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

The latest round of the debate between the House and the Senate over Medicaid.

By Rose Hoban

For days, rumors had been circulating among lobbyists at the General Assembly that lawmakers were on the verge of a compromise over Medicaid, the state and federally funded program that provides health care to close to 1.8 million low-income, disabled and elderly North Carolinians.

Medicaid reform has been a significant sticking point for several budget cycles, with House members supporting a reform plan that’s got the backing of the medical community and the governor, while members of the Senate have pushed to allow commercial managed care companies to operate in the state.

Senate leader Phil Berger (R-Eden) has maintained that his chamber would not end the legislative session without a Medicaid deal. So when Berger got up on Wednesday afternoon to say his chamber was pulling Medicaid reform language out of the Senate budget, expectations for a compromise rose.

And when Sen. Ralph Hise (R-Spruce Pine) got up to present a compromise plan in the Senate Health Care Committee on Thursday morning, some eyebrows shot up when the substitute bill that was presented looked a lot like a bill Hise had proposed last fall and again earlier this year.  Some features were changed, but, for the most part, the language in the bill looked like the Senate had gotten most of what it wanted.

But compromises at the NC General Assembly don’t come easily.

Hise insisted he had “worked with many members of the House leadership” on the plan.

But when he was asked whether the Senate’s new bill represented a Medicaid compromise, House Speaker Tim Moore (R-King’s Mountain) said there’s still a long way to go.

“I don’t think anyone is saying that what the Senate has passed will be the law, or the final bill,” Moore said after the Senate hearing. “It’s still a work in progress.”

New department

The bill represents the latest salvo in what’s become a long-running back-and-forth between the two chambers over the future shape of Medicaid in North Carolina. The revised bill passed the Senate Health Care committee Thursday morning and will run through an appropriations committee early next week.

A hospital emergency department may be a good place for a heart attack patient, but advocates say it's the wrong setting for someone in psychiatric crisis.
Hospitals and other providers have asked legislators to be given the ability to manage Medicaid patients, in lieu of out of state managed care companies. Photo courtesy CRMF Crumlin, flickr creative commons

The Senate plan would create a new department to run the Medicaid program, with a cabinet-level secretary who would have to be approved by both chambers of the General Assembly.

The secretary of Medicaid would be controlling close to $4 billion in state dollars and two times that amount from the federal government. Other department personnel would be exempted from the State Personnel Act, a move that lawmakers hope would allow for hiring insurance experts at competitive salaries.

The proposal is a shift from earlier Senate proposals that would have Medicaid run by a board appointed by legislators and the governor.

“While it may not exist with a cabinet-level agency, it’s been common practice among SBI and other positions who come into this unique role of having a state agency not subject to the state personnel act,” said Hise when asked about having a cabinet member approved by the legislature.

Other cabinet-level appointees do not require legislative approval.

Hise said he has not heard back from McCrory’s advisers on what they think. The governor and the legislature are already involved in litigation over who has the authority to appoint some state-level positions.

The bill proposed Thursday also calls for the framework of the new agency to be put in place by January 2016, when it would take over managing Medicaid.

Hise said he expected the new system to start operating no earlier than January 2019, but acknowledged that without Medicaid expansion in the mix federal officials could drag their feet on approving the plan.

“They could use that leverage,” Hise said.

He also said that, “We have no interest” in expanding Medicaid.

A Medicaid expansion, as allowed for under the Affordable Care Act, would cover an estimated 500,000 low-income North Carolinians, mostly low-wage working adults.

Shifting risk

The new plan also takes steps toward the House’s position of emphasizing local providers over national companies.

Both chambers have pushed for health care providers – doctors and hospitals – to bear more financial risk for patient costs under a “capitated” payment system. Under capitation, health care providers receive a set monthly payment for patients rather than payment for each visit. Savings come because the providers have to work inside that budget to get everything done, rather than billing for each visit.

Providers resisted capitation at first, but over the past year the health care community has acknowledged that moving away from the current fee-for-service payment is inevitable.

Instead, what providers have pushed for is control: They’ve proposed to lawmakers that doctors and hospitals in North Carolina form their own provider lead entities, or PLEs, that would, in effect, be mini regional insurance companies.

The House, McCrory and outgoing Health and Human Services Sec. Aldona Wos have backed this plan. The incoming secretary, Rick Brajer, said after his appointment Wednesday that he continues to support a “provider-lead” Medicaid reform plan.

The Senate, however, wants to see large commercial managed care companies have a piece of North Carolina Medicaid. North Carolina is the largest state in the U.S. without a significant commercial managed care presence in Medicaid.

The current proposal would allow space for three statewide managed care companies, while between five and eight PLEs would operate regionally.

In other states with Medicaid managed care, commercial companies have terminated their contracts when they haven’t made enough money, throwing those states’ systems into turmoil.

Hise said having this combination would mean that if the commercial companies pulled out of the state, the local PLEs would be in place to serve as a backstop.

Speaker Moore said he was glad to see movement in the Senate toward the House position, but that the current proposal is far from what the two camps can agree on.

“What I’ve said from day one [is] the House position won’t become the law and the Senate position won’t become the law. It’s just a question of what the compromise is,” Moore said.

“Otherwise, we’ll be here until December.”

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