Senate Gives More Detail on Budget Plan
Adjustments to Health and Human Services run for more than 70 pages in the proposed Senate budget. Yesterday, the HHS appropriations chairs presented what they think should change, in particular, in the Medicaid program.
By Rose Hoban
More details about the Senate’s plans for Medicaid and the state’s health care budget emerged Monday as senate leaders explained more of their thinking around their budget plans.
In meetings with the media and during presentations in appropriations meetings Monday afternoon, senators reiterated several times that Medicaid has become a drag on state spending.
“Medicaid is an entitlement; we don’t control enrollment, we manage but don’t control utilization,” said Sen. Ralph Hise (R-Spruce Pine), co-chair of the Senate Appropriations on Health and Human Services Committee.
“This is a federal program that we administer, and even in tough times,” he said, “you have to deal with the bill you’re stuck with.”
Hise said that additional Medicaid expenditures would account for about $1.3 billion of additional spending over the coming biennium.
“Medicaid is driving everything in this state budget,” he said. “These funds coming out are controlling what we do in education, they’re controlling what we do in highways and transportation.
“This is the message of this budget.”
Tucks and trims
The additions to Medicaid’s budget don’t necessarily mean that beneficiaries are receiving more services.
Provisions in the budget would cut the number of doctor visits per year for Medicaid beneficiaries from 22 appointments to 10. In addition, co-pays would rise to the federal maximum of $3.90 from the $2 to $3 they are now.
The Senate also proposed changing how to pay for prescription medications, a move that could cut payments to pharmacists.
Another provision would require mental health care providers to get prior approval before prescribing psychiatric drugs to a patient.
“We still have an issue with these medications being over-prescribed, particularly to children,” Hise told the committee.
But Karen McLeod, head of Benchmarks, a coalition of organizations that provide services to developmentally and mentally disabled people, said she worries about that provision.
“We have real concerns about the impact of this provision on clients with severe and persistent mental illness who we serve,” McLeod said. “If a client like this is finally stabilized on their medications and then they have a lapse because they’re waiting for prior authorization, it could wind them up in the hospital.”
“Then you’re spending more on them,” she said.
Shifting patients to federal exchanges
Advocates expressed more concern over some of the ways the Senate found to shift certain Medicaid costs around. Among these is a proposal that will affect pregnant women earning between 135 percent of the federal poverty level ($11,490 for one person) and 185 percent of the FPL ($21,256 for one person).
Currently, Medicaid covers expenses for all pregnant women up to 185 percent of the FPL in an effort to promote healthier babies and bring down North Carolina’s high infant-mortality rate.
Senate budget writers have proposed moving all pregnant women in that group onto the online insurance exchanges that will start operating in January as part of the implementation of the federal Affordable Care Act.
Under that new law, anyone earning more than 135 percent of the federal poverty rate would be eligible for subsidies to buy insurance on the exchanges.
“For that entire population, we will fully pay for their premiums on the exchange,” Hise said. The rate, with subsidies, would come out to only about $25 a month. Currently, North Carolina pays, on average, $414 a month for pregnant women on Medicaid.
Hise said the move would save about $20 million per year.
“So we will give an affordable insurance policy that they can continue with after the pregnancy for very limited costs, for most individuals,” he said. “This is an affordable policy that they can take with them after that process.”
Health care advocate Adam Linker of the N.C. Justice Center expressed misgivings during the meeting about the plan.
“I think there’s a lot of concerns about moving someone from Medicaid to private insurance, especially someone from this vulnerable population,” Linker said. “For example, would someone be able to lose their private insurance policy?
“Second, on Medicaid a pregnant woman is not denied service because she doesn’t have the co-pay amount. The co-pays are higher in private insurance. So could they be turned away for service?”
Linker said there are patient protections on Medicaid that don’t currently exist in the private-insurance market.
Hospitals would be deeply affected by changes in the Senate plan. The amount of money they would be reimbursed by Medicaid would be lowered.
Currently, when hospitals care for Medicaid patients, they are reimbursed by the state at 80 percent of their costs. The Senate budget proposes reducing that reimbursement to 70 percent, saving the state $62 million over two years.
“Are you taking into account any overhead costs?” asked Sen. Gladys Robinson (D-Greensboro). “And is this going to threaten collaboration?”
She said many larger, more profitable urban hospitals have acquired or merged with smaller rural hospitals, and subsidize their smaller affiliates with profits generated in city centers.
“The reason a lot of those smaller hospitals have been able to provide services has been because of that collaboration,” Robinson said. “So when you reduce the base rate, are you taking into account the overhead of those larger hospitals?”
“I think health care survives on those partnerships,” she said.
Hise said another proposed change could make rural hospitals more stable on their own: setting regional rates for care that would be paid to all hospitals, large and small.
A final provision that would affect hospitals is the creation of “shared savings,” an idea that’s being rolled out at the federal level.
“We will withhold 4 percent of the provider payments in Medicaid,” Hise said. “Community Care of North Carolina, along with the [Department of Health and Human Services], will develop measures that will show the cost reductions and efficiencies that exist, and we can begin to pay those back to providers in performance-based measures as we move forward.”
The intention is to incentivize hospitals to find ways to save money; if they do, the Medicaid program would share the savings with them.
The measure is calculated to save close to $81 million over the biennium. But the reduction in reimbursement would start on July 1, while the shared-savings plan would be rolled out in January 2015.