Lawmakers change course on Medicaid reform

State House leaders and medical providers appear to have won the latest round of the battle over Medicaid reform, but the debate is expected to continue through 2015.

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Laura Leslie
RALEIGH, N.C. — State House leaders and medical providers appear to have won the latest round in the battle over Medicaid reform, but it's a debate that's far from over. 

Just last week, a special Medicaid reform subcommittee voted with Senate leaders to approve a report recommending the inclusion of managed-care organizations, or MCOs, in reform plans, despite the opposition of House senior Budget Chairman Nelson Dollar.

On Tuesday, however, all but two members of the full Joint Legislative Oversight Committee of Health and Human Services voted with Dollar, R-Wake, to amend its final report to remove for-profit managed care organizations from its recommendations.

The vote came after Secretary of Health and Human Services Aldona Wos told the committee the agency has made a great deal of progress over the past two years. The Medicaid budget is on the soundest footing it's had in five years, she told them, and the budget forecasting model has drastically improved as well. 

While Wos stressed her support for reforming the system, she warned that the subcommittee's recommendations were unrealistic and would likely be detrimental to patient care as well as long-term costs. The report initially called for a full overhaul of the system within three years, a timeline she called "overly aggressive."

"If we move too fast, we will do more harm than good," Wos said, pointing to the state's failed effort to reform and privatize the mental health system a decade ago.

Since the debate began, Wos has backed a competing proposal by Gov. Pat McCrory's administration, backed by physician groups, to instead hand over the Medicaid system to accountable care organizations, or ACOs, which are provider-led organizations generally operating as nonprofit networks of regional medical groups.

Wos said MCOs might reduce costs more quickly than ACOs, but ACOs would give doctors more time and flexibility to change how they manage whole-patient care, which is likely to lead to better long-term outcomes.

"If we do not have the goal of keeping people healthier, we’re just going to keep spending more money," she told legislators. 

Dollar said he had "very serious concerns" about parts of the report that were stripped out by his amendment, including the three-year timeline, regional access to care under MCOs and the exclusion of any mention of the state's successful existing ACO network for mental and behavioral health care.

"It's not in here," he said.

Dollar's amendment removed several paragraphs of specific recommendations in the committee's report, leaving only broad goals and findings.

Sen. Louis Pate, R-Wayne, compared the amendment to removing the details from a recipe for baking a cake, but Rep. Marilyn Avila, R-Wake, said a recipe for stew might be a better comparison.

"We’re not starting from scratch. We’ve got a stew that’s got to have the flavor improved. You look at what you’ve got, and you figure out what you have to add to it to make it better," Avila said. "One part may be ACO. One part may be MCO. One part may be leaving it the heck alone." 

Avila said that, although the current system is not working as efficiently as it could, it's not broken.

"Starting from scratch with a wholesale overhaul is probably the worst way to go about this," she said.

"We have to work with what we have in the state," Wos agreed, referring to existing ACO networks such as Community Care of North Carolina.  "We need to incorporate all of them, work together and improve on them."

Oversight Co-Chairman Sen. Ralph Hise angrily defended the original recommendations, denying that they focused on commercial managed-care groups and arguing they would offer consumers more choice, which he said lobbyists for the health care industry don't want. 

"I think there’s been a lot of attempts to sabotage this, both internally and externally," Hise, R-Mitchell, said of Dollar's amendment. "I see this as another one of those attempts."

However, the committee overwhelmingly sided with Dollar, with only two of the 17 members present voting against the amendment.

The report now goes to the full legislature, which is expected to take up the battle over Medicaid reform near the beginning of its 2015 session.

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