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By Rose Hoban
Lawmakers made it clear this week, they want Medicaid to move to managed care, no more delays.
Medicaid, a program that consumed $3.7 billion in state expenditures, was scheduled last year to transform from a system where the state pays for every test, treatment and hospitalization to one where independent insurance companies get paid a lump sum for managing the care of beneficiaries. But political wrangling over a different aspect of Medicaid – namely expanding the program to cover hundreds of thousands of uninsured adults – kept Democratic Gov. Roy Cooper and the Republican-dominated General Assembly from coming to an agreement over a state budget.
Now lawmakers and the governor, apparently, have set aside the battle over Medicaid expansion in an effort to get transformation moving again. That included legislators removing poison pills from a Medicaid funding bill passed by the General Assembly this week.
In several versions, Senate Bill 808 had penalties to be levied against the state Department of Health and Human Services if the department went past the date set by the legislature for Medicaid managed care to begin, those were deleted.
The final compromise bill also added in $100 million of funds that came to North Carolina as a result of the CARES Act to the DHHS to support testing and tracing of COVID-19. The bill also allocates $20 million to support early childhood initiatives.
The bill fully funds a $6.1 million upgrade to the NC FAST information system to finish work on a component that would integrate child welfare information into the rest of social services data. It also appropriates money ($26 million) to finish up work on the entire system. Neither of these was included in the initial bill and the overall upgrade funding was not included until the final version.
Also missing in this final bill is a legislative mandate to move DHHS to Granville County, a move included in last year’s vetoed budgets which many saw as a slap in the face to the department. Instead, the bill allocates $15 million to “select land located in Wake County suitable for the Dorothea Dix campus relocation project. The funds appropriated in this Part shall be used for planning expenses associated with the relocation project.”
DHHS, which is headquartered on the old Dix campus on the edge of downtown Raleigh, has a lease on buildings on the property that is slated to expire in 2025. The old psychiatric hospital is being revamped as a park and public space by the City of Raleigh.
Transformation to move ahead
The most important piece of the Medicaid bill is Medicaid’s “transformation” from fee-for-service to managed care, a priority held dear by the Republican majority in the legislature, especially in the Senate.
“I think both the House and Senate wanted to get the transformation,” said Medicaid head Dave Richard. He noted that one important House priority, extra dollars to make Medicaid function, known as the rebase, was also included in the bill, creating an inducement to each chamber to vote in the positive.
“I think this has been one of those cases where people were willing to have conversations, and that the conversations weren’t always easy,” he said. “The bill that I think has the makings of something everyone can work with.”
The bill includes a mandate to make the transformation happen by July 1, 2021, but the final version took out penalties totaling about $20 million per month that would have been levied on DHHS had they missed that deadline for rollout.
Rep. Josh Dobson (R-Nebo), who spearheaded negotiations on the bill, said the penalties would have been a “guaranteed veto.”
Richard called the July 2021 timeline “aggressive.” Even though the state had spent years gearing up for transformation to happen in fall 2019, the department had to stop work, move people around, and lay off some contractors who were working on different aspects of getting the contracts and information technology infrastructure required for transformation done.
“You lose momentum on the work,” Richard said of the work stoppage.
March to Medicaid managed care switch looking rocky
Getting things back up and moving towards transformation even as the department and providers are scrambling to respond to the pandemic could be a challenge, Richard said. Many providers have needed to shift the way they do business, for instance, relying more on telehealth, and that will affect what providers can agree to, the way contracts get written and reimbursements. In addition, the department has been all hands on deck since the start of the pandemic this spring.
“We’ve had this massive shift in how we’ve done our business,” Richard said. “We have had to shift resources significantly to address COVID.”
Other provisions in this bill include:
- $50 million to local mental health management agencies for COVID-19 behavioral health and crisis services;
- Allowing departmental funds for testing staff members at long-term care facilities, who often lack insurance coverage;
- Allowing some of those funds to be used for hiring temporary contact tracing staff at local health departments;
- $69.4 million to fund the department’s work on transformation in the coming year, which will fund the rehire of contractors to complete work on IT, program design, and fraud detection functions;
- Setting a minimum rate for durable medical equipment.
The bill sets an assessment rate on hospitals that will provide Medicaid services, as well as creates a 1.9 percent tax on the premiums paid to the insurance companies that will run the managed care system.
After a final vote in the Senate just before midnight Thursday evening, the bill heads to Cooper, who is expected to sign it into law.
Not this year
The one thing not included in the bill: Medicaid expansion, the item that had been one of the major sticking points between the governor and the legislature last year.
“There’s a lot in Medicaid transformation to improve the way we address social determinants of health as providers and in our public health systems. I think that’s good,” said Adam Zolotor, head of the North Carolina Institute of Medicine. “I’m glad to see legislation proposed that over the finish line, I think that last year, the governor wanted to use that as a negotiating tool to get Medicaid expansion.”
But this year, similar to prior years, Dobson said expansion just wasn’t going to happen.
To get a budget, and money for testing and other departmental priorities, expansion ended up on the cutting room floor.
“It’s been right for the past four years, it is even clearer today that we need people to have health coverage,” said Richard when asked about the lack of expansion in the bill.
Zolotor said he was disappointed.
“It is a recommendation that comes out of almost every task force that we convene,” he said. “It invests substantial federal dollars into the health and well-being of North Carolinians and it costs North Carolina relatively little. We continue to send a billion dollars a year taxpayer money to DC and we don’t get that back because we chose not to participate in Medicaid expansion.”
Thirty-seven other states, including the District of Columbia, have embraced the policy. But with the state legislature run by Republicans who are facing down a Democratic governor, the votes just haven’t added up.
“I think that in this time of divided government, it seems hard to move on big and bold ideas,” Zolotor said. “I am not sure if the governor thinks he has the political capital to, to change that equation right now. But I think the political dynamics and the public discourse remain largely unchanged.”
He noted that House members, such as Dobson, had been willing to float a plan several times. But without the assent of the other chamber, there was no way forward.
“We have not seen a version of Medicaid expansion that our Senate is willing to consider,” he said.