No Medicaid short session in North Carolina

A few weeks ago, there seemed to be an agreement between the N.C. House and Senate to have a special session on Medicaid reform in late November, 2014. That no longer appears to be the case, unless the Governor called the General Assembly back for a special session, which I believe that he has the ability to do if he so wishes.

I have mixed feelings about this. On the one hand, given all the words that Republicans spilled about Medicaid being messed up, it is astonishing they managed to agree among themselves (they control the House, the Senate and Governorship) about …..nothing. Quite a failure if you take their own words about Medicaid seriously. On the other hand, they didn’t do anything really bad, and there were points during short session that outcome was not inevitable.

Conservatives often say it is good when legislative bodies do nothing. Perhaps that was the best realistic outcome possible for the short legislative session.

Who is covered by Medicaid

Kaiser Family Foundation has a great overview of who is covered by Medicaid, what type of care they need, how much it costs, and how it is financed.


When evaluating any Medicaid reform proposal it is key to get straight how a proposal effects these groups. In the North Carolina Medicaid reform discussions (that are apparently going nowhere fast), some have said they want to move all parts of the program into such arrangements quickly. Generally, I think the largest groups (children + adults constitute three fourths of the beneficiaries) could be moved quickly into managed care because most of their care is acute care (physician, hospital), while I think we need to move more slowly for the elderly and disabled. They are of course the most expensive groups, but that is because they tend to have both acute and long term care needs.

In any event, the most important thing to understand about any Medicaid reform proposal is how it would effect each of these groups.

End of the session Medicaid stuff

The N.C. Senate passed their Medicaid reform last night, and it is virtually identical to what I didn’t like much last week. Things haven’t changed much in terms of the House v the Senate since I wrote this, but they will have to work out some sort of deal over the next week or so on this. They are putting together an omnibus technical correction bill and who knows what ends up in that.

However, sometimes decent things can come about in the middle of the night (did you know that the Medicare hospice benefit and the direct precursor to the current Medicare Advantage program were jammed into TEFRA 1982 at the last minute?). Anyway, let me suggest one thing that might be a good thing to stick in while no one is looking–a technical planning grant under section 1311(a) of the ACA. Regardless of what the honorables decide to do about Medicaid, there will a great need for as much information as possible to guide the development of the new plan, and the ongoing functioning of the health care exchange in our state (~350,000 North Carolinians have private insurance purchased with subsidies).

We initially had such a grant as requested by Governor Perdue, that the Republicans sent back with great fanfare once they took over both Houses of the General Assembly and the Governor’s mansion in January, 2013. We could still get such a grant, but must do so prior to January 1, 2015 (here is sec. 1311(a)(4)(B)*

(B) LIMITATION.—No grant shall be awarded under
this subsection after January 1, 2015.

Republicans can pass anything they want simply by agreeing amongst themselves, but of course that means they also own it a la the Pottery Barn rule. Let me humbly suggest there is some chance that they haven’t thought through their health reform plan as much as they might have, that it will be hard to pull it off if the docs and hospitals are opposed to it, and that it would help us all to have more information and data, and not less.

*Bonus. If you want to impress your friends, the sections in dispute in the court cases this week are sec 1311 and 1321. They are quite short; you can print it out and impress your friends (also sec 1401)

N.C. House v Senate Medicaid proposal

I am not opposed to managed care in Medicaid. In fact, in January 2014, I proposed an approach to both expand insurance coverage and reform Medicaid by using private insurance to cover newly eligible persons via Sec 1331 (Basic Health Plan) of the ACA that would have insurance companies and integrated delivery systems compete for the newly eligible beneificiaries. Down the road, the state could opt to place a large proportion of Medicaid beneficiaires into private insurance.

The move toward capitation throughout the health care system and for payers to insist on improved or at least steady quality per cost is inevitable and generally a necessary and good thing. My problem with the Senate Medicaid proposal is that it is too much, too fast. A few points on the two plans (both of which are quite incomplete because they don’t address expanding insurance coverage, and don’t address other things that I did, like the patient safety/medical malpractice situation and scope of practice laws): Read more of this post

Medicaid Managed Care Across the U.S.

