By Rose Hoban

As the days tick by since Gov. Roy Cooper vetoed the state budget and there’s little movement on resolving some of his issues with the spending plan delivered by the Republican-led legislature, some lawmakers and advocates are working to mitigate the effects of the stalemate on vital health care policies and priorities.

In years past, if there was no budget agreement by the July 1 start of North Carolina’s fiscal year, legislators would pass short term resolutions to continue the prior year’s budget while negotiations on a spending plan proceeded. But in 2016, lawmakers inserted language in the state budget bill creating an automatic continuing resolution. This means that for the first time, the General Assembly has not had to create a short-term spending plan, even as they negotiate over the yearlong budget.

But there are still holes in this strategy namely, many new priorities that would have received funding in the budget will not move forward, nor will any projects dependent on one-time spending receive appropriations.

For example, one of those new priorities is the initiative to raise the age at which teenagers are treated as adults in the criminal justice system, something many have long considered a more developmentally appropriate response for teens who commit crimes that they might not fully understand the implications of. The 2017 budget included language from the Juvenile Justice Reinvestment Act and many parts of that legislation are slated to go into effect on Dec. 1.

There was new funding in the budget to hire court counselors and to fund juvenile crime prevention councils.

North Carolina House Rep. Chuck McGrady, at podium, discusses his “Raise the Age” legislation at the state House Judiciary I Committee on Wednesday, May 10, 2017, in Raleigh North Carolina. The bill would raise the criminal age of majority to 18 from 16 for misdemeanors and lower-level felonies.
North Carolina House Rep. Chuck McGrady, at podium, discusses his “Raise the Age” legislation at the state House Judiciary I Committee on Wednesday, May 10, 2017, in Raleigh North Carolina. The bill would raise the criminal age of majority to 18 from 16 for misdemeanors and lower-level felonies. Photo credit: Paul Woolverton

“Those agencies that are community based and are in all 100 counties, and that will really do the job of keeping kids from going further into the system and saving the state money, ultimately,” said Susanna Birdsong, from the ACLU of North Carolina, who has worked for several years on implementation of the law.

“There was a lot more funding for raise the age in the budget that was vetoed,” said Rep. Chuck McGrady (R-Hendersonville), who shepherded that bill through the legislative process.

On Wednesday afternoon, the House of Representatives unanimously passed a stopgap spending measure to fund some critical new priorities, included in the six-page bill is $22.9 million in recurring funds to implement the Raise the Age initiative, along with $4 million in one time money, plus $87,681 in funding to pay for someone to coordinate juvenile and indigent defense across the state.

McGrady noted that it wasn’t a heavy lift to get the funding into the supplemental appropriations bill.

“We do have a statute requiring the change, and therefore it would seem to be inconsistent with current law if we don’t at least provide the minimum necessary to start down that road,” he said.

Medicaid changeover looming

One of the biggest pieces of new funding in the coming fiscal year is the changeover of the state’s Medicaid system from its long-running fee-for-service structure into a managed care system run by large companies. The vetoed budget has in it at least $242 million in funding that needs to be moved from a set-aside in the state’s General Fund into a Medicaid Transformation Fund, to be used to cover expenses of getting the new system up and running.

At the very least, tens of millions of those dollars are needed to get the information technology up and ready for the changeover, and the management companies will need to get paid starting in November.

“I don’t think we can go forward with managed care unless we have a budget,” said Rep. Josh Dobson (R-Nebo). He also ticked off areas that need money, such as increased rates for foster parents and group homes and grants for local health departments.

“If we can’t get a budget passed, all those good things that were in the budget will not happen.”

Dobson noted that in order to implement the changes, the managed care companies will need to know what rates the state will pay them for delivering care. But the state can’t ink final contracts that include payment information until contract negotiators have budget numbers.

“Let’s just say we’re delayed a month, there’s no way they can meet the November 1 without an understanding of the rules to play the game,” said Rep. Donny Lambeth (R-Winston-Salem).

Man stands at a podium, points at an easel with a display on it, explaining his Medicaid expansion plan
Winston-Salem Rep. Donny Lambeth (R) lays out the details of the NC Health Care for Working Families Act at a press conference at the state capitol in April. Photo credit: Rose Hoban

Both men noted that the vetoed budget contains several new taxes to help pay for Medicaid, such as a new assessment on hospitals that would be used to pay some of the state’s Medicaid bills, and a new tax on the management companies that will be administering the program.

The stopgap plan appropriates a total of $4.8 million from the General Fund to the Medicaid Transformation Fund to cover some of the immediate IT needs that the transformation requires and another $20.8 million to keep the Medicaid program’s computers and IT systems humming throughout the year.

There’s also another bill, SB 212, sitting in the Senate which would give the Department of Health and Human Services permission to push back implementation of transformation into early 2020.

That’s the timeline preferred by the NC Healthcare Association, which represents the state’s hospitals.

“A delay would give the Department of Health and Human Services, insurance companies and providers more time to ensure the implementation process runs smoothly and care is uninterrupted for North Carolina’s Medicaid population,” wrote NCHA spokeswoman Cynthia Charles.

In an email response to questions, Charles said her organization doesn’t believe the new Division of Health Benefits created to oversee the program is ready, that the contracts are ready or that the information technology will be ready.

For now, people in the DHHS say they’re confident that transformation can proceed and that the funds coming from the automatic continuing resolution can keep things moving well.

A DHHS spokeswoman also said that the continuation funds from last year’s budget levels, plus reserves and federal dollars have allowed the department “to operate at last year’s levels.”

Sticky situation

Lambeth, who is one of the primary sponsors the bill to extend Medicaid insurance to low-income workers, said it looked pretty clear that Democrats would be able to hold the line on sustaining the governor’s veto, so he said it could be a while until the situation resolves.

“This is typical negotiations, where I mean, it’s summer, too, and people do gear down a little bit in summertime, not as much urgency maybe,” Lambeth said. “As that filters out into lots of communities across North Carolina, there will be more and more pressure, on both sides, to get back to the discussions about how we’re going to resolve these differences.”

He laughed when a reporter made the analogy of gum stuck to the bottom of a shoe.

“Maybe it’s more than gum, maybe it’s caulk or some other stuff on your shoes that you just can’t get off,” he said. “And until I think we get to the next step, it’s really going to be hard to start having a meaningful discussion about the budget differences until we get that gum off the shoe.”

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Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...