughout the state.

In an effort to address some of those key elements for positive outcomes for children in foster care, Dave Richard, Deputy Secretary for Medicaid, presented the framework and design for a statewide Children and Families Specialty Plan (CFSP). Through this model, DHHS would contract with a single entity which would then be responsible for serving children and families in the foster care system no matter where they are located in the state. DHHS would focus the plan on the unique needs of each case served by the child welfare system and would emphasize keeping families together. Plan based care managers would be trained and have specific experience in the unique needs of children and families in child welfare. The Department did not have an exact timeline for when they may look to roll out this type of statewide plan, though. Several members raised concerns expressed to them by the counties in their district that want to stay with their current LME/MCO partner. While counties would have the option to opt out of the statewide plan and remain with their LME/MCO, members were concerned that they were already hearing from county leadership about their plans to opt out before knowing what the final statewide plan would look like. 

The committee also heard from DHHS and Department of Justice (DOJ) leaders about opioid settlement funding coming to North Carolina and guidance for local governments on how they may best be able to spend those dollars. Steve Manage, Senior Policy Counsel and Interim Legislative Counsel for DOJ, and Daniel Mosteller, Deputy General Counsel, provided members an overview of what the national settlements include for North Carolina. The McKinsey & Company settlement will bring $19 million to North Carolina over five years – $15.7 million of which was received in April 2021 and $812,000 will be due to the state annually from April 2022 to April 2025. The Johnson & Johnson and distributors settlement includes $750 million for North Carolina over an 18-year period in addition to new rules aimed at preventing future harm.

Members wrapped up Tuesday’s meeting with a presentation from Deputy Secretary Gale Perry on NC Pre-Kindergarten and how the program is funded in North Carolina. The state defines NC Pre-K as high-quality education for 4-year-olds to enhance school success and is delivered in public schools, private childcare centers, and Head Start. To be eligible for NC Pre-K, the child must turn four by August 31st and must either be from a family whose income is 75% or less than the state median income of $60,554 for a family of four, have a parent that is active military, limited English proficiency, have an identified disability, or have a chronic health condition. Based on a 2017 study directed by the legislature, the cost of childcare in North Carolina was $9,972 per child. The state of North Carolina pays $5,228 per child for childcare, on average, and counties, local education agencies, and contributions from certain participating programs make up the difference in cost. 

Medicaid and NC Health Choice Meeting

Legislators concluded their formal healthcare discussions this week with a Joint Legislative Oversight Committee on Medicaid and NC Health Choice. This year, the committee has been tasked with overseeing Medicaid transformation, which moved the state from a fee-for-service model to a managed care system. Legislators heard from a familiar voice, North Carolina Department of Health and Human Services (DHHS) Deputy Secretary for NC Medicaid Dave Richard, who has spoken to the committee several times before. Richard presented the committee with specific legislative needs during the upcoming short session to affect the Tailored Plans, the Children and Family Specialty Plans, and other changes to clarify administrative duties and processes within the managed care system.

Following Deputy Secretary Richard’s presentation, legislators received an update on Medicaid transformation from Jay Ludlam, the DHHS Assistant Secretary for Medicaid Transformation. Committee members questioned particular facets of the transformation program and wanted to know what challenges the department is encountering. Several legislators asked about the NC FAST program, which is a program designed to improve the way DHHS and county departments of social services conduct business. Ludlam and Richard expressed that the system was not flawless and addressed the complexities that go along with changing and modernizing the system.

Legislators then heard from a Prepaid Health Plan panel on Medicaid Transformation. Panelists included Anita Bachmann, the CEO of UnitedHealthcare Community Plan; Heidi Chan, Market President of AmeriHealth Caritas of North Carolina; Jesse Thomas, the CEO of Healthy Blue North Carolina; Mardy Peal, the VP of Public Affairs for WellCare of North Carolina; and Chris Paterson, the CEO of Carolina Complete Health. The panel spoke about the major changes to prepaid health plans and members that occurred as a result of Medicaid transformation, which begin last year during the pandemic. They also spoke about next steps, including the early successes of transformation and the strong foundation being set for network adequacy and enhancing coverage. The panel commended the department for their various successes. Senator Gladys Robinson (D-Guilford) thanked the panel and DHHS for their “intentional collaboration” with each other, and with community-based organizations throughout the state. Representative Carla Cunningham (D-Mecklenburg) asked a similar question about collaboration with community partners to address health disparities being felt by poor and minority individuals. Bachmann spoke about recognizing critical focal points of health inequities, like infant mortality, and their investment in programs like the ECU Brody School of Medicine to address that issue.

Upcoming Legislative Meetings

Tuesday, April 19

10:00AM: Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources (NC Zoo)