Costly, controversial: Lawmakers have just months to tame Medicaid beast
Posted April 25, 2015
Raleigh, N.C. — If the panoply of issues facing the General Assembly every year were a zoo, the Medicaid health insurance program for the poor and disabled would be the snarling, nearly $14 billion beast that makes all of the other critters nervous.
During prior legislative sessions, Medicaid has thrashed its tail and toppled budgets, and attempts to tame this ferocious fiscal and health policy issue have devoured the goodwill built between lawmakers and governors of the same party.
So, maybe it shouldn't be a surprise that, during the first four months of this year's legislative session, discussions about making another run at taming Medicaid have been relegated mainly to early morning budget meetings and back-room discussions.
That is likely to change in the coming weeks.
"Both chambers say they're committed to staying here until we get it done," said Sen. Tommy Tucker, R-Union, one of several legislators who have floated proposals in the state House and Senate to remake Medicaid.
Lawmakers have one more week until "crossover," a hectic period during which both chambers scramble to meet a key legislative deadline for non-budget items. After that, the pace of work settles down, and legislators turn their attention to crafting the $21 billion state budget that will govern state operations beginning July 1. In general, lawmakers hope to finish their work for the year by early July, but sessions often drag into August and can go later.
That would give the General Assembly three months – give or take – to change how Medicaid operates.
Q&A: Medicaid basics "We can't afford it if we don't get better cost controls in place," Tucker said, pointing to figures that show more than 20,000 people had been added to the Medicaid rolls this year.
In all, Medicaid covers roughly 1.8 million people in North Carolina, more than half of them children.
With the exception of mental health, North Carolina's current Medicaid program pays providers on a fee-for-service basis, meaning a doctor or hospital is paid for each individual procedure or treatment provided. State taxpayers pick up about 25 to 30 percent of the cost of the program, with the federal government paying the rest.
Generally speaking, lawmakers of all political stripes and Gov. Pat McCrory believe the state should move toward a capitated system under which a network of providers would take on the responsibility of caring for a patient in exchange for a flat fee. If the patient's health care costs less than the flat fee, the providers would make money. If the patient ended up costing more, the providers would lose money.
This shift in the risk would make budgeting for the program easier. Instead of budget swings based on how sick recipients were, how many services they used and vagaries involved in billing, the state would have to worry only about how many people were eligible for the program.
"There are some of us who believe that reforming Medicaid is a requirement for us to have predictability overall in the budget. I am definitely one of those," Senate President Pro Tem Phil Berger said. "The difference is that different members have different approaches on how to do that."
Two approaches dominate discussion
During the last legislative session, those "different approaches" boiled down into two different camps. One, championed by McCrory and senior House lawmakers, would prod local groups of doctors and hospitals to create accountable care organizations. The downside of the ACO approach is that it would take years to make the transition as ACOs came together and would likely require more hands-on management.
Senate leaders have typically looked for a quicker transition that would rely more heavily on existing managed care organizations.
The divide is not absolute. Tucker, for example, says he leans toward "provider-led" ACOs, while Rep. Justin Burr, R-Stanly, has championed measures that look much more like the turnkey managed care approach.
That standoff loomed over the 2014 legislative session, souring budget negotiations and leading to increasingly testy public sniping until the topic was dropped for the year.
"We really need to look beyond that," said Rep. Nelson Dollar, R-Wake, who has been a leading champion of the ACO approach.
To boil the fiendishly complicated reform debate down to ACO vs. managed care is an oversimplification, Dollar said.
"More fundamental is how do you structure the incentives to truly help bend the cost curve," he said.
In other words, how does the state structure a program to give doctors, hospitals, patients and administrators motivation to save money when they can?
While those questions are definitely being asked, they are still, at least for the moment, packaged in the ACO vs. managed care context. Doctors, hospitals and other providers continue to talk up the ACO approach.
"We already treat Medicaid patients every day," said Cody Hand, a lobbyist for the North Carolina Hospital Association.
Hand describes the ACO plan put forward by McCrory and tweaked by House lawmakers last year "the best outcome we can see."
That option still has the backing of the McCrory administration.
"DHHS continues to have the same vision for Medicaid reform that Gov. McCrory put forward more than a year ago: A provider-led, patient-centered health care model that fosters partnership and accountability between providers and patients," said Alexandra Lefebvre, a spokeswoman for the Department of Health and Human Services. "This model puts patients first by focusing on better health outcomes versus paying only for services."
On the other side of the argument, managed care companies say that no state has gone to an exclusively ACO model and that they should be able to compete for business in the state.
"We think a competitive marketplace will serve both taxpayers and Medicaid recipients better," said Taylor Griffin, the front person for N.C. Medicaid Choice, a group backed by health insurers Aetna, Amerigroup, AmeriHealth Caritas, UnitedHealth Group and WellCare.
Allowing managed care companies to play a bigger role, Griffin said, would allow for cooperative arrangements between providers that could focus on giving care and insurers, which could handle billing and administrative functions.
No matter their positions, lobbyists such as Hand and Griffin say that advocates have been speaking with lawmakers but don't have a clear indication of if, when or how the General Assembly will settle on a Medicaid solution.
"What I have seen over the past few weeks is a lot more legislators engaging in the issue and trying to learn more," Griffin said.
Tucker said he hopes that lawmakers in both chambers can get together on a single approach and roll out a bill that includes the basics of a compromise right from the start.
Asked about the flurry of Medicaid legislation already filed, Tucker said, "They're placeholder bills, in my opinion, waiting for the final document to be drafted."