shows a red cross with the word Medicaid printed on it, in front of a pile of dollar bills. For Medicaid transformation


This year’s bill bears a strong resemblance to House bills proposed during the last legislative session. The Senate’s plan is expected to be quite different.

By Rose Hoban

First published: 5:05 am
Updated: 7:50 pm

Months into this year’s legislative session, one of the biggest elephants in the statehouse has been what a plan to reform the state’s Medicaid program would look like.

On Wednesday, people got their first glimpse at the House’s ideas for moving Medicaid forward, but they didn’t have to look that hard. The plan looks a lot like plans proposed by House Health and Human Services leaders during last year’s session.

According to the Kaiser Family Foundation, North Carolina spent close to $1.2 billion on nursing homes for elderly Medicaid recipients in 2013.
According to the Kaiser Family Foundation, North Carolina spent close to $1.2 billion in 2013 on nursing homes for elderly Medicaid recipients. Image courtesy Derrick Tyson, flickr creative commons

The House plan calls for health care providers around the state to form “provider-led entities,” which would be paid set fees to manage the health care of 90 percent of North Carolina’s Medicaid recipients.

As opposed to earlier plans that called for the formation of accountable care organizations, in which provider groups would have shared financial risk with the state, the provider groups have agreed to shoulder all the financial risk for most of the state’s 1.8 million Medicaid beneficiaries.

Medicaid recipients include low-income children, some of their parents and low-income pregnant women.

Ten percent of Medicaid recipients, those who are eligible for both Medicaid and Medicare, would be excluded from the new plan.

A report this past week in the News & Observer revealed that the state Department of Health and Human Services is as much as two years behind in paying some doctors for care delivered to those dually eligible patients due to problems with the state’s Medicaid management information system.

So-called “dual eligibles” are often the most expensive patients, with multiple problems or conditions that are some of the hardest to manage. These people include low-income people with disabilities and poor elderly people in nursing homes.

According to data from the Kaiser Family Foundation, North Carolina’s elderly and disabled Medicaid recipients totaled 27 percent of the beneficiaries in 2011, but the state spent 62 percent of its Medicaid dollars on them.

Miles apart

For months, lawmakers have gone about their business, writing and passing other bills, but the Medicaid question has loomed over the session. Senate leader Phil Berger has made it clear his chamber would not adjourn until a Medicaid plan passed. Berger has also made it clear he wants a Medicaid plan that uses managed care companies to manage the program. Often those organizations are for-profit entities that also manage Medicaid in other states, with mixed results.

[pullquote_right]Get notifications of new NC Health News stories to your newsfeed – “like” us on Facebook today![/pullquote_right]Nonetheless, House leaders have proposed a plan that looks a lot like their proposal from previous years, and it’s quite different from what the Senate wants.

The House proposal includes the following:

  • Medicaid would be delivered by organizations created in state, such as hospitals and physician groups, that choose to manage a group of no less than 30,000 patients at a time. Those provider-led entities would be given a set amount to cover services for all of those patients, putting the financial risk on the PLEs to meet patient care and quality goals without going over budget.
  • There would be rewards and penalties for PLEs that meet or fail to meet performance and quality goals.
  • The program would be overseen by the Department of Health and Human Services, which would be authorized to “take all actions necessary to implement the Medicaid transformation.”
  • It would authorize DHHS to ask federal regulators to approve a waiver allowing North Carolina to implement the comprehensive plan.
  • Medicaid would transition from the current system to the new provider-led system over a five-year period.

The House plan would also create a 14-member legislative oversight committee consisting of an equal number of House and Senate members that would oversee and monitor the program.

When asked if he’d seen the House bill, Sen. Tommy Tucker (R-Waxhaw) said he didn’t need to.

“The timeline is so far out of reach for what this state needs, I can’t even consider five years out,” said Tucker, who is co-chair of the Senate Health Care Committee. “And to continue to have Medicaid overruns and be able to fund other essential programs in this state, we cannot wait five years.

Tucker said Senate leaders are preparing a managed care Medicaid plan that would be included in their budget, which he said would make its debut this coming weekend.

“The Medicaid reform package [in the Senate budget] is 30 pages,” he said. “Ours goes more in depth than the House bill ever thought of.”

Details, details

House lawmakers spent hours discussing the plan in the House Health Committee, with bill sponsors Nelson Dollar (R-Cary) and Donny Lambeth (R-Winston-Salem) fielding almost two hours of questions from some who would prefer a plan similar to what the Senate wants.

“Medicaid has been a sinking ship for the last few years, struggling, and we plugged the holes. How did we plug the holes? Billions of dollars. It is floating right now, but it’s leaning a little bit,” said Rep. Justin Burr (R-Albemarle). “This bill doesn’t fix it; it kicks the can down the road.”

Dollar defended the plan that he’s been championing for several years now. He said he’d rather see the state use the provider-led entities than commercial managed care because he believes the state would have more leverage over their operations.

“The provider-led entities have nowhere to go, they are not going to pull out of the state; they’re going to be here,” he said, pointing to the example of managed care provider Centene in Kentucky. After the first few years of managing that state’s Medicaid system, the company asked for a significant rate increase. When Kentucky said no, Centene shut down operations, throwing the system into crisis.

“What you’ve got to realize is that once you go to an HMO insurance company, then your network goes away. You lose a lot of your ability to control the data when you make that commitment and go in that direction. In many respects, you’ll be running blind,” Dollar said.

Freshman Rep. Dan Bishop (R-Charlotte) worried about the structure of the new entities, including the amount of capital PLEs would need to get started.

Rep. Gary Pendleton (R-Raleigh), an insurance agent and financial consultant, said he lacked confidence in the Department of Health and Human Services to oversee the transition.

“I have no confidence in DHHS. They can’t even tell us how much money they owe,” he said. “Why not put it out to bid and pick one major insurance company that’s done this in other states and let’s have a little competition…. We need competition.”

Dollar said DHHS’ Division of Medical Assistance would continue to operate the program, and that he thought DHHS had made “tremendous strides.”

“We have had all kinds of problems, some of which were generated by the General Assembly,” he said.

In the end, the committee voted overwhelmingly to pass the bill, which will next be heard in an appropriations committee before going to the House floor.


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