The North Carolina Senate  discussed today a proposal for Medicaid reform that would be the broadest application of managed care in any State nationally. By broad I mean:

  • They want all categories of Medicaid beneficiary (children, adults, aged, blind and disabled–including the dual eligibles) to be a part of managed care
  • Soon: 2016 for those covered by private insurance company plans; 2018 for provider-based plans (think Duke offering a plan for Medicaid beneficiaries in Durham, Granville, Vance and Franklin counties)
  • For the full benefit package, including long term care and specialized services for the long term disabled, behavioral, etc
  • Based on a capitated payment (insurance plans or provider organizations get a fixed amount per month to be responsible for the full benefit package)
  • With the capitation rate set low enough so that North Carolina would spend less on Medicaid than it would under the default system

Actually doing this–putting all Medicaid beneficiaries, under full capitation, for the full benefit package within 2 or 4 years and reducing the state’s Medicaid costs–would amount to the grandest health policy change in U.S. history. And you thought liberals had wild eyed schemes! Read more of this post

Decreasing Medicaid eligibility: reducing or shifting costs?

North Carolina House and Senate Republicans are grinding toward a resolution of their differences in how to proceed with Medicaid reform. The latest from the Senate sounds mostly similar to their past offer (reduce Medicaid eligibility for some aged, blind and disabled beneficiairies, and move to bid out the full Medicaid program to private insurance companies, but allowing provider networks to bid). Hereis is a brief review until today of the many twists and turns since complete Republican control of state government commenced in January 2013.

I will get to the ins and the outs of the emerging plan when it emerges some more, and we hear from the House.

A quick point on the continued insistence of Senate Republicans to reduce eligibility for some aged, blind and disabled recipients–Rose Hoban quotes Senator Harry Brown (R-Jacksonville) in a committee meeting yesterday as follows:

“That is a major concession for us. We think that you eventually have to address eligibility requirements in Medicaid if you want to control costs,” Brown told the committee.


Read more of this post

Others move ahead on Medicaid while N.C. stands still

New Hampshire became the latest state to move ahead with a Medicaid expansion tailored to the preferences of their state (adults with incomes up to 138% of poverty can be covered by their Medicaid managed care program, or they can receive payments to subsidize employer provided health insurance for workers with low wages). New Hampshire has divided government (Dem Governor, divided Legislature), as does Arkansas that has adopted a privatized Medicaid expansion under which federal money will be used to purchase private health insurance for those who would otherwise qualify for Medicaid.

So far 7 states with Republican Governors have managed to figure out a beneficial means of expanding Medicaid in spite of not being a big fan of the President’s, and 3 others: Utah, Pennsylvania, and Indiana are currently negotiating with the federal government to obtain waivers that will allow them to expand under state-specific details/models (that generally include some sort of privatized expansion).

Drew Altman notes that Red States will pay close attention to what other Red States do regarding Medicaid expansion/health reform, and there will likely be a drip-drip-drip move toward expansion/reform proposals that make sense within the politics of a given State, that will eventually give way to a rush of expansions except for perhaps the deep south. In North Carolina, which is totally red in terms of control (Governor, both state houses), but which had the closest margin of any State in the last two Presidential elections (14,000 and about 100,000 votes), the Republican party appears to be dead in the water on Medicaid, unable to negotiate with itself, leaving our state which was once thought of as a leader in the South, relegated to the sidelines to watch others embark on state-specific reform plans.

Medicaid reform in North Carolina

My granddaddy would say the N.C. General Assembly is “on a twisty path” so far as their Medicaid reform goes. 3.5 years after they took over the General Assembly, and 2.5 years after the Republican Party gained total control of the state’s policy apparatus, the details of what they have termed to be absolutely crucial to the future of the state (Medicaid reform) are clear as mud. It has gone something like this.

  • The Governor initially wanted to bid out the entirety of the Medicaid program to managed care companies. The provider community was skeptical.
  • Later, the Governor changed his mind and was in favor of a regionalized, Medicaid ACO system that maintained the role of Community Care North Carolina (CCNC). The provider community seemed ready to get behind this and a way forward was glimpsed.
  • The Senate budget a few weeks ago produced a vague paragraph in their budget that put us back to bidding Medicaid to private managed care companies with a couple of specifics: CCNC was going to be eradicated, and we were going to reduce Medicaid eligibility for the aged, blind and disabled to the lowest level allowed by law.
  • The House decided to move a separate (outside of the budget) Medicaid bill. It went from a 10 page bill in May with CCNC intact and and something similar to the Governor’s preferred regionalized Medicaid ACO approach, to a vague 3 pager.

I have no idea what will happen. I hate to invest lots of blogging on this because it keeps changing and getting less specific over time. If you like conspiracies (and I always suspect incompetence/confusion over a plot–especially when a legislative body or a university is involved) then here is one for you. This vague bill is set up to let the Governor call for Medicaid expansion as key part of reform the week after the 2014 election.

Stick with me.

