NC's Medicaid spending still uncertain, experts say

Staff from the Fiscal Research Division and the Office of State Budget and Management said program spending so far appears to be in line with the certified 2013-14 budget for Medicaid, but one after another warned of higher than usual uncertainty and risk for the remainder of the fiscal year. 

One issue, explained Fiscal Research's Susan Jacobs, is that the state's new Medicaid billing program, NCTracks, is not providing the same claims data that has been used for forecasting in prior years. 

Another potential issue is whether the Department of Health and Human Services can actually realize the budget cuts and changes mandated by state lawmakers. 

Many cuts to Medicaid services require approval from the federal government through a process known as a State Plan Amendment, or SPA. That approval process can take months.

Fiscal Research's Steve Owen said that, of the $147 million in spending cuts in this year's budget, $68 million – nearly half – is at "high risk" of not being realized because of the SPA process. 

An additional variable next year will be federal changes to presumptive eligibility rules for Medicaid. While the state's standards still govern eligibility, more providers will be allowed to assess presumptive eligibility, which could lead to more unbudgeted state spending.

Acting Medicaid Director Sandy Terrell told lawmakers the agency is working to make sure all new providers are carefully trained on the state's rules and assured them the department will be closely monitoring hospitals' compliance. 

In response to a question from House Budget Chairman Nelson Dollar, R-Wake, Assistant State Budget Officer Pam Kilpatrick said the Medicaid budget is more structurally sound than it has been in years past, thanks to changes in budgeting procedures to more fully reflect the program's obligations. She agreed that current year-to-date receipts and expenditures appear to be closer to balance than in recent years. 

However, Kilpatrick added, the second half of the year tends to be more expensive, and policy changes and budget cuts won’t be reflected until January. She warned that the program "may have to aggressively pursue" spending reductions to realize them by the end of the fiscal year on June 30. 

Kilpatrick also said the problems with coding in NCTracks are skewing reports of spending on different types of care. She said the problem could affect the state’s ability to draw down federal matching Medicaid dollars – money that the state's spending plan assumes the state will receive. 

Rep. Jim Fulghum, R-Wake, asked Kilpatrick whether those issues can be corrected. 

"I want to make sure this is a disease that has a cure," joked Fulghum, a doctor. 

"The department tells me the disease has a cure," Kilpatrick responded. "We don’t know what it is yet."

In her opening remarks, DHHS Secretary Aldona Wos assured legislators that the agency is "forcefully addressing" problems with NCTracks. 

"Although progress is being made, we will not rest until all issues are resolved," Wos told the panel. "I assure you, that where necessary, I will hold people accountable."