Lucas Thomae
After months of political jockeying, state lawmakers finally pushed through a bipartisan bill to fully fund Medicaid through the end of the current fiscal year. However, the legislative victory wasn’t without its “imperfections,” as NC Rep. Sarah Crawford, D-Wake, put it in an interview with Carolina Public Press.
Health policy advocates said cost-cutting provisions inserted into the bill would unduly restrict care for the more than 3 million low-income North Carolinians covered by Medicaid. In some cases, the consequences went further than even the bill’s own authors anticipated.
An unforced error on the part of the bill’s architects accidentally booted 27,000 women and children off their insurance. Other provisions intended to cut spending through reduced enrollments may actually spike administrative costs and increase instances of uncompensated care, critics warned.
Still, all Republicans and most Democrats in the statehouse threw their support behind the bill, which Gov. Josh Stein signed into law Thursday afternoon.
The legislation had three primary objectives regarding NC Medicaid.
The first was to fully fund the program through the end of the current fiscal year — a key priority for Democrats.
The North Carolina Department of Health and Human Services had previously warned that it would soon run out of money without an infusion of $319 million, and DHHS went as far as cutting reimbursement rates to save money before being ordered to reverse course by the courts in December.
The second goal was to set stricter eligibility rules, some of which were mandated by H.R. 1, the federal law formerly known as the One Big Beautiful Bill Act which Congress passed last year.
As a result, the 725,000 people covered under NC Medicaid expansion will now be required to work at least 80 hours per month, with some exceptions for schooling or volunteer work. They’ll also undergo more frequent eligibility checks. Some lawfully present immigrants who are not US citizens will lose their coverage entirely.
The third goal of the bill was to identify “fraud, waste and abuse” within the Medicaid program and to curb rising spending on ABA therapy, a popular treatment for children with autism.
The bill also increased copays for those covered under Medicaid expansion from $4 to $35, the maximum amount permitted under federal law, in an effort to reduce unnecessary utilization of medical services.
More Medicaid red tape?
Although state leaders celebrated the funding bill as a bipartisan achievement, DHHS and a coalition of advocacy groups warned legislators that some of the add-ons by lawmakers could have problematic ripple effects.
For example, the way in which the new rules were worded inadvertently terminated coverage for 27,000 pregnant women and children who are lawfully present noncitizens. Previously, that group was eligible for traditional Medicaid coverage under federal legislation called the CHIPRA 214 option.
DHHS alerted the leaders of the House health committee to that “potentially unintended” consequence in an email on April 23, before final votes on the bill took place.
However, because the legislation had already made it through both chambers and emerged in short session as a conference report, lawmakers weren’t permitted to make further changes.
The legislators who crafted the bill said the exclusion of the women and children covered under CHIPRA was accidental.
Crawford said the mistake was likely to be corrected in a future technical corrections bill, although bill co-sponsor, NC Rep. Timothy Reeder, R-Pitt, didn’t confirm whether that was the case when asked via email.
Additionally, DHHS emphasized that any cost-savings resulting from the new work requirements and increased copays would not reduce future Medicaid funding requests. That’s because those changes only apply to the Medicaid expansion program, which is not paid for through the state’s general fund like traditional Medicaid is.
In fact, the extra paperwork associated with the new eligibility rules could significantly raise administrative costs for both DHHS and county departments of social services that are responsible for processing applications and determining eligibility.
One particular area of concern is the requirement that new applicants for Medicaid expansion have worked for at least three months prior to receiving benefits. That’s troublesome for people between jobs or those starting new employment. Federal law only requires a one-month lookback period.
“This is red tape that is going to lead to people losing coverage,” Rebecca Cerese, a health policy advocate for the left-leaning North Carolina Justice Center, said regarding the stringent new rules.
“It’s actually going to increase costs for everybody by putting these ridiculous, unnecessary barriers in place.”
Cerese helped organize a letter signed by more than 40 advocacy groups voicing their concerns about several provisions in the bill. They recommended that the legislature pass a future “clean-up” bill to address those issues, although it’s unclear what legislators are willing to change about the bill, other than to reinstate the CHIPRA 214 option.
Legislators scrutinize autism therapy
The spectre of “fraud, waste and abuse” loomed over several additional provisions of the funding bill.
Lawmakers allocated $500,000 to the Office of State Auditor for performance audits of both the Medicaid program and NCWorks career centers.
Two separate mandated audits are also set to pick apart the finances of NC Medicaid.
One comes from the funding bill, which requires DHHS to produce annual reports of improper payments and expenditures, as well as recovered funds. The other comes directly from CMS administrator Mehemet Oz, who recently directed all 50 states to produce a “revalidation strategy” of the medical providers enrolled in their Medicaid programs.
The money allocated to the state auditor can’t be used to comply with the CMS directive, DHHS staff said.
One particular target of Medicaid fraud speculation is applied behavior analysis, or ABA therapy.
The research-backed therapy aims to help children with autism spectrum disorder learn skills and reduce harmful behaviors. It often involves intensive one-on-one sessions for as many as 20 hours per week. It can be very expensive.
Medicaid spending on ABA therapy has surged in recent years, prompting concerns from DHHS and lawmakers on both sides of the partisan aisle that some providers might be overbilling the state or providing inadequate services.
Aside from the ongoing audits, the funding bill also overhauled the reimbursement rules for ABA therapy. It limited out-of-state providers and mandated that a majority of sessions be conducted in-person rather than through telehealth.
David Laxton, a spokesperson for the Autism Society of North Carolina, an organization that provides in-home and clinic-based ABA services, said many of the reforms included in the bill made sense, particularly in regards to the cutback of virtual sessions.
“From a best practice standpoint,” he said, “in-person is better.”
Crawford introduced a bill last week that would go further by creating a closed-network of ABA therapy providers. In that scenario, only a smaller group of in-network providers would be eligible for Medicaid reimbursement.
Crawford said she was concerned that “bad actors” were taking advantage of the current reimbursement system.
“What we’re trying to do is put some bumpers on the bowling lanes and ensure that high quality ABA services remain intact for the people who need them,” she said.
This article first appeared on Carolina Public Press and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Republish our articles for free, online or in print, under a Creative Commons license.
