North Carolina Legislative News- May 2, 2023

George M. Teague

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Old North State Report – May 2, 2023

by: George M. Teague of Nelson Mullins - Idea Exchange - Alerts

Tuesday, May 2, 2023

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HEALTH INSURANCE AND PHARMACY REFORM

Several measures to reform significant portions of the insurance and pharmacy sectors in North Carolina advanced on Tuesday at the statehouse, where major corporations are vying for control of the rules.

On a divided vote, House Bill 346 , which amends state regulations governing the biggest insurer in the state — Blue Cross Blue Shield of North Carolina — passed its first committee on Tuesday. Although the bill has support from both sides of the aisle, it has led to one of the biggest lobbying campaigns of this legislative session. The business plans to restructure, putting itself under a holding company with fewer regulatory requirements from the North Carolina Department of Insurance. See more on House Bill 346 below.

House Bill 246 , a separate bill regulating pharmacy benefit managers that big insurance companies use to negotiate drug prices, also advanced, continuing years of conflict between these organizations and independent pharmacies across the state. The bill would forbid "spread pricing," which PBMs use to even out drug prices that would otherwise vary from pharmacy to pharmacy, as well as other business practices. Independent pharmacists claim that these businesses, which handle about 80 percent of all prescriptions in the nation, engage in anti-competitive behavior to profit from acting as intermediaries in the pharmaceutical sector. This bill passed the House on Thursday and is on to the Senate for more debate.

House Bill 649 , a third proposal to quicken the prior authorization process insurance providers use to decide whether to cover medical care, also had bipartisan support and breezed through committee on Tuesday. This bill also passed the House on Thursday and is headed to the Senate.

BLUE CROSS BLUE SHIELD REORGANIZATION

House Bill 346 , a bill that would enable the dominant nonprofit health insurer in the state to operate more like a for-profit business, was passed out of the House on Thursday by a vote of 86-26 and is on its way to the Senate. With the passage of the bill, the nonprofit Blue Cross Blue Shield of North Carolina would be able to establish a holding company that would be able to use insurance company assets to acquire additional businesses without seeking permission from state regulators.

The new holding corporations, according to the legislation, should "contribute to the health needs of customers, subscribers, or the people of this State, including those in rural communities of this State, or promote affordability, access, better health, or customer experience."

The State Insurance Commissioner would have 30 days to approve the company's request to reorganize after it submits an application. A change from the previous version would enable the commissioner to engage consultants at the company's expense to review the content.

According to a critique of the amended bill written by a former Insurance Department worker who served under the late Commissioner Jim Long, it would not permit the commissioner to consider how reorganization would affect policyholder premiums or the general public interest, and it would not stop Blue Cross from investing in businesses outside of North Carolina. As currently written, the bill would allow customers and subscribers to come from outside the state.

The bill is being advanced by Representative John Bradford (R-Mecklenburg), House Majority Leader John Bell (R-Wayne) and House Minority Leader Robert Reives (D-Chatham). Bradford told the committee that Blue Cross must operate with the same simplicity and quickness as for-profit organizations like Aetna and UnitedHealthcare. According to Bradford, Blue Cross "is a business trying to compete in a highly competitive, rapidly evolving industry." Bradford's argument focused on economic development, arguing that allowing Blue Cross to operate more like a for-profit company will allow it to increase its workforce.

Even though the bill will have a significant impact on the state, the public debate on Tuesday was limited to 10 minutes. Bradford did not have time to fully explain the bill before Republican Insurance Commissioner Mike Causey was asked to comment.

Causey has been the bill's most vocal critic. According to Causey, the bill would not benefit the 4.3 million policyholders whose premiums would rise if the company was allowed to invest as if it were a for-profit company.

The bill was sponsored by 56 of the House's 120 members. The Senate companion bill was sponsored by 36 out of 50 senators.

MATERNAL HEALTH LEGISLATION

For the third consecutive legislative session, Democratic legislators are promoting a number of bills to address maternal health, particularly Black maternal health disparities. At a news conference on Wednesday, lawmakers and supporters urged the state Senate to allocate more funds to the matter when it creates its budget in the coming weeks.

In the United States, black women are three times more likely than white women to die during childbirth. Black mothers in North Carolina died at a rate of 52.8 from 2016 to 2020, which was more than three times the 17.3 rate for white mothers. In comparison, the rate of 10.7 for mothers who were Hispanic was nearly five times higher.

Additionally, the state has a remarkably high infant mortality rate. In terms of infant deaths between 2018 and 2020, North Carolina ranks among the ten worst states in the nation. While only 10.6% of babies in the state were born prematurely, that number rises to 49% for babies born to Black mothers.