Sections 1 and 2 are aspirational and outline goals for Medicaid (e.g budget predictability, slow rate of cost growth), and Section 3 states that the Executive Branch (Governor) in the form of the Department of HHS is to lead the movement toward such a system. Sections 8 and 9:

ScreenHunter_01 Jun. 21 12.31

Last year’s budget explicitly banned DHHS from seeking any Medicaid waiver without express permission of the General Assembly. This bill provides an outline and says DHHS work out the details after consulting with stakeholders

ScreenHunter_02 Jun. 21 12.36

Let me promise that all the stakeholders that are involved in health care delivery know that expanding insurance coverage is a part of developing an improved Medicaid program. We could even develop a privatized option, and I have even written a policy outline suggesting how we could do this in a way that increases competition in North Carolina’s exchange. Plenty of other Republican led states have figured out how to move ahead.

Far fetched? Maybe. But, two years from this November, Governor McCrory is going to have to run for re-election in a non-gerrymandered district, unlike the members of the General Assembly. For context, he won by ~500,000 votes, and President Obama lost N.C. by ~100,000 in 2012. I think it is safe to assume that the 400,000 persons who split Obama/McCrory are not so thrilled with the direction of the state. Further, you will never undertake a huge reform without the existing health care system being involved. I have heard several Republicans say that the large systems (like Duke, UNC, etc.) are going to have to step up and do some things they don’t like for the good of the State. I agree.

The same thing could be said to those in charge of our State today. They may be setting up a way to make it happen.

Could people who lose Medicaid coverage get ACA plans?

The North Carolina Senate budget would reduce the Medicaid eligibility for aged, blind and disabled beneficiaries who qualify due to being medically needy–meaning they have high health care costs but their income would otherwise be too high.  It is difficult to say for sure how many persons would be effected because the budget lays out a principle–get eligibility as low as allowable under federal law. But here is a ball park estimate in terms of number of persons who could lose eligibility: of the ~54,000 medically needy persons in 2010, at a cost in 2010 of around $900 Million (I estimate that around 32,000 of them are aged or disabled (with blind mixed into disabled). I don’t believe children or adults are included in the proposal.

These are obviously expensive Medicaid beneficiaries on the whole, but the groups that would be targeted by this change are particularly expensive on a per capita basis:

ScreenHunter_04 May. 30 17.17

According to WRAL via their @NCCapitol twitter account, this afternoon on the Senate floor, Sen. Hise said that these persons being cut from Medicaid can buy insurance on the ACA exchange so they don’t need Medicaid. Is this true?

I believe this is false for some persons losing coverage, but true for others. And for some who could get coverage, the ACA benefit package–as expansive as it is–would not cover the Long Term Care Services that are so expensive for these persons. Lets walk it through.

  • The 21,500 elderly persons who are medically needy are not eligible for ACA plans. Anyone who is age 65 and over cannot buy health insurance in the ACA marketplace. They have Medicare for acute care services, and Medicaid due to high expenses as compared to income. From a recent Kaiser Family Foundation brief on the medically needy (p1):

Elderly living in nursing homes and children and adults with disabilities who live in the community and incur high health care costs comprise a large portion of spending in the medically needy program.

I believe that Senator Hise and others are misinformed.

  • The 10,100 disabled and blind persons younger than age 65 are eligible for ACA plans sold in the marketplace. However, there is a good chance that most of the care they are receiving via Medicaid won’t be covered by an ACA exchange plan because Long Term Care services are not typically covered by acute care insurance (or Medicare). That is why Medicaid has gotten involved in the first place.  Consider the figure below from KFF on the types of care that the medically needy receive:

ScreenHunter_05 May. 30 17.40

Part of the care costs of the 10,100 disabled and blind persons who would lose coverage could get some of their expenses covered by ACA plans, lets say one-third as a ball park estimate. However, two-thirds of these costs will not be met because acute care insurance doesn’t cover Long Term Care.

Bottom line: it is false that all persons who lose Medicaid under the Senate proposal will be able to be covered by an ACA plan. The elderly are not eligible. And for the blind and disabled who are younger and who could get coverage, the acute care plans sold on the exchange (and provided by Duke as a benefit of employment, for example) don’t cover Long Term Care. There seems to be a fairly large error behind the logic of this aspect of the Senate proposal.

If you think I have made an error above, let me know. It would of course be nice to have more detailed information about this sort of proposal–it is knowable with precision–including what type of care is being paid for by Medicaid and whether it would be covered under an ACA plan.

This is a bad day for my beloved North Carolina.

