- Associated Press - Wednesday, August 6, 2014

LUMBERTON, N.C. (AP) - Whenever Medicaid cuts filter down from the legislature in Raleigh to small-town and rural hospitals such as Southeastern Regional Medical Center in Lumberton, the pain is acutely felt.

Although they disagree on just how to reform North Carolina’s Medicaid program, lawmakers know they want to upend the way the state pays for and administers the health insurance program for low-income residents, including the elderly, disabled and children. They talk of contracting with private companies to manage the unpredictable and ever-rising costs of Medicaid.

Any changes are expected to strike hard at nonprofit hospitals like Southeastern, already reeling for earlier Medicaid cuts.

“It has an impact on everything. It hurts our hospital,” said Dr. Dennis Stuart, a physician in one of the hospital’s clinics. Stuart sees patients in a region that statistically has some of the highest rates of obesity, heart disease, substance abuse and mental illness in all North Carolina. And statistics also show the residents of this region are among the least able to afford medical care.

“It’s very difficult for people to appreciate the sort of triple whammy of poverty, ill health, relatively low education,” he said. “How do our friends in Raleigh hope for us to change that?”

North Carolina’s Medicaid program is facing major changes. And those changes will particularly affect independent nonprofit hospitals such as Southeastern, which lies in the heart of Robeson County and also serves four surrounding counties.

The legislature considered reform measures during this year’s budget-adjustment session, but the House and Senate couldn’t agree on the path to do it. They are now likely to return after the November election to try again. The chambers are looking at shifting more risk for cost overruns to doctors, hospitals or managed-care insurance companies, but disagree on significant details. One thing that will not be part of the reform is expanding Medicaid, which the legislature has soundly rejected.

Lawmakers have tried for years to bring Medicaid costs under control, with mixed success. Community Care of North Carolina - comprised of provider networks where doctors are paid a little more for patient management and chronic illness control - has contributed to large savings. But Medicaid still consistently recorded shortfalls of hundreds of millions of dollars in recent years.

Greater privatization will likely hurt a hospital already struggling to stay afloat because it could result in even less the money returned for the care they provide patients with no insurance or Medicaid, experts note.

“Certainly an independent hospital in a more rural community is going to be more impacted because they don’t have that safety net of the larger corporations to help them offset some of their losses,” said Julie Henry, a spokeswoman for the North Carolina Hospital Association.

“In a community like Lumberton that hospital is the resource for that community,” Henry said. “They don’t have a choice of offering more selected services.”

Southeastern Hospital is one of 18 private hospitals in North Carolina that are not a part of a larger corporate system. More than 10 percent of its patients are uninsured and 23 percent are on Medicaid - two to three times higher than the Medicaid rates in other hospitals statewide - according to Southeastern officials.

The hospital is trying to do its part to reduce costs so it doesn’t have to cut services, said Joann Anderson, the hospital’s chief executive officer. Still, the hospital lost $3.3 million caring for Medicaid patients last year, partially because of the state’s 70 percent reimbursement rate. This year’s budget has even more cuts, including a 1 percent reduction in the reimbursement rate.

“The (Medicaid) reductions keep coming at us faster than we can react,” said Thomas Johnson, the hospital’s chief financial officer.

A privatized payment system “would be an overnight change for us that could be devastating,” Johnson said.

Robeson County leads the state in an unfortunate litany of medical statistics: diabetes, heart disease, obesity and kidney disease rates. It’s a county with a diverse population that includes Lumbee Indians, blacks, whites and a growing group of Hispanics.

Southeastern is trying to save money the same way as other hospitals nationwide: by diverting people away from the expensive emergency department, cutting unnecessary tests and procedures and doing as much out-patient treatment as appropriate.

Going to the emergency room for primary care is a hard habit to change, however, in places like Robeson County where many factors re beyond the control of the hospital itself, Anderson noted.

Nikki Kessler, who is hunched in a wheelchair at Southeastern’s emergency department for four hours one day waiting to see a doctor for back spasms, hasn’t seen a primary care doctor for that issue since 2008. Kessler, 34, was on the last few weeks of the Medicaid insurance she carried through the birth of her son. She routinely has back pains so painful she heads to the emergency room for relief.

Senate lawmakers say their plan ensures coverage for rural areas with lots of Medicaid patients. The plan calls for private companies and hospital-led health plans to compete and work to lower costs overall and incentivizes private companies to take on Medicaid patients by offering them contracts to administer the program in wealthier parts of the state.

Hospitals aren’t so sure.

Private companies “cherry pick the patients that aren’t as sick so they’re performance will look better only because they’re serving less sick patients,” said Hugh Tilson, executive vice president of the North Carolina Hospital Association.

That notion is wrong, said Jeff Myers, president and CEO of Medicaid Health Plans of America. He added that states set parameters for the contracts and plans that bar private companies from selectively covering patients for the biggest profits.

As lawmakers decide Medicaid’s future, the physician Stuart keeps seeing patients at the Southeastern clinic regardless of their ability to pay.

“If you’re going to reduce our compensation for the existing patients, who would you propose is going to take care of the folks who are excluded?” he said. “Are we going to relocate them to South Carolina? No, were going to continue to take care of them … every single day of the year.”

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