November 22, 2019
NC Gov. Roy Cooper signed two bills into law this week: HB200 and SB356. HB200, the “2019 Storm Recovery/Var. Budget Corrections Act,” provides funds for disaster relief from Hurricane Dorian and other named storms, funds for resiliency measures against future storms, and funding for the “Rural Health Care Stabilization Fund.” The legislation also provides funding to make corrections to various budget related bills and to enact certain budget provisions from HB966 (budget bill). SB356, “DOT Cash and Accountability,” implements budget stabilization and financial transparency measures for the Department of Transportation. Of particular interest in HB200, is the provision allocating funds for rural hospitals (health care stabilization). Appropriated from the General Fund to the Office of State Budget Management is $13,397,000 in nonrecurring funds for the 2019-2020 FY and $6,603,000 in nonrecurring funds for the 2020-2021 FY. Earlier this session, companion bills were introduced in the House and Senate under the name “Rural Health Care Stabilization Act.” The intent of the standalone bills (HB704/SB252) and the rural health provision included in HB200 are the same: to establish a non-reverting revolving loan fund to provide low interest for the support of hospitals in rural areas that are in financial crisis, with loan approval by the Local Government Commission (LGC) and loan administration by UNC Health Care. The standalone effort failed, however bundling the provision with storm recovery and other budgetary corrections proved to be a success. With the nonrecurring funds now available, the application process can begin. “Eligible hospitals” must meet established criteria to apply. Applications are first submitted to UNC Health Care for evaluation to determine if the applicants demonstrate a financially sustainable health care service model for the community in which the eligible hospitals are located. All applicants must submit a hospital stabilization plan. Based on the evaluation, UNC Health Care will make recommendations of approval or disapproval of the loans to the Local Government Commission, as well as the terms of the loans. The LGC makes the final decision on loan approvals, while UNC is charged with execution of the loans and oversight of administration. Should Gov. Cooper’s veto of HB966 (budget bill) be overridden in the Senate, this section of HB200 is repealed.
A familiar question was being asked by many around the legislature this week – should North Carolina’s legislature be full-time? With the 2019 Long Session entering its 11th month, an argument can certainly be made that the NC General Assembly has been anything but part-time this year. Looking back, in 2015, the state legislature was in session from January 28th to September 30th. In 2016, the legislature reconvened five extra times in addition to a Short Session that lasted from April 25th to July 1st. In 2017, Long Session lasted from January 11th to June 30th, but reconvened four additional times between June and October. Last year, regular session was held from January 10th through July 4th, then again November 27th through December 28th. Three special sessions were held last year, as well – July 24th to August 4th, August 24th to August 27th and October 2nd to October 15th. The pattern does seem to show a trend toward fewer short sessions and much more time spent in Raleigh. NC is considered to be a “citizen legislature,” which by definition means members are able to serve while maintaining employment back home in their respective districts at a high enough financial level to support themselves and/or their families. On paper, the description of a citizen legislature is accurate, as members receive an annual salary of $13,951 plus $104 per day for meals and lodging. Thus far in 2019, that has totaled $30,175 for almost a year’s salary. And, the members have actually been here a good majority of that time this year, keeping them away from their employment back home. So, the question arises – should NC consider moving to a full-time legislature? Or, another option, should NC mandate session term limits, ensuring long and short sessions will adjourn by a set time or within a set number of days each year? Food for thought and a hot topic in the months ahead.
Congressional Redistricting Update
In yet another twist, the state court in NC issued an injunction on Wednesday temporarily blocking candidates wishing to run in the newly redrawn congressional districts from filing for office in early December. The filing period for candidates running for statewide office is scheduled to begin on December 2nd at noon. However, a three-judge panel will meet that same day at 9:00 a.m. to consider whether or not the recently redrawn congressional map is acceptable for use in the 2020 election. The injunction handed down Wednesday states that no one can file for U.S. Congress until the court says so, thus putting candidates for those races in limbo. The primary election in NC is currently scheduled for March 3rd. The State Board of Elections has indicated that they could most likely move forward with that primary election date for congressional races if the district map is finalized by December 15th. The current split is 10-3 favoring the GOP. Under the redrawn map, the projected split would be 8-5 in favor of the Republicans. Democrats continue to argue for a map with a 7-6 or 6-7 split, favoring either way, or a 6-6-1 balance.
Medicaid Transformation Delayed – But, for how long?
With the unsuccessful attempt at a DHHS “mini-budget” last week, and the legislature adjourned until mid-January, the fate of Medicaid transformation is on the mind of most in North Carolina. On Tuesday, Sen. Joyce Krawiec released a statement announcing “Medicaid Transformation is Delayed Indefinitely.” She told reporters that the move to managed care will not happen because the state still doesn’t have a comprehensive budget, and she referenced HB966 – the budget legislation passed by the GOP-legislature, but vetoed by the Governor. The House was able to override the veto, but it has not been overridden in the Senate. Krawiec added, “the veto will force insurers to lay off thousands of people they’ve already hired as part of the years-long plan to transform Medicaid." Transition to managed care has been a Republican priority for many years, and the legislation to implement the transformation was passed under their leadership. The implementation itself, however, falls to Gov. Cooper’s administration. DHHS Secretary, Dr. Mandy Cohen, has worked closely with the legislature to prepare for the transition, and was hopeful that the negotiated “mini-budget” last week would be successful. However, when the Senate reneged on the deal, it became apparent that Medicaid transformation may indeed be dead in NC. For now, it is for certain delayed indefinitely. The legislature will return January 14th for a final regular session of the 2019 Long Session. The adjournment resolution under which they will be working does allow for business to include that of conference reports and matters of health care. So, could there potentially be one final attempt at passing a funding package for DHHS that would cover the costs of Medicaid transformation? Perhaps – but unlikely. What then? That is uncertain.
OF NOTE ~
This is the final “Old North State Report” of 2019, as the General Assembly will be adjourned until January 14, 2020. The Nelson Mullins Government Relations Team thanks you for a wonderful year - it has been an honor to work with you in 2019. We wish you a wonderful Holiday Season and blessed New Year!
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