This session, a number of bills addressing maternal health issues were filed by lawmakers, primarily Democrats. The MOMnibus Act, or Senate Bill 467 /House Bill 552, is the key legislation. If approved, it would: (1) create and fund the Maternal Mortality Prevention Grant Program; (2) create a program to train perinatal care workers about implicit bias; (3) define the rights of perinatal care patients; and (4) support and diversify lactation consultant training programs.

Other bills addressing maternal health issues introduced to date are:

House Bill 421 – Medicaid Coverage for Doula Services
House Bill 558 /Senate Bill 469 – Funds for Maternal Health Programs
House Bill 553 /Senate Bill 468 – Expand TANF (Temporary Assistance for Needy Families) Eligibility to Include Pregnancy
House Bill 321 /Senate Bill 294 – Reduce Maternal Morbidity/Mortality Medicaid
Senate Bill 455– Protect Moms Who Serve

MEDICAID AND MENTAL HEALTH

According to North Carolina House members, 300 people wait each day in emergency rooms for behavioral health services due to a lack of additional private and public hospital beds. Numerous children with complex service needs are sleeping in these departments or in regional social services offices.

A bipartisan House bill filed on Tuesday provides a framework for how North Carolina should use $1 billion in one-time federal funds to enhance the care of criminal offenders, children, and adults with mental illnesses.

As a result of the state's decision to extend Medicaid coverage to hundreds of thousands more low-income individuals last month, House Bill 855 lays out in detail what should be done with a sizable portion of the anticipated $1.8 billion in revenue.

The bill passed on Tuesday would spend $225 million over three years to increase reimbursement rates for behavioral healthcare providers who treat Medicaid patients. The plan calls for investing $100 million in the treatment of patients at state-run psychiatric facilities, including to help increase employee pay and put electronic medical record systems in place there.

There is $150 million available to help people involved in the criminal justice system receive mental health treatment or avoid jail. Additional funding would support the development of community-based mental health services, such as mobile crisis teams, short-term housing for youth in need of services, and housing for adults. Additionally, there is money for the 988 Suicide & Crisis Lifeline.

According to bill sponsor Representative Donny Lambeth (R-Forsyth), the proposal was created with assistance from the state health department leaders and broadly complies with Governor Roy Cooper's recommendations in his state budget that he unveiled last month.

BANKING / CREDIT UNION LEGISLATION

On Thursday, two bills that would alter the laws governing how banks and savings and loans conduct business were approved by House committees.

House Bill 784would make it illegal for banks to refuse to do business with a person or company because of factors like their history of environmental violations, corruption, worker abuse, human rights violations, and other issues. ESG, which stands for environmental, social, and governance, is a term used to describe how well-regarded or rated companies are on these kinds of issues. The bill specifically forbids banks from severing business ties or declining to offer new financial services because of politics or an ESG score.

The bill was approved by the Banking Committee on Thursday without any debate from lawmakers or the general public.

Additionally, House Bill 410 , a bill that would update the state statute governing how North Carolina's credit unions function, was approved by the House on Thursday by a vote of 85 to 25. It will now be sent to the Senate for consideration.

Although the banking industry opposes the bill, it would enable credit unions to contract with customers who are below the federal poverty level and anyone who lives in a region without a traditional bank branch within eight miles of the local population center.

The closure of bank branches in rural areas, according to credit unions, has left gaps that must be filled. Credit unions are perceived by banks as unfair competitors because they are tax-exempt non-profit organizations.

LEGISLATION ON A FAST TRACK

A looming May 4 deadline called crossover is one of the factors influencing a lot of General Assembly news this week. Before the crossover deadline, legislators race to move numerous bills through the legislative process and into at least one chamber for a vote. A policy bill is dead for the remainder of the biennium if it fails to pass the House or the Senate. (Bills with money attached are not bound by this deadline.)

So far, 893 bills have been submitted by House members and 704 by senators. Most of those bills will meet an untimely demise after being referred to the Rules Committee in one of the two chambers. But in an effort to pass legislation this week and the week after, the legislature will ram through dozens, possibly even hundreds of bills. Furthermore, a bill still needs to navigate the rapids in the opposing chamber even if it passes through one side of the building. Many of these bills, even though they made it through crossover, will still fail because the House and the Senate have many policy differences.

On Wednesday, the House Health and Insurance Committees debated 14 bills for a total of 80 minutes, including the significant Blue Cross NC bill with broad ramifications. There is hardly enough time to adequately explain the bills, much less assist legislators in understanding what they are voting for. In a hearing that lasted under an hour ton Thursday, the House Rules Committee heard 20 bills.