N.C. Senate Budget on Medicaid

The N.C. Senate released its budget, and the key Medicaid section starts on page 91. A few highlights and some questions and comments:

  • Section 12H.1.(b) stops the movement toward a regionalized “Medicaid ACO reform approach” that was the direction that the Executive branch (NC DHHS) had been moving, and is really back toward the Governors initial plan, which I labelled as ‘unworkable’. But, the phrasing below about full-risk capitated plans and provider led and non provider led plans is quite vague, so might really encompass Medicaid ACOs. I don’t know if the language is trying to be coy, or if they don’t really appreciate the nuance under the labels.
  • Section 12H.1.(a) would move Medicaid out of NC DHHS and into an independent agency (first sentence below). The execution of such a move is key, but I actually think this is a pretty good idea.
  • Section 12H.1.(a) also has some generalities that are difficult to judge without lots more details. There is *massive* amounts of health policy in lines 16-21

SECTION 12H.1 .(a)It is the intent of the General Assembly to transfer the
14 Medicaid and NC Health Choice programs to a new state entity that will define a new, more
15 successful direction for the programs and that will be able to focus more clearly on the
16 operation of the programs. Specifically, the Medicaid program shall move away from
17 unmanaged fee -for-service towards a system that manages care. To that end, Medicaid shall
18 include all dimensions of care for a recipient through full-risk, provider-led and
19 non-provider-led, capitated health plans. Such full-risk capitated health plans shall include all
20 aspects of care, without exceptions, so that the State will bear only the risk of enrollment
21 numbers and enrollment mix

Several comments:

  • The paragraph implies that Medicaid is one program, when in reality it is at least 4 programs when viewed in terms of who is covered, what type of care they need, and how much they cost (see below; I know I write this over and over, but it is the most fundamental thing to understand about Medicaid).

ScreenHunter_20 May. 29 21.50

For example, the figure below illuminates the “dual eligible” persons, who are covered by Medicare because they are age 65+ typically, and Medicaid because they are poor. They have both acute care needs (doctor, hospital) that are shared by Medicare and Medicaid, and Long Term Care needs (nursing home) that is primarily paid for by Medicaid. There are some children who need nursing home care, for example, but that is very rare for that category of Medicaid beneficiary. And the groups of Medicaid that are the most expensive as shown above (aged, disabled) cost so much because they use lots of acute care as well as Long Term Care. Kids and adults, on the other hand, mostly use acute care.

ScreenHunter_03 Jun. 07 09.36

  • The biggest problem with the proposal in lines 17-21–the movement to a completely at risk, capitated system is that it does not make clear what parts of the Medicaid program they intend to do this in? If they mean adults and children–the relatively inexpensive portions of the Medicaid program who mostly need acute care, then it is doable over time. In fact, my white paper is consistent with what they say if that is the patient group focus [I also call for coverage expansion using Medicaid expansion money, but putting beneficiaries into risk based private plans, be they organized by providers or insurance companies].
  • If they mean the entire Medicaid program (the aged and disabled, including the dual eligibles as well–the folks who need lots of Long Term Care) will be put totally into an at risk system right away, I don’t think that will work in one of two ways. First way to fail: if you hold a geographical based at-risk system and the price to bid is that you must take all the beneficiaries in an area, then no one is going to bid in at least some parts of the state (or if they do and are for profit, I want to make sure I don’t own their stock). Second way to fail: you break down and say we can’t do it all at once, we will let managed care companies in and bid a subset of the at risk lives, then the insurance companies and perhaps others will cherry pick the best risks (see New York), and later say they need more money or they will leave the state, or stop covering Medicaid. Some of the big health systems might take all comers in certain areas, likely in exchange for Medicaid expansion via a private route (in the language of above, provider led risk plan) or otherwise. However, moving all of the Medicaid program into 100% at risk plans would be one of the biggest health policy changes in the nation’s history. To say more details are needed is an understatement….
  • Sections 12.H.3(a) and (b) on page 92 seeks to reduce categorical eligibility and medically needy eligibility criteria for Medicaid beneficiaries who are aged, blind or disabled. The way the Medicaid program works is there are minimums that you must cover, and states can go beyond that if they wish, both in terms of services and eligibility levels (and the federal government pays around two-thirds of the cost in N.C.). This section directs the state to find the lowest eligibility level allowable by law for the elderly, disabled and blind in Medicaid (based on this KFF link, there were ~54,000 medically needy North Carolinians in 2011; total medically needy spending was ~$900 Million in 2011). This would eventually go to zero under the proposal. As a lifelong North Carolinian, I find this section embarrassing.

We can do better.

Update 5/30: there is lots more that is quite bad. For example, section 12H.20.(a) on p. 99 allows the new Medicaid entity created in Section 12H.1.(a) to end the Community Care North Carolina (CCNC) without cause given 30 day notice, and does not allow them to contract with under any circumstances after December 31, 2015. As this post notes, I didn’t think the Governor’s initial plan would really be able to eradicate CCNC, but the Senate budget quite explicitly would.


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