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

Lawmakers might be gone from Raleigh, but discussions over what they did, and didn’t do, this session continue. The topic of Medicaid expansion remains top of the list.

By Rose Hoban

Although federal regulators are likely to press North Carolina to expand the Medicaid program as part of its reform plan, state officials say there’s currently little talk of expanding the program. That’s according to a presentation given by Medicaid head Dave Richard to the North Carolina Institute of Medicine last week.

Dave Richard headshot
Dave Richard heads North Carolina’s Medicaid program.

Richard also gave the NCIOM’s Task Force on Substance Abuse and Mental Health a look at some of the broad outlines for the Medicaid reform mandated by state lawmakers in September that would be drafted as soon as early spring.

“A March 1 deadline will be difficult for us to hit a lot of things we have to talk about, including what our … waiver will have to look like going forward,” Richard said.

But he said he understood why the General Assembly included a March 2016 deadline for the preliminary report on basic features of the plan: It would allow enough time for lawmakers to look at the plan before the short legislative session that begins in April.

Demonstrating innovation

March’s report will have to include information such as suggestions on how to divide the state into six regions in which local provider groups will bid to provide Medicaid services.

Currently, health care providers get paid on a fee-for-service basis, where they bill Medicaid for each test and exam. Under the Medicaid reform plan, providers will instead be subject to “capitation,” where they receive a set amount of money per patient per month and are tasked to provide all services for that amount. The plan also requires these providers to hit performance and quality benchmarks.

Another requirement for the March report is a draft plan of the waiver that will be submitted to federal regulators.

“You’re demonstrating innovation – that what you’re doing is improving the health care for people,” Richard said after his presentation. “You have to show something different beyond that we’re just moving to capitation – that it’s going to result in innovation and that you’re going to measure that.”

But the waivers are complicated, with many details that will have to be hashed out with CMS regulators. He predicted the process would take years.

“We will submit a Medicaid waiver on June 1. CMS will take however long CMS wants to take to approve the waiver,” he said. “It’s not a secret that there is an election between now and then at the federal and state level.”

He also said that the experience of other states is that the quickest time between submission of the paperwork and approval is about a year, “but some have gone up to two and two-and-a-half years to get approval.

“So it’s not quick.”

Then the state would need about 18 months post-approval of the waiver to implement the changes.

“You can assume that we’re not going to get approval from CMS and then on the next day to flip the switch,” he told the panel, noting that it would probably be around 2020 before reform is implemented.

Waiver vs. expansion?

During Richard’s task force presentation, Rep. Josh Dobson (R-Nebo) of the group asked him whether federal officials would approve North Carolina’s application if it didn’t include a provision to expand Medicaid, as allowed for under the Affordable Care Act.

Rep. Josh Dobson (R-Nebo) headshot
Rep. Josh Dobson (R-Nebo). Photo courtesy NCGA

North Carolina is one of 19 states that have rejected expanding Medicaid to cover workers who make less than 135 percent of the federal poverty level.

“Obviously, we know that they’re going to ask about expansion,” Richard said. “If you don’t think that wouldn’t be part of the conversation, we probably wouldn’t be talking about it here.“

But Richard said CMS cannot reject North Carolina’s waiver application solely because it might lack a provision to expand Medicaid, because whether or not a state expands Medicaid is not part of the decision-making process for the agency.

“To be honest with you, there was not a lot of talk in this session about expansion,” said Dobson after the meeting. He is also a member of the House Appropriations Committee on Health and Human Services. “We had a lot of debate in prior years.”

He said he has been part of discussions to find other ways to “gain that access.”

“Whether it be our health departments, whether it be our rural health centers, how can we boost them and fully fund them. Maybe through the [federal] Home and Community Care Block Grants for our seniors as well,” he said. “How can we do other things to expand that health care in rural areas like mine.”

Defending expansion

“The conversation about expansion is on everyone’s mind,” Richard said.

But he maintained that some states that have expanded have found it hasn’t solved all their problems.

Nonetheless, researchers from UNC-Chapel Hill have found that in non-expansion states, rural hospitals are proving to be particularly vulnerable.

And research is showing that expansion states have narrowed the gaps for insurance among minorities, young and low-income people are now less likely to be uninsured and low-income people have reduced out-of-pocket spending on health care. And in those states, there are fewer uninsured people overall.

Several members of the task force challenged Richard, particularly pointing out that expanding Medicaid could reduce overall costs, especially on institutional care.

“If our state expanded Medicaid, it’d be a lot of healthy people who happen to be poor who’d come into the program,” said Gina Upchurch, who leads Durham’s Senior PharmAssist. “This is how economies of scale work.”

She said that the per-person money for many healthy people coming into Medicaid would bring in federal dollars to provide more preventive care to low-income people and would reduce the number of people needing more expensive care in hospitals and institutions when they’re sicker.

Upchurch also pointed out that newly covered Medicaid beneficiaries would not need to receive the full range of benefits, but could come in with a “basic plan of essential health benefits” that gives people access to care.

“It feels like that’d be more money coming to the state to provide better services to people who need more services,” she said.

“That’s a great statement,” Richard responded.

“And if I told you I wasn’t trying to avoid the question, it would be a lie,” he said to some laughter.

“But in all seriousness, the governor has said he believes if there is ever going to be expansion, it has to be uniquely situated for North Carolina,” Richard said. “And he believes that [a work requirement] has to be a part of it.”

After the meeting, Richard said a decision about expansion is really out of his hands.

“Medicaid expansion will be a conversation that legislators and the governor will have, and our job is to administer the program as it currently exists to the best possible way that we can to benefit the citizens of North Carolina.”

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