Raleigh, N.C. — The effort to privatize North Carolina's Medicaid program made its first substantive deadline Tuesday, but Department of Health and Human Services officials warned lawmakers that putting the plan in place will face at least one big obstacle: presidential politics.
For years, North Carolina's health insurance program for the poor and disabled has been based on a fee-for-service model in which doctors, hospitals and other health care providers are paid based on what treatments they render. Lawmakers last year created the skeleton of a new system in which insurers would be paid a flat fee per person they cover. Under such a "capitated" system, if that person stays healthy, the insurer saves money and earns a profit.
Under the legislation, Gov. Pat McCrory's administration had until Tuesday to submit a draft fleshing out that proposal. Lawmakers said they were pleased with the effort.
Medicaid reform passes; could be years before patients see change Changing Medicaid to managed care could take years "I feel very good about how this complies with the law that we passed. That's something, historically, we've been a little nervous about up here," Sen. Ralph Hise, R-Mitchell, said.
Lawmakers and the administration have frequently clashed over Medicaid, debating who is responsible for cost overruns and delays in providing reimbursement to providers. On Tuesday, lawmakers declared they felt "warm and fuzzy" as DHHS officials reported the existing program was under budget and work on the new program has proceeded according to schedule.
There were few surprises in the DHHS presentation to lawmakers and accompanying outline. Health officials will divide the state into six broad service areas. The state plans to have one or two provider-led entities – groups of doctors, hospitals or other health providers – offer coverage in each of those regions. As well, three state-wide insurers – either provider-led entities or traditional for-profit managed care companies – will offer coverage to all Medicaid patients in the state.
The upshot will be each patient will have four or five insurance programs from which to choose, and each of the those programs will have a financial incentive to keep patients healthy rather than simply earn their money on a per-treatment basis.
The next steps, as outlined by DHHS Secretary Rick Brajer, include a 12-stop, statewide sequence of public hearings and a final visit to the General Assembly before officially submitting the plan to the federal Centers for Medicare and Medicaid Services.
"We expect, based on the experience of other states, that this process could take anywhere from 18 months to 24 months to finalize getting approval form CMS," Brajer said.
Among the things that will likely slow down the process, he said, is the coming presidential election.
President Barack Obama is in his last year in office, and as the election approaches, Brajer said he expects work to slow on the plan. Depending on who is elected next, he said, the federal government could do anything from accepting North Carolina's plan as is to demanding major changes or scrapping it entirely.
"We believe the election cycle will be the first primary hurdle because things will go quiet for a while," Brajer said.
Among the reasons federal officials may be circumspect with regard to North Carolina's plan is the state's refusal to expand Medicaid coverage to those who fall in a gap and cannot receive subsidies to health insurance purchased under the Affordable Care Act. Roughly 500,000 people in North Carolina would be covered if the state expanded Medicaid to single adults and certain families who live just above the poverty line.
"What is the probability of this being granted without there being Medicaid expansion?" Sen. Floyd McKissick, D-Durham, asked Brajer.
DHHS officials pointed to Alabama as a state where federal officials recently approved a remake of the Medicaid program without participation in the expansion of Medicaid allowed under the Affordable Care Act.
Resistance to expansion was still very evident among lawmakers.
"It's unfortunate that Medicaid has been co-opted as a political vehicle," Rep Bert Jones, R-Rockingham, said.
Jones added that Medicaid was meant to be a safety net program, not a way to create de facto single payer system.
"We're not here because we're trying to foster a dependency on government," he said.