North Carolina, Montana and Oregon are among the states that have begun to use Medicare reimbursement rates to adjust how much their state employee health plans pay hospitals, according to NPR.
Five things to know:
1. Traditionally, employers and insurers negotiate rates behind closed doors. Hospital charges are often many times what Medicare would pay, even with agreed upon discounts between employers and hospitals.
2. In an attempt to lower state healthcare costs, North Carolina Treasurer Dale Folwell revealed plans for the state's employee plan to begin paying most hospitals at Medicare rates plus 82 percent. Mr. Folwell projected the plan would save the state $258 million each year, according to NPR.
3. North Carolina's hospital association disputed the plan when it was introduced, stating it would disproportionately affect rural hospitals and lower hospital revenue statewide by about $460 million.
4. Mr. Folwell agreed in mid-March to a 20 percent payment boost to rural hospitals. Rural hospitals in North Carolina are expected to get another $52 million annually under the increase, while getting paid an average 218 percent of Medicare.
5. Montana shifted its state employee health plan program to use Medicare rates two years ago, and Oregon will transition to the strategy this fall. Additionally, Delaware is considering the change to lower spending. As NPR notes, while still at the state level, "If the gamble pays off, more private-sector employers could start doing the same thing."
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