Medicaid funding, reform efforts continue to divide House, Senate

"We are very pleased with the House bill," Secretary of Health and Human Services Aldona Wos told the House Health and Human Services Committee. "It closely aligns with Gov. McCrory's Medicaid reform plan."

The McCrory and House plans would build upon the state's existing Medicaid system, incorporating efforts to ensure patients get preventive health care and relying on the same division in the Department of Health and Human Services. 

Senate President Pro Tem Phil Berger said the state Medicaid program needs a "clean slate" and an organization focused only on the $14 billion-per-year program. 

"It would create a department that would manage Medicaid in way that would look after not only the recipients of Medicaid, not only the providers, but also the taxpayers in a way that I don't think is currently be done," said Berger, R-Rockingham.

That said, the House plan does make a nod to a key piece of the Senate effort. Both plans now call for "capitation," in which the organization caring for the patient is paid a flat fee per patient and assumes the risk if the person needs expensive treatments.

Health care providers are wary of capitation, worrying that it could make their practices less financially successful and get in the way of delivering needed health care. However, among those who spoke during a committee hearing Thursday, the House plan was seen as preferable to the Senate measure. 

"The bill you are considering today is one we generally support. While we still have significant concern about moving to full capitation, this plan sets a glide path for physicians and other providers to systematically transition," said Chip Baggett, a lobbyist for the North Carolina Medical Society.

The House plan would reach full capitation in five years, while Senators would move much more quickly, possibly reaching that goal sometime in 2015. 

The appeal of capping the state's risk and costs makes sense, at least for lawmakers, when one considers how much money goes toward Medicaid every year. 

Although the federal government pays roughly two-thirds of North Carolina's Medicaid costs, the $4 billion North Carolina will put into the program next year represents a fifth of all state-taxpayer-supported spending.

And as the House and Senate try to hash out what Medicaid reform will look like, they are also trying to hash out their spending plan for the fiscal year that begins July 1.

For much of the past two weeks, Senate and House budget writers have had what they thought was a $250 million difference in the money they needed to set aside to operate Medicaid. Legislative staffers said their "worst case scenario" numbers were slightly less dramatic than originally projected, but that still left senators advocating for well over $100 million more than the House wants to put into Medicaid next year. 

"We need to reach some understanding on the Medicaid number before we can realistically start talking about most of the other things (in the budget)," Berger said.

Lawmakers entered the session saying that providing raises for public school teachers was their top budget priority, but in order to agree on such raises, the state needs to know how much money it will have available.

"I don't think we can talk about education ... until we have a Medicaid number we're in agreement on," Berger said. 

The House Medicaid reform plan passed out of the House Health and Human Services Committee on a voice vote. It will next be heard in appropriations. That progress sets it on a collision course with the Senate plan.

Although the accountable care organization approach championed by McCrory and embraced by the House bill has generally won plaudits among health care providers, one section of the House bill did raise questions for a key population. 

Among the most expensive patients for the Medicaid system are those with intellectual and developmental disabilities. The House bill would experiment with a system that would allow the same organization to administer these patients' mental and physical health care.

Currently, those two facets are administered separately. Mental health is provided through regional organizations know as LME/MCOs, while physical health care is provided through the traditional fee-for-service delivery system.

Rep. Nelson Dollar, R-Wake, the primary sponsor the bill, said it would make sense for the LME/MCOs to handle both sides of the health care equation.

"This is a group of clients and families with which the LME/MCOs would be very, very familiar," Dollar said.

His bill lays out a plan that would allow Cardinal Innovations, the largest of the mental health entities in the state, to test the combined health care system with a select group of patients who reside in certain kinds of group settings. 

That proposal met with skepticism from committee members, who questioned why Cardinal had been singled out.

Pam Shipman, the head of the group, said the state needed to explore whether such a combined approach could work.

"I would hate to see us not have this chance to try something on a very small scale," Shipman said. "Just having a chance to see if this could work would be an important experiment for North Carolina."

Advocates for those with developmental disabilities said that they embraced the bill overall but said lawmakers should keep working on this last piece of the bill. 

"Nobody who is a stakeholder knew about it until the very last minute," said Julia Adams, a lobbyist for the ARC of North Carolina. "We believe, for people with intellectual and development disabilities, we really do need to merge physical health and developmental disabilities."

That said, there are other forms such collaborations could take. Adams' group and other have been talking with each other, as well as other LME/MCOs, about ways to structure such a program. 

"We are not sure that this language really highlights all of the work that is going on," she said.