NC Medicaid shortfall smaller, but uncertain

Posted March 26, 2014

— State budget forecasters say the Medicaid program will likely face a smaller shortfall this year than last, but problems with computer systems and backlogs are making forecasting difficult.

At a meeting Wednesday morning, the Department of Health and Human Services, the governor's budget office and the legislature's Fiscal Research Division all agreed the shortfall for the current fiscal year probably won't exceed $130 million.

That's a sizable sum – about 3 percent of the program's budget – but it's far less than in recent years, when Medicaid shortfalls ran as high as $500 million.

However, all three groups noted that there's a great deal of uncertainty in that number because of data they don't have. That includes potential claims by tens of thousands of backlogged Medicaid applicants, delayed or erroneous cuts to the state's benefit program and thousands of backlogged Medicaid provider claims stuck in NCTracks, a troubled billing system launched last summer.

"We do not have a Medicaid forecast," Fiscal Research Division analyst Susan Jacobs bluntly said, warning that the uncertain data means the projections could change "drastically."

DHHS Chief Financial Officer Rod Davis said 81,000 Medicaid applications are backlogged – 59,000 that came in through the federal online marketplace from eligible people who had not previously been covered and 22,000 that came in through county offices.

Those applications carry the risk of retroactive claims, which makes predicting their cost difficult. 

"Things are tracking fine for now. We’re just concerned about things we don’t know about," Davis said.

The state has spent less of its annual Medicaid budget to date than at this time last year, he said, even though claims are up. About 30 percent of claims are not being paid by NCTracks. 

Jacobs predicted the cost of those unpaid Medicaid bills, both from the backlogged applications and delayed claims, will top $356 million. The state's share of that is about $120 million.

"We don’t know what the real backlog is. We are estimating," she said. "That has huge implications if we do not have that number right."

Medicaid Chief Financial Officer Rick Brennan also said the state will fall about $48 million short on its budgeted cuts from last year. 

Lawmakers included in their 2013-14 budget about $147 million in "savings," premised on cuts and changes to benefits. Many require approval by federal program officials, which can take months. 

Brennan said some cuts were being delayed, but others were simple mistakes. About $20 million in budgeted "savings" for 2013 was from cuts that lawmakers had already implemented in 2012.

A budgeted cut to physician visits, Brennan said, would send a projected 15 percent of affected Medicaid patients to emergency rooms instead, which would end up costing the state more money than the cut would save.  

Rep. Marilyn Avila, R-Wake, called the errors "sophomoric," blaming the staff at DHHS.  

"Are we working under too much pressure with too few people?" she asked Brennan. "Why didn't somebody bring this to the attention of the new people who were brought in? It should have never been implemented to begin with."

"At what point did you realize this was not an achievable savings?" asked Rep. Nelson Dollar, R-Wake, the House budget chief. "Why was that not specifically brought to this committee?" 

Brennan said staff at Medicaid realized as early as the end of 2013 that some of the cuts could not be realized. He said he discussed the issue with the Fiscal Research Division and the governor's budget office but could not provide the documentation of that conversation that Dollar demanded.


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  • Kenny Dunn Mar 27, 2014
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    I'd say the jury is still out on that one. I haven't seem them fix one single thing yet. Unless reducing taxes of the wealthiest counts. Oh, and throwing the long term unemployed under the bus, maybe that counts for some.

  • "Screen Name-8/20" Mar 27, 2014

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    Truth is, both parties will always blame one another, usually instead of getting a job done.

    The problem I have with Mc is (and I voted for the guy with great hopes, but won't do so again), as soon as he took office, he seemed to declare war on the neediest in the state, the poor, the elderly, the disabled, and the unemployed (all while helping to keep the status quo of the wealthy in the state level or even better), and that's wrong in any society, for any reason IMO, because when one loses compassion for the needy, the needy then eventually rise up and try to equalize things themselves (remember the French Revolution?).

  • "Screen Name-8/20" Mar 27, 2014

    Not making excuses, but don't know if you all know this or not, but not every state picks up the tabs via Medicaid for those with no insurance who can afford it, but still refuse to pay or ignore hospital bills when they get them.
    Many states require income statements proving the person is really indigent before they'll do that. NC doesn't, just picks up the tabs that don't get paid, probably to help keep hospitals in the black.

  • 68_dodge_polara Mar 27, 2014

    Yes, thank you Pat and team for finally putting this house financially in order. Still lots of work to do as the Democrats ran this state for quite some time.

  • HeadsUp Mar 26, 2014

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    Thankfully, Pat McCrory has assembled a top-notch team of managers who will straighten this out once and for all.

    Oh, wait...

  • Kenny Dunn Mar 26, 2014
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    I personally don't really care to cast blame as there is plenty to go around. They just need to address the problems regardless of who gets the blame.

  • HeadsUp Mar 26, 2014

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    Pat McCrory had six months to spike NC Tracks before it was to go live, and he acknowledged repeatedly and publicly that IT MIGHT NOT WORK if it launched last year.

    So what did Pat do? He launched it anyway!!!

    As Colin Powell wisely warned W. about Iraq: If you break it, you own it.

    Pat owns this mess now. It's all his.

  • shecuban Mar 26, 2014

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    Not true. The backlog was created by NC Tracks or whatever database system they got going on over there. Only now are Medicaid applications filtering through from the state office to local DSS agencies and the backlog has made them come hard and fast--at least 100 a day. NOT the DSS staff fault. The jury is still out on the DSS Admin.

  • Nicole Collins Mar 26, 2014
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    How in the world does Woes still have a job? This much incompetence on my part and I would have been let go by now. NCTracks, NCFAST and DHHS are a joke and the ones suffering are the least of us.

  • HeadsUp Mar 26, 2014

    NC Tracks was a totally avoidable disaster. Bev shouldn't have bought it, and McCrory never should have launched it on his watch. They had much better alternatives, but dismissed them.

    Bev II, Pat Perdue.