House Medicaid proposal embraces governor's plan

Posted June 18, 2014
Updated June 19, 2014

A federal program would fund Medicaid expansion in North Carolina, but Republican lawmakers have declined the aid. (Mark Simpson / WRAL)

— House leaders plan to roll out a Medicaid reform proposal Thursday afternoon that largely embraces the approach taken by Gov. Pat McCrory for reforming the state's health insurance system for the poor and disabled. 

Gov McCrory 060414 HB 1181 (2014): House Medicaid Reform Plan The draft three-page bill was distributed to members of the House Health and Human Services Committee Wednesday night. It will take the place of the language that is currently displayed in House Bill 1181. 

"It is a legislative road map, and I think it does encompass much of what the governor put forward," said Rep. Nelson Dollar, R-Wake, the chamber's senior budget chairman who has been involved in Medicaid legislation for years.

North Carolina spends $14 billion per year on Medicaid. Roughly $3 billion to $4 billion of that comes from state taxpayers, while the remainder comes from federal funds. The current system is largely a fee-for-service model in which doctors, hospitals and other health care providers are paid based on individual services they provide. 

The system has been subject to frequent cost overruns, as even the best forecasts of how many Medicaid users there will be and what the cost of the services they will use have proved unreliable over the past two decades. For the past several years, Republican lawmakers have been pushing for a reform effort that would allow the state to control those costs. 

Two basic plans have emerged. A measure put forward by the state Senate is custom-made for a large insurance company or group of insurance companies to take over the system. Under this managed care model, those insurers would have the responsibility of ratcheting back costs.

Wos 060414 NC leaders still at odds over future of costly Medicaid program McCrory's plan would develop home-grown groups of providers that would treat Medicaid patients. These "accountable care organizations" would have financial incentives to control costs, but those cost-savings would be driven by doctors and other health care providers.

Although the difference between the two plans can seem abstract to those not involved in the debate, it is very real for health care providers. Associations representing doctors, hospitals and other health care providers have sided with McCrory.

The House does not adopt the governor's language outright, it does provide a framework into which the governor's plan would fit.

"Providers would have a major stake in the process," Dollar said.

The House bill makes clear it wants providers to form the organizations that will lead the Medicaid reform effort, and it clearly cements a roll for Community Care of North Carolina, a nonprofit that works with the current Medicaid system to help doctors make sure patients are doing basic things such as getting their prescriptions filled and watching what they eat. 

While Senators would have stripped the Department of Health and Human Services of the responsibility of running Medicaid, placing it instead in a new government agency, the House bill orders the DHHS to develop the plans for Medicaid reform. 

However, in one large respect, the House bill is close to the Senate bill. It calls for "capitation," an industry term meaning that the amount of money the Medicaid system puts toward each patient is "capped." This provides greater budget certainty but is risky in terms of patients who might need a lot of expensive care. 

The House bill also calls for a pilot program that would explore placing the responsibility for both the physical and mental health care for intellectual and developmentally disabled individuals under one organization. Currently, health care for this population is managed by the state's main Medicaid system for physical health needs and by regional mental health systems for needs related to long-term intellectual disability. 

Under the House bill, DHHS would report back with timelines and plans for the move next year.


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