Senate budget proposes change to Vidant reimbursements
By Ginger Livingston
The Daily Reflector
Wednesday, May 29, 2019
The proposed Senate budget introduced on Tuesday would cut Vidant Medical Center’s Medicaid reimbursement by an estimated $35 million, according to hospital officials.
The cut in reimbursements is because of the hospital’s decision to change its governance structure and stop the University of North Carolina Board of Governors’ from making appointments to the hospital’s Board of Trustees.
“That is certainly a decision Vidant can make, but it does not make sense for Vidant to continue receiving financial benefits directed by public policy when it has ended its side of the partnership,” said Pat Ryan, spokesman for Senate President Pro Tempore Phil Berger.
The three-paragraph section in the 338-page proposed budget states that effective July 1, the state Department of Health and Human Services, which manages the state’s Medicaid reimbursements, shall amend the Medicaid State Plan “to no longer reimburse the primary affiliated teaching hospital for the East Carolina University Brody School of Medicine for the allowable costs for inpatient and outpatient services.”
Instead, “the primary affiliated teaching hospital” which is Vidant, “shall be reimbursed in the same manner as other private hospitals under the Medicaid State Plan.”
State Rep. Greg Murphy, a Greenville urologist and surgeon, explained that Vidant and the University of North Carolina Hospitals, the institutions that serve as the teaching hospitals for Brody and the UNC School of Medicine, receive a higher rate of Medicaid reimbursement because as teaching hospitals they care for a “disproportionate number” of Medicaid patients.
The budget proposal comes eight days after the University of North Carolina and East Carolina University filed a complaint against Vidant Medical Center and Pitt County government for changing a long-standing agreement on the process of appointing the hospital’s board of trustees.
“What classified Vidant as a teaching hospital was its formal contract with ECU,” Ryan said. “That contract stipulated that, in exchange for the financial benefits to Vidant of its classification as a teaching hospital, ECU would receive a number of appointees to Vidant’s Board of Trustees so ECU could have some oversight in the hospital with which it was partnered.”
It is the UNC Board of Governors, not ECU, that had the appointment authority.
Since the mid-1970s, when the medical school was established and Pitt County Memorial Hospital, now Vidant Medical Center, became its teaching hospital, the Pitt County commissioners appointed 11 trustees and the UNC Board of Governors appointed nine trustees to the hospital board.
That changed when the hospital’s Board of Trustees and the Board of Commissioners amended the affiliation agreement and removed the Board of Governors from the appointment process. Under the new articles filed with the Secretary of State’s office on April 24, Vidant’s trustees will appoint nine members from nominees submitted by Vidant Health’s Board of Directors. Vidant Health is the hospital’s parent company.
Since it’s alleged that Vidant broke its affiliation agreement, “the Senate budget therefore treats Vidant the same way as other private hospitals, as is only fair,” Ryan said. “Otherwise, Vidant would be receiving public benefits that other hospitals do not currently receive even though Vidant now has the same relationship with the public university system as other private hospitals have.”
Vidant is still functioning as the medical school’s teaching hospital.
“We are disheartened to learn that the Senate's proposed budget includes language to eliminate Vidant Health’s ability to be reimbursed as the primary affiliated teaching hospital for the Brody School of Medicine at East Carolina University,” said Jason Lowry, Vidant associate director of communications. “If allowed to become law, it will have devastating consequences for the communities we serve.”
Lowry said the change would result in a $35 million cut to Vidant’s funding. That cut comes on top of an expected $38 million loss tied to changes in the state health plan.
“The Senate budget is absolutely awful. It dismantles health care in eastern North Carolina, which already has some of the highest needs,” said state Sen. Don Davis, D-Pitt. “The budget also fails to close the Medicaid coverage gap.”
Davis said the Senate budget does not include planning dollars for a new Brody School of Medicine building. The House budget does include planning funds.
Groups also are analyzing changes to the certificate of needs process, a state-supervised process for determining if medical facilities need to be built in an area, and how the changes may affect health care providers, Davis said.
Murphy said he heard rumors that the Senate budget would contain cuts to Vidant but it was not confirmed until the budget was released.
“I am very disappointed in this. I know there is disagreement because of the actions that the Vidant Health board took about governance with the UNC system,” Murphy said. “I just feel it’s unfortunate that Brody’s mission could be put into peril because of that disagreement. I’m hopeful a solution will be worked out so the Brody School of Medicine can continue its mission of providing primary care doctors to the state.”
Lowry said hospital officials cannot be certain as to the motivation of the reimbursement change.
“It is a direct attack on the people in eastern North Carolina who depend on Vidant for access to care and the hundreds of physicians and health care providers who train in our facilities,” Lowry said. “We are calling on legislators representing eastern North Carolina to take a stand on behalf of the people of the east. Vidant strongly opposes this effort and will stand up to protect health care for the rural communities we serve.”
As the Senate was releasing its budget, attorneys for Vidant and UNC filed documents in Orange County Superior Court stating each side had agreed to voluntary mediation to resolve the case and asked that the 10-day temporary restraining order issued on Friday be extended to give them time to mediate.
The two sides said they want the case declared an “exceptional case.” Such a designation is made by “a senior resident superior court judge, chief district court judge, or presiding superior court judge” to the state’s chief justice.
According to the General Rules of Practice for the Superior and District Courts, “Such recommendation for exceptional cases may include special areas of expertise needed by the judge to be assigned and may include a list of recommended judges.”
Both sides also have agreed to change the case’s venue to Pitt County from Orange County.
Contact Ginger Livingston at email@example.com or 252-329-9570.