There may be a growing movement to tie some hospital payments directly to Medicare rates.

Montana started doing it two years ago, linking payments for hospital services provided to state employees to Medicare rates.  Oregon will start a similar program this fall.

And now, North Carolina is laying plans for a similar approach while Delaware is considering doing so.

Montana is paying an average of 234 percent of Medicare hospital rates.  Oregon will pay 200 percent of Medicare rates.  North Carolina is talking about paying Medicare rates plus 82 percent, with extra money for rural hospitals.

Such an approach could lead to a number of possibilities.  Officials in North Carolina believe it will lead to reduced out-of-pocket health care costs for state employees and their families.  Some hospitals believe the reduced revenue associated with serving public employees will threaten their very existence – especially in rural areas and areas with large concentrations of state workers.

Hospitals have long maintained that Medicare underpays them, so the question arises:  is 82 percent on top of Medicare rates enough?  Is 200 percent of Medicare rates enough?

Another question:  if these programs work, or appear to work, will self-insured companies seek to follow suit?  And then, health insurers?

Learn more in the Kaiser Health News report “Health Plans for State Employees Use Medicare’s Hammer on Hospital Bills.”