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McCrory Proposes Medicaid Overhaul

Since the beginning of his administration, Gov. Pat McCrory has said he wants to fix the state’s Medicaid program. Wednesday morning, he outlined his plan.

By Rose Hoban

Gov. Pat McCrory rolled out his plan for revamping the state’s Medicaid program Wednesday morning, describing a managed care plan that could lead to the privatization of the program that serves more than 1.5 million people with disabilities, the low-income elderly, pregnant women and children.

The governor and Health and Human Services Secretary Aldona Wos said that too often Medicaid recipients receive uncoordinated care that doesn’t serve them well.

McCrory, Steckel, Wos

Gov. Pat McCrory, Medicaid director Carol Steckel and DHHS Secretary Aldona Wos take questions about the Medicaid overhaul Wednesday morning.

“The current system is not structured to best serve the needs of, first of all, North Carolina’s young and elderly, the disabled, the mentally ill and those on low income,” McCrory said. “While we are currently providing services to these individuals and their families, we are spending a lot of money doing it. And yet, the system does not focus on improving overall results and delivering better health outcomes.”

McCrory said that too often care in the program is disjointed and complex, and costs too much. North Carolina’s Medicaid program costs about $13 billion per year, with two-thirds of the cost being borne by the federal government.

“It’s often difficult for people … to know where to get the services they must have,” McCrory said.

In February, Wos and state Medicaid director Carol Steckel issued a request for information, with a short deadline, for people and organizations interested in seeing Medicaid changed. By mid-March, DHHS received about 160 plans from people and organizations on how to change the program.

North Carolina Health News has made repeated public requests to DHHS for a list of respondents.

McCrory and Wos said that much of the current plan comes from those ideas. Their proposal, which they’re calling a “Partnership for a Healthy North Carolina,” would open up Medicaid to competitive bidding by companies and managed care organizations from inside and outside the state.

Under the plan, at least three organizations, called comprehensive care entities, would win contracts to administer and coordinate the care paid for by Medicaid and be paid for the task. Once established, those comprehensive care entities would compete against one another for beneficiaries.

Some of those organizations could be for-profit entities that would take a share of any savings as profit.

The plan would also require comprehensive care entities to coordinate physical and mental health care for patients, rather than having a separate mental health system.

McCrory said his office had communicated with that of federal DHHS Sec. Kathleen Sebelius about the proposal and sent a letter Wednesday morning asking for the federal waiver to change the Medicaid program, with a phase-in date of mid-2015.

Mixed reactions

McCrory predicted that providers, hospitals and the General Assembly might not be enthusiastic about embracing his plan, and at the General Assembly reactions were mixed.

Medicaid_Managed_Care_BoxFor weeks, the corridors of the legislative building have been buzzing with speculation about the plan, which lawmakers, advocates and health care providers only saw for the first time on Wednesday morning. And when they did see the governor’s plan, many were left scratching their heads.

“We’re still trying to figure out what the governor and the secretary mean,” said Allen Dobson, president of Community Care of North Carolina (CCNC), the state’s program that coordinates “medical homes” for more than a million of the state’s 1.5 million Medicaid recipients.

Last year, an audit of CCNC found that the program had saved the state as much as a billion dollars over a four-year period. Around the same time the governor was making his announcement, Dobson was getting an award from a national organization for CCNC’s innovative approach to Medicaid.

Sec. Wos said that CCNC could be one of the plans chosen to become a comprehensive care entity if it was chosen in the competitive bidding process.

“We created CCNC to help avoid managed care,” said Rep. Tom Murry (R-Morrisville), a pharmacist who serves on the House Health and Human Services committee. “Not all states that have gone managed care are happy with the decisions that they’ve made.”

“We’ve got a good wheel [in CCNC],” Murry said. “We might need to shine it; we don’t need to create a new wheel. Maybe put some rims on it. I’m willing to have the conversation. I’m not surprised, but I’m not disappointed either. It’s worth discussing.”

“We haven’t even gotten through the [mental health reform] process yet and now we’re introducing a new entity,” said Sen. Tommy Tucker (R-Waxhaw), who serves on the Senate Health and Human Services committee. “And I’d hate to depend upon a Medicaid Management Information System that has yet to be tested, that has been seven or eight years in the making and is $200 million over budget to be used as a vehicle for billing and paying for this.”

Other Republicans were more supportive.

“I think it’s nice to hear a secretary and a [Medicaid] director with a plan and a vision, and a long-term vision, not piece-mealing things like it is now,” said Rep. Justin Burr (R-Albemarle), who co-chairs the House HHS committee.

“I think this will pull everybody under one roof. There’s a lot of details that I want to get more educated on, but I think, overall, the secretary has a good plan. I feel good about it.”

A spokesman for House Speaker Thom Tillis (R-Charlotte) said Burr’s statement reflected the speaker’s sentiments.

But reaction from providers’ groups was swift.

If the administration’s idea of reform is bringing in out-of-state corporations so they can profit by limiting North Carolina patients’ access to health care and cutting critical medical services to our state’s most vulnerable citizens, that is not change we can support,” wrote Bob Seligson, head of the N.C. Medical Society, in a statement.

We have a homegrown, nonprofit, national-award-winning program in CCNC that addresses problems the Governor identified and has produced hundreds of millions of dollars in taxpayer savings through coordinating health care. We question the wisdom of handing this important function off to Wall Street,” the statement concluded.

“Whenever we’re looking at privatized managed care, there’s a concern that cost management can trump the provision of care,” said Rob Thompson, head of the Covenant with North Carolina’s Children, an advocacy group that represents more than 70 organizations.

Thompson said he was concerned about how the new plan would affect the State Children’s Health Insurance Program, known as Health Choice.

“Health Choice is really important for kids in North Carolina,” Thompson said. “Any dollars that are saved through managed care shouldn’t come at the expense of children’s health and well-being.”

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