As they contemplate reforming and reorganizing North Carolina’s Medicaid program, lawmakers are looking for examples from other states’ successes and failures.

By Rose Hoban

In a committee meeting Monday, state lawmakers heard from the Medicaid directors of three other states in an attempt to get a handle on how states that have some similarities to North Carolina organize and pay for Medicaid services.

But if lawmakers were looking for a road map of how to proceed with reorganizing and reforming North Carolina’s system, they didn’t get any clear directions.

table comparing states' medicaid recipients and expenditures
Sources: Presentations, Oct 6, 2014 & NC DHHS

Medicaid directors from Ohio, Florida and Virginia presented an array of examples of how other states have decided to run their Medicaid programs – from a system that transformed Florida’s program this summer from fee-for-service payments to one run by managed care and accountable care organizations; to a system the Virginia director described as “stingy”; to Ohio’s system, where a Republican governor expanded the Medicaid program – but no other state’s program could draw a direct comparison to North Carolina.

“Is it accurate to say that when you’ve seen one Medicaid program, you’ve seen one Medicaid program?” asked Rep. Nelson Dollar (R-Cary), one of the House members of the Medicaid Reform/DMA Reorganization Subcommittee of the Legislative Oversight Committee on Health and Human Services.

“That is very true,” answered John McCarthy, the head of Ohio’s Medicaid program. “Whatever state you go to, it’s very different, both from the employee level and provider level. Legislators are different and governors are different.”

But for all the differences in state programs, the Medicaid directors hit some common themes: that change in Medicaid should be done slowly and that different branches of government need to cooperate on making changes. And the directors provided praise for some aspects of North Carolina’s current system.

Take your time

One commonality of the state systems presented Monday was that Ohio, Virginia and Florida all use managed care organizations – for-profit and not-for-profit insurance companies that pay doctors and hospitals a set monthly fee to deliver care rather than paying for each procedure and visit – to run their Medicaid programs.

McCarthy described a system in which Ohio used to have multiple regions where multiple managed care companies bid to cover different populations of patients, such as children and families and so-called “aged, blind and disabled” populations.

But when Republican Gov. John Kasich came into office in 2011, one of his priorities was to “repeal and replace” the old Medicaid system, which had 33 percent spending increases in the three years before he took office. The state ranked 37th in health care outcomes.

McCarthy told the committee that Ohio pulled the Medicaid program out from a larger Department of Child and Family Services, a process that is still happening three years later and still not complete.

“We are still, at this time, pulling different pieces out of the old Department of Child and Family Services,” he said.

Leaders in the North Carolina Senate have called for pulling Medicaid out of the Department of Health and Human Services on a more aggressive schedule, a move that members of the House oppose, along with Gov. Pat McCrory and the DHHS leadership.

Justin Senior from the Florida Medicaid program described how his state ran a five-county pilot program of managed care since 2006; the program only completed a statewide rollout this summer. And when the state made the changes, provider service networks were allowed to continue fee-for-service billing for two years as they made the transition to receiving monthly payments for patients.

Virginia’s Medicaid director, Cindi Jones, talked about how in 2013 her state made 19 significant reforms in their program.She seemed to warn North Carolina lawmakers from doing too much at once.

“You have to figure out, can you be moving the mousetrap and doing the reforms at the same time, because it is difficult,” Jones said.

Choose your partners

This past summer, lawmakers from the House and the Senate bitterly disagreed about the organization of the Medicaid program, as well as differing over whether to pull Medicaid out of DHHS. Many provider groups sided with the House and McCrory in supporting a plan to create provider-lead accountable care organizations.

Those divisions remain.

Data compiled by and graphic courtesy of the Ohio Department of Medicaid. Sources: CMS Health Expenditures by State of Residence (2011); The Commonwealth Fund, Aiming Higher: Results from a State Scorecard on Health System Performance (October 2009)
Data compiled by and graphic courtesy of the Ohio Department of Medicaid. Sources: CMS Health Expenditures by State of Residence (2011); The Commonwealth Fund, Aiming Higher: Results from a State Scorecard on Health System Performance (October 2009)

However, in their presentations the Medicaid directors indicated reforms happen more smoothly when everyone – legislative, executive and providers – is on board.

In Ohio, Kasich created an Office of Health Transformation, with a trusted aide at the head. According to Medicaid head McCarthy, the head of that office pulls in leaders from other departments and programs to get them to find common ground.

“We are lucky to have a group of directors who are working collaboratively with one another,” McCarthy said. “That is, in fact, what the governor demands, and he has said to all of us, “You guys have to work together.’”

And he said that while when Kasich came into office he set the path for the way he wanted to go, “We had to lay that out and work with the legislature to say this was the direction we wanted to go and why we needed to go in that direction.

“It was a long transition; it did not happen overnight.”

Florida Medicaid head Senior called the process of changing Medicaid programs “disruptive change,” but that one way the state got providers on board was to offer higher reimbursement for care.

“We tried to develop the program in a way that would create a multi-way win for providers, so that there were a lot of things that would come to the providers where they would benefit from managed care,” he said.

Senior said that since the changeover is still new, it’s unclear whether providers throughout the state will be happy. He said that in some areas of the state, such as Miami, providers have more positive experiences with managed care; but that in others, such the Florida panhandle, it’s been harder for providers to adjust.

“It is a process,” he said. “Ultimately, I think the higher payment rates are going to be very well received.”

Rep. Donny Lambeth (R-Winston Salem) said he could understand the imperative felt by some lawmakers to make changes happen fast.

“When the state was putting in three, four and 500 million dollars and taking away those resources from those things we need to fund, it was a high priority to fix Medicaid,” he said. But with the budget coming in closer to the forecast this past year, he said, lawmakers should now take the time to plan and not just react.

“I’d love to be able to come up with a plan in the early part of the long session so that we’re on the same page and we’re marching down that path,” said Lambeth, who is the former president of Wake Forest Baptist Hospital. “I have said for a year that the quicker we can define a model and lay out a road map, the quicker hospitals and doctors will be able to adjust to that model.”

Don’t mess with success

Both McCarthy from Ohio and Virginia Medicaid director Jones noted North Carolina’s system of getting Medicaid patients into patient-centered medical homes.

McCarthy explained that over the next five years, Ohio plans to push for medical homes in a big way.

“We want to have 80 percent of all patients in the state of Ohio – not just Medicaid; all of Ohio’s patients – enrolled in medical homes,” he said.

North Carolina’s medical home model, Community Care of North Carolina, also got a nod from Jones, who said her health secretary is “fond” of the CCNC model.

“But we already had a system that worked for Virginia,” said Jones, who said it would have been too difficult to completely change over from what was already in place in her state.

“But if we were without anything,” she said, “we probably would be similar to North Carolina.”

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