Compromise reached on how to privatize Medicaid

Posted September 17, 2015
Updated September 18, 2015

— North Carolina will remake the system that provides health care for the poor and disabled under a compromise bill filed with the Senate clerk's office Thursday afternoon.

Both the House and the Senate plan to take votes putting the $14 billion state-run program in the hands of private health insurers next Tuesday. Gov. Pat McCrory says he supports the bill.

North Carolina taxpayers pick up about 25 to 30 percent of the cost of Medicaid, with the federal government paying the rest.

In exchange, the program provides care to 1.8 million North Carolinians – roughly one out of every five residents – from poor pregnant women to developmentally disabled adults to children living in poverty.

House Bill 372 will convert Medicaid from a fee-for-service program to a managed care model, in which insurers are paid a flat fee per patient they cover. The move is a bid to control costs, which Republican lawmakers said have too often absorbed money that could be put toward education and other needs.

North Carolina will need permission from the federal government to make all of these changes. Although state agencies are directed to apply to the federal government for the transition in the middle of next year, lawmakers say the expect the actual transition process to take about two or three years.

"I would be shocked if that process takes less than 12 months," said Rep. Donny Lambeth, R-Forsyth.

More likely, Lambeth said, it will take 18 to 24 months to wrangle federal approval.

"North Carolina will not be viewed as a friendly state," he said, noting Republicans leaders here have refused expand Medicaid coverage as allowed under the Affordable Care Act.

Once the federal government signs off, he said, it will take another 18 months to fully make the transition.

Capping expenses

Since taking control of the General Assembly in 2011, Republicans have looked for ways to curb spending on the program. In particular, they have said that the fee-for-service model – in which doctors and other health care providers are paid for each individual service they provide – has led to growing health care costs.

Over the past two years, there has been general agreement among GOP leaders that Medicaid ought to be based on a managed care model. But what exactly that model should look like, how quickly that transition should take place and how the remade program should be overseen have been huge sticking points.

For example, one draft of House Bill 372 would have taken oversight of the program away from Gov. Pat McCrory's Department of Health and Human Services and turned it over to a newly-appointed board. McCrory, backed by the House, fought that idea.

But on Thursday, he praised the compromise reached by legislative negotiators.

"No one gave us a chance for Medicaid reform, and we’ve come together, I think, on a very good Medicaid reform package," McCrory told WRAL News' David Crabtree on Thursday.

Lawmakers made a breakthrough in mid-August that virtually guaranteed they could reach a compromise this year. The key compromise was allowing both big for-profit managed care insurers as well as locally created provider-led entities to care for patients. Provider-led entities are groups created by doctors, hospitals and other health care providers.

There will be three statewide slots that could be filled by either kind of insurer. The state will also be carved into six or seven regions. Only provider-led entities could sign up to care for patients within those regions.

Patients will be able to choose whether they want to have their health care managed by one of the statewide groups or one of the regional entities.

Some doctors are unhappy with the inclusion of large managed care insurers.

"We oppose the General Assembly’s decision to involve corporate managed care in our Medicaid program," said Robert Seligson, CEO, North Carolina Medical Society. "Including some of the patient protections we requested such as performance standards based on quality, cost and patient experience is an improvement. This is not the end of the Medicaid reform debate. We will continue to work with our partners and the state’s leaders on the many decisions that lie ahead to enable the delivery of high value medical care to our state’s most vulnerable citizens."

There are exceptions to these broad guidelines. For example, the state Medicaid system will continue to pay dentists directly rather than putting dental care in the hands of the new private insurers.

The state's existing LME-MCOs, which manage mental health care, will be allowed to keep operating for at least four years. After that, Lambeth said, it's possible mental health care could be turned over to the insurers covering physical health issues.

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  • Randy Riddle Sep 19, 2015
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    The story should make clear - even in the headline - that the "compromise" is between the Republican-controlled House and Senate versions of the plan. This process, in political reporting, is referred to as "reconciling". "Compromise" is usually reserved for describing ideological opponents on an issue coming to an agreement. A casual reader, just looking at the headline, would get the mistaken impression that Republicans are comprising with Democrats in the legislature and we all know that has only very rarely happened in the past couple of legislative sessions.