McCrory administration questioned on Medicaid overhaul
North Carolina health budget-writers brought questions and skepticism Thursday to Gov. Pat McCrory's administration about its proposal to overhaul the state Medicaid system by shifting patient management and risk to a few managed-care organizations.
Health and Human Services Secretary Aldona Wos gave legislators a few more details about the proposal from her agency to choose from two to four outside organizations that would serve patients statewide. The organizations would create medical provider networks and receive specific monthly allotments from the state for each patient it serves.
The private "comprehensive care entities" would have to pay for expenses beyond what the monthly payments the state gives it for each patient, providing an incentive for them to improve patient health and giving more cost certainty to the state after perpetual overruns, according to Wos. The state's Medicaid shortfall was $418 million last year.
Wos estimated Thursday that the state could reduce annual Medicaid costs in the state by 8 percent, or roughly $1 billion in a program that receives $13 billion in state and federal funds.
"The change that we are proposing is bold but the governor and I would say that it is necessary if you are going to create a system that is predictable, sustainable and most important, focuses on outcomes," Wos told the joint House-Senate health and human services budget subcommittee.
Legislators asked why the McCrory administration would want to dismantle recent and successful reforms in Medicaid, the government health insurance plan for 1.5 million residents, who are mostly poor children, older adults and the disabled. They include the nationally recognized Community Care of North Carolina, a series of nonprofit managed-care doctor networks, and recently consolidated public-sector organizations that help people receive treatment for mental illness, developmental disabilities and substance abuse problems.
Rep. Donny Lambeth, R-Forsyth, said that while he agreed the "system is broke and we do need to make changes," the state already has the framework in place to do so.
"I actually think that we in North Carolina need to be the ones to solve the problem, not bringing in outside entities," Lambeth, a retired hospital president, told Wos. "I'm just very, very concerned that we'll take so much energy away from what you're trying to do and there'll be so much combative effort to stall these comprehensive care entities that we're going to miss the mark."
The North Carolina Hospital Association and the N.C. Medical Society, a trade association for physicians, have said the program would overwhelm Community Care, which an outside report said saved the state nearly $1 billion between mid-2006 and mid-2010.
"They are particularly skeptical and dubious about this managed care model," said Sen. Floyd McKissick, D-Durham, told Wos. "There is a healthy degree of skepticism and I put that politely."
Wos and state Medicaid director Carol Steckel praised Community Care and wants to work with to find more innovative ways to treat patients. She said it could envision the network as becoming one of the organizations that would take on patients in the privatized model or at least joint another comprehensive care entity.
"We are definitely not wanting to undo that model," Wos said. "That is not in our plan."
Getting buy-in from legislators is important for the McCrory administration to seek permission from federal regulators to shift to the managed care model. The committee received draft legislation that provides just a framework of how to complete the overhaul.
The changes would take place over five years. Wos said the first networks would begin July 2015 after a bidding process to start in 2014.
Wos and Steckel are traveling around the state and meeting with groups seeking input on the plan. Steckel lamented that medical industry critics of their ideas have spoken little to them about their concerns.
"They won't come to us and say, 'this is what could make it work,'" Steckel told McKissick.
Adam Searing with the North Carolina Justice Center's Health Access Coalition pointed to troubles with Medicaid managed care organizations in Kentucky, where rural pharmacies have complained about declining reimbursements and one provider announced it was leaving the state.
"I do think we should walk very carefully when we consider radically restructuring the program," Searing told the committee.
Wos said her department is learning from successes and failures in other states: "Our goal is not to repeat the problems of the past."