The Senate budget unveiled Monday cuts state laws that regulate hospital competition, placing Medicaid expansion, and health coverage for thousands of low-income North Carolinaians, in conflict.

During last year’s Medicaid expansion negotiations, a key agreement between the House and the Senate was Certificate of Need laws, which limit where hospitals, clinics and other health care facilities can be built. The Senate wanted to pass expansion with Certificate of Need changes but the House did not.

But this year, there was a breakthrough, and in early March, the Senate and House announced that they had reached a compromise deal: Medicaid expansion would pass and it would cut some CON regulations for health care facilities. The compromise bill would also include a new reimbursement program for hospitals.

By the end of March, Gov. Roy Cooper signed the expansion into law at a ceremony at the Executive Mansion in downtown Raleigh, opening the door for health insurance coverage to 600,000 low-income North Carolinians, who would be newly eligible for the program under its enhanced eligibility parameters.

There was a big caveat, though. Expansion would be contingent on the passage of the state budget, setting up the stage for roadblocks during potentially contentious budget negotiations.

The Medicaid expansion law signed by Cooper eliminates CON requirements for behavioral health beds and chemical dependency beds, among other cuts.

Meanwhile, the Senate’s budget bill takes “a sledgehammer to those archaic and unnecessary Certificate of Need laws that remain on the book,” said Sen. Ralph Hise, Monday, during a press conference to unveil the budget.

“These common sense changes will build on the CON reforms we included in the Medicaid expansion package and drive down costs and increase availability for patients” he said.

What happens next?

Senate Leader Phil Berger addressed Monday how the proposed CON changes could affect the House compromise and Medicaid expansion.

“I suspect there’ll be a number of things in this version of the budget that will create conflict with what the House did and we’ll work that out,” Berger said at during a budget press conference Monday.

The House passed its version of the budget in April. Berger said the Senate expects to pass its version this week, followed by negotiations between both chambers.

“That’ll set up the conference, because I’m pretty sure that the House will not concur in the changes that we make,” Berger said. “So even if it takes us three weeks in conference, that’s still the middle of June getting it done. So I think we’re on track to get the budget done before the end of the fiscal year.”

Pressed further on how expansion fell through because of CON change agreed, Berger said, “I don’t anticipate us reaching a stalemate with the House. We will see what happens but I don’t anticipate that.”

Details on changes

In addition to the Medicaid expansion law cutting CON for behavioral health beds and chemical dependency beds for counties with a population of 125,000 or more, it eliminates CON requirements for MRI machines and ambulatory surgical centers. These provisions would become effective years down the line, as previously reported by The News & Observer.

Under the new Senate budget, CON laws would be repeated:

  • for ambulatory surgical centers and facilities with Magnetic Resonance Imaging (MRI) machines, in counties with a population under 125,000 that do not have a hospital.

  • for mobile MRI machines, linear accelerators, physician office-based vascular access for hemodialysis, and kidney disease treatment centers.

  • for the conversion of special ambulatory surgical programs to multi-specialty programs and for the addition of a specialty.

The North Carolina Healthcare Association, a powerful interest group that represents hospitals, had been against cutting CON laws — and tying CON reform to Medicaid expansion — saying that it would erode access to care.

By limiting how many providers can offer lucrative services, CON helps hospitals ensure they can offset operational losses for things such as Medicaid care, said the NCHA, as previously reported by The N&O .

Cynthia Charles, a spokesperson for the NCHA, said Monday that the association was reviewing the budget proposal and didn’t yet have a comment about the changes.

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