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A memo circulated to members of the General Assembly gives a glimpse of the conflict between different branches of state government over the coming year’s Medicaid budget.

By Rose Hoban

State budget director Art Pope has waded into the budget fight between the two chambers of the General Assembly.

For the past week, members of the House and the Senate have traded barbs over their diverging interpretations of the coming fiscal year’s state spending. And the roadblocks to a final budget agreement boil down to two issues: Medicaid and raises for teachers.

Now Pope has responded to allegations made by Senate leader Phil Berger’s press officer, Amy Auth, that his organization, the Office of State Budget and Management, has been withholding “real numbers on Medicaid and the lottery.”

“You have been misinformed if you believe that OSBM and DHHS have a separate set of ‘real numbers’ that have not been provided to the General Assembly’s Fiscal Research Division,” Pope wrote in a memo to Senate budget conference committee co-chair Harry Brown (R-Jacksonville) dated June 24.

North Carolina Health News has obtained a copy of the memo that also went to all of the House and Senate budget conferees.

Pope’s memo is another salvo in an escalating battle of words between different parts of the state government over a revised budget being released by House members on Wednesday that includes a 5 percent raise for teachers. The House budget has the backing of Gov. Pat McCrory.

It comes after the Senate Appropriations Committee met on June 19 to discuss the disparity in House and Senate Medicaid budget numbers. At that meeting, senators complained publicly that Pope had been asked to present his office’s Medicaid numbers but that he had not shown up.

“This Medicaid portion of the budget is the linchpin to getting this problem solved,” said Sen. Bob Rucho (R-Matthews). “Would someone explain to me why we don’t have OMB or staff people from DHHS here to help us get to an answer so that we can move this budget forward?”

“If push comes to shove, we can issue subpoenas and have the numbers come to us,” Sen. Tom Apodaca (R-Hendersonville) said at that meeting. “Let’s don’t take that off the table.”

Different accounting

While Pope’s memo has not been widely distributed, a press release from Berger’s office late Wednesday called the budget put forth by the House and the executive branch “unbalanced, unsustainable.”

“We can’t accept unrealistic Medicaid estimates that would create an unbalanced, unsustainable budget. Art Pope and Nelson Dollar’s latest budget gimmick fails to account for the state’s deteriorating Medicaid situation and could violate North Carolina’s constitutional requirement for a balanced budget,” wrote Apodaca in the press release.

Pope’s memo attributed the disparity in the two budgets to different methodologies for calculating Medicaid’s year-end expenses, needs and any potential overruns.

“It appears the Senate methodology is to make a Senate estimate for Fiscal Year 2014-15, which in turn is based on a Senate estimate made last year for Fiscal Year 2013-14, which is in part based on even earlier estimates made in previous years,” Pope wrote.

Indeed, Senate budget writers have deployed analysts from the legislative Fiscal Research Division to calculate “worst case scenarios” that show an estimated Medicaid backlog of $143.8 million, according to a budget document provided along with Berger’s press release. That release also called for an additional $206 million for next year’s Medicaid budget, for a total adjustment of $352 million.

Fiscal research analyst Susan Jordan said that part of the challenge this year has been that the troubled NCTracks claims-payment system has not produced accurate data on enrollment and utilization.

“We have had accurate data before, and I’m hoping that once these systems get resolved and completed that we’ll get that accurate information again,” Jordan told lawmakers.

She said she thought it would be some time late next year before fiscal research analysts know what the accurate total expenditures are for Medicaid.

“They’ll have cash on the bottom line but they’ll have outstanding liabilities…. It’ll take a little while to reconcile all of those,” Jordan told lawmakers.

Screenshot of attachment to Art Pope’s memo to budget conference committee members comparing program shortfalls.

On the other hand, Pope wrote that the methodology used by OSBM and the Department of Health and Human Services “is to review, question and revise those old estimates based on the most recent year to date actual [emphasis his] information on expenditures, receipts and, more recently, enrollment.”

Pope said his office’s numbers were tracking closely what was proposed in the governor’s May budget, which estimated that Medicaid would have $70 million in cash surplus that could be carried forward into the coming fiscal year, which begins in five days. That $70 million would be sufficient to pay North Carolina’s share of about $205 million in claims made to Medicaid that still need to be paid.

(For every Medicaid dollar billed, North Carolina pays out about 34 percent, with the federal government paying the other 66 percent.)

Pope also wrote to lawmakers that another $60 million in cash was available to be set aside and carried over into next fiscal year.

“Now that the state has issued its last ‘check write’ for FY 2013-14 and based on the year to day actual receipts, we believe the cash surplus for Medicaid for FY 2013-14 to be carried forward to FY 2014-15 remains safely within this range,” Pope wrote, noting that for the first time in four years Medicaid has a cash surplus at the end of the fiscal year.

“OSBM still respectfully disagrees with the Senate’s “worst case” scenario for Medicaid based on old estimates,” Pope wrote.

Pope is scheduled to appear before another Senate Appropriations Committee meeting on Thursday morning at 8:30.


Pope Memo – June 24 (PDF)

Pope Memo – June 24 (Text)

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5 replies on “Government Branches Tussle Over Medicaid Numbers”

  1. Very sad indeed. Within the last week the following has occurred in my personal world of chronic disease management: 1) the endocrinology group that fills the diabetes management subspecialty role for many Medicaid diabetics in the RTP area has stopped taking these patients and (according to my personal MD) they plan to discontinue services for existing patients on Medicaid. 2) The behavioral health group that treats many of the same diabetics for depression has dropped away from their care-team roll as they too are no longer accepting payment from Medicaid.

    Meanwhile, back in the grass roots of Johnston County we have been blessed by three Raleigh Retina Specialists who are willing to continue treating Medicaid patients. This includes visits, laser procedures, vitreal injections for macular edema etc. I begged them not to drop the Diabetes Eyesight Preservation program at Taylor Retina Center and their response was clear: Are you kidding Jeff, we will turn no-one away, this is a serious disease and far too many preventable vision related disability cases are missed.
    A Heart-Felt Hooray for the Good Guys.

    I wish the NC voters could understand the magnitude of dishonesty between legislators and their constituents. I have worked directly with past external review actuaries including Mercer when determining the return or loss associated with NC Managed Care through their CCNC program. The level of detail, down to the adjustment for illness burden and months of enrollment in Medicaid proved to me the sincerity and accuracy of the folks charged with program evaluation. Later (2006-2010) the program and its outcome data were modeled in many States around the country.

    Yet when attending a Medicaid public forum I witnessed a NC employee from the budget office explain away all cost efficiencies by pointing to differences in the percentage of the NC population that are children in contrast with other States. Such an illinformed if not ignorant piece of information to share with the GA. This comment was made as I sat next to a former legislator who is a surgeon. I described the inaccuracy to him and said they may want to get some help with interpreting the data reported on Medicaid estimates. After a few more minutes discussing evaluation methodologies he looked at me and admitted ” We really do not know what questions to ask”.
    I testify to the truth of this statement further acknowledge that it is mine alone.

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