Joint panel starts work on Medicaid reform, reorganization

A legislative oversight subcommittee began work Wednesday on the issues of Medicaid reform and potential reorganization of North Carolina's multibillion-dollar program.

The panel was created by the Joint Legislative Oversight Health and Human Services Committee to study the two topics and make recommendations to the committee for submission to the House and the Senate in 2016.

Both House and Senate lawmakers unveiled and voted on reform proposals earlier this year, but the two chambers' approaches were miles apart.

House leaders proposed letting health care providers form accountable care organizations to manage Medicaid care and costs, while Senate leaders proposed removing Medicaid entirely from the Department of Health and Human Services, turning it into an independent agency under the control of a politically appointed board and allowing large for-profit insurers to bid to run the program.

Gov. Pat McCrory has publicly sided with the House's proposal, as have those medical groups who have taken a position on the issue. 

DHHS Secretary Aldona Wos has been openly critical of the proposal to remove Medicaid from her agency, warning that the program is interwoven with other DHHS services to provide better coordinated care. She reiterated her position Wednesday morning. 

Wos told lawmakers she has worked for the past year and a half to restructure her agency, including Medicaid – efforts she says are already bearing fruit. 

"I firmly believe that the decision to remove Medicaid from the department would be a direct contrast to the path that we are on," Wos said in her opening remarks. "Such a decision would be disruptive. It would divert resources and human capital from the ongoing day-to-day operations of the division.

"We are close to the finish line for the improvements we are making. We are witnessing collaboration and progress, and to turn around now before we get to the finish line and realize the full benefits of all this work would be a waste of taxpayer money and greatly disruptive to those that need our services," she told lawmakers. "If you don’t fix how the program works, it doesn’t matter where it is."

According to presentations by legislative staff, only about a quarter of states have split off their Medicaid programs into standalone agencies. In most states, as in North Carolina, the program is housed within a larger state agency.

Proponents of the standalone option say it would improve focus and accountability within the program. Critics of the idea say it would require duplication of administrative and operational costs and could lead to less efficient delivery of services.

Several House lawmakers questioned whether the state ought to be attempting to both reform and reorganize the Medicaid system at the same time.

"What sort of order would you all advise?" Rep. Nelson Dollar, R-Wake, asked Mercer consultant Marcia Morgan.

Morgan replied that the functions lawmakers want the reformed Medicaid program to serve – whether monitoring contracts with managed care organizations or managing direct fee-for-service programs – would have an effect on how and where the program should be structured.

"It’s just my opinion, but you should know what direction you’re going” before reorganizing the program, Morgan said. 

At its next meeting Oct. 6, the committee will hear from Medicaid officials from several other states about their respective reform efforts. Ohio, which split off its Medicaid program into a standalone agency last year, will be one of the states represented. 

Still, Morgan cautioned lawmakers not to assume that other states' Medicaid reform experiences, good or bad, would be repeated in North Carolina because each state has unique factors.

"If you’ve seen one Medicaid program, you’ve seen one Medicaid program," she said. "It’s hard to do an apples-to-apples comparison."