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After weeks of standoff, Wednesday’s joint budget conference committee meeting results in the two chambers of the state legislature finding common ground on Medicaid forecasts.

By Rose Hoban

For the past few weeks, two big issues have kept the two chambers of the General Assembly from reaching an agreement on next year’s state budget: teacher salaries and Medicaid.

But on Wednesday, the Senate and the House of Representatives finally moved closer to agreement on their Medicaid forecasts, loosening a logjam that’s kept legislators in Raleigh past July 1, the beginning of the fiscal year.

Senate President Pro Tempore Phil Berger (R-Rockingham).
Senate President Pro Tempore Phil Berger (R-Eden). Official NCGA portrait

“We have, for a number of weeks now, had Medicaid as a real sticking point,” said Senate leader Phil Berger after a joint budget conference committee meeting Wednesday morning.

For weeks, Berger has argued that the House’s numbers on this year’s Medicaid shortfall were too optimistic.

During the meeting, members of the House and Senate agreed to pin last year’s Medicaid shortfall at $136 million, closer to the Senate estimate of $143.8 million. House members had originally estimated last year’s Medicaid shortfall at only $75 million.

In addition, the two chambers agreed to add an additional $186 million to next year’s Medicaid budget.

“I think the House moved significantly towards our number,” Berger said. “We are still concerned, obviously. But in order to move the process along, we were willing to compromise and go to the midpoint of the best-case, worst-case scenario that our fiscal staff had.”

No data

One of the big problems in reconciling this year’s Medicaid numbers is a result of the troubled rollout of the NCTracks Medicaid billing system, which launched a year ago.

Since the beginning of the year, legislators have repeatedly asked the state Department of Health and Human Services for numbers on Medicaid enrollment and spending, only to be told the numbers were not available because of problems with NCTracks.

“What we do not have, and everyone acknowledges this, is we do not have a Medicaid forecast this year,” said Rep. Nelson Dollar (R-Cary), the lead House budget negotiator. “Unfortunately, that is the case.”

“There are a lot of estimates being made on top of assumptions upon other estimates,” he said, noting that “this is the best that many folks can do.”

Dollar argued though that recent years’ problems with Medicaid overruns had to do with many “structural issues” he said had been resolved.

“We inherited some very significant problems,” Dollar said. “Items that were owed back to the federal government, hundreds of millions … those items were off budget.”

“It was not the fault of providers; it wasn’t a spike in claims growth,” he said.

Hospitals owed big

For the past week, officials from the North Carolina Hospital Association have been querying their member hospitals about how many state dollars they’re owed by DHHS.

According to Cody Hand, vice president for governmental affairs at the Hospital Association, hospitals have reported being owed close to $100 million in state Medicaid from the last fiscal year, which ended June 30.

“We’ve been working with the state to try to get a handle on it. But with NCTracks being what it is, it’s hard to get a grasp on who’s owed what and what the spend is,” Hand said.

During a Senate Appropriations meeting last week, Sen. Bob Rucho (R-Matthews) attempted to pin down Hugh Tilson, another lobbyist from the Hospital Association, on what the hospitals were owed. He asked if Tilson would “go ahead and ask your CEOs to sign a claims waiver so it doesn’t exceed that cost.”

Tilson told Rucho, “Our interest is in insuring that number is right.”

Both Tilson and Hand reported their members had worked through the weekend to get legislators those numbers. Hand said collecting that kind of information is not something the Hospital Association usually does, and he noted that those numbers have not been audited or validated.

Best case, worst case

The budget proposal the Senate passed in late May calls for adding at least $143 million to cover unpaid Medicaid costs, on top of adding $206 million to cover additional expenses next year.

The Senate budget proposal also calls for cutting Medicaid eligibility for some beneficiaries who are aged, blind or have disabilities.

Members of the House have argued that the Senate’s numbers are too harsh. They were supported in their argument by members of Gov. Pat McCrory’s Office of State Budget and Management, including state budget director Art Pope, who pleaded with Senate leaders last week not to set aside too much money for Medicaid.

“What is the cost of overfunding Medicaid?” Pope asked. “The cost in the Senate budget is firing teacher assistants. Some 7,000 teaching assistants who serve over 239,000 children in classrooms would be fired. If you unnecessarily fire them, you can’t go back and rehire them and put them back in the classroom next spring.”

Pope also objected to the Senate’s eligibility changes.

“That will require … removing 5,200 aged, blind and disabled residents form the Medicaid safety net – 1,600 of those patients with Alzheimer’s or dementia currently being served in special care units.”

Berger wouldn’t say if the agreement on numbers Wednesday means the final budget would not cut eligibility.

“All of those issues are subject to negotiation,” he said. “All we’re doing is reaching an agreement of how much money is available for us to spend and what the cost is going to be of changes to Medicaid.”

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