A Few More Thoughts on N.C. Medicaid Reform

A few more thoughts expanding on my post last week on the Medicaid reform plan the North Carolina General Assembly passed yesterday:

  • North Carolina will have to get a waiver to implement this policy outline. I call it an outline because there are many details to be resolved before the initial waiver is due per the law (June, 2016); the law is 14 pages long, the waiver will be dozens if not hundreds of pages long.
  • The most likely thing to happen to North Carolina’s Medicaid program as a result of this law is nothing. I figure the passed law is 5% of the work, with 95% of the work to be done in the waiver process.
  • If Medicaid expansion is added as a part of the waiver, there is a chance to get a waiver from this policy outline that could be approved. Without expansion, I don’t think it will get approved.
  • The next President’s administration will almost surely judge the waiver. I am hearing the June, 2016 deadline is for a general outline of the waiver, and not the waiver itself to be submitted to CMS. If that is true, there is no way the Obama Administration will decide on this waiver.

North Carolina Medicaid Reform Bill Moves Ahead

The North Carolina General Assembly released what appears to be the compromise version of Medicaid reform that is poised to become law. It is similar to what was released in early August. Several big points.

  • The big idea is to allow private managed care companies to bid for the right to provide Medicaid services on a statewide basis (a bidding process will yield 3 options; full capitation), while also allowing up to 10 “provider led entities” (PLE) to bid to provide services regionally. On PLE, think big health systems and aggregations of same into new organizations here (Duke, UNC, Carolina’s Health Care, etc). The Senate wanted outside managed care companies to run a privatized Medicaid, the House wanted in-state solutions to move toward full capitated care (Sec 4, pp. 2-3). They have set up a test of the two approaches.
  • They have carved out the so-called “dual eligible” population. This makes sense in policy terms, and is something I suggested in my January, 2014 proposal for Medicaid reform along with a Medicaid expansion (they aren’t doing the expansion part). However, the dual-eligibles are also the most expensive part of the Medicaid program, primarily because they are receiving huge amounts of Long Term Care, most typically in nursing homes. The bill calls for study of how to bring dual eligibles into fully capitated plans in the future (Sec 5(11) p. 6). I don’t expect that to ever come about. Let me put it another way: if there are for profit private managed care companies who are (1) going to go fully at risk for widows in nursing homes with Alzheimer’s disease who are dual eligibles at (2) capitation rates that save North Carolina money, I want to make sure I don’t own their stock.
  • Community Care North Carolina (CCNC) gets a reprieve of sorts. They provide primary care case management and are well thought of nationally and in State, but the Senate has been desperate to get rid of them. Here is a post I wrote about 2 years ago on CCNC and statewide bidding for capitated Medicaid. CCNC can continue providing case management, but the bill imposes a contracted rate cut; they are legislating the outcome of a negotiation (Sec 7, p. 7). My hunch is that CCNC in whole, or in part, will turn up as important in some of the provider networks, most likely the homegrown PLE who will bid regionally.
  • Create a Division of Health Benefits to replace the Division of Medical Assistance, and run this program, with all employees exempt from the State Employee Act rules (Sec 13(e)(g)(1), p 10).
  • The sleeper section that I suspect will be revised. There are some very aggressive transparency provisions, that I applaud conceptually, but Sec 13(e)(9) p.10-11 says that the new Division of Health Benefits will put on their website monthly the number of enrollees by county and eligibility category for Medicaid, and the per member per month spending by category of services (itals mine). If they mean the premium the state pays to the company/PLE, then that is straightforward, but that is not what the text says. This sounds like claims based analyses (actual payments for care that the managed care company pays docs, hospitals, etc). The managed care companies will certainly consider this information to be proprietary. Reading this section makes me wonder if the NCGA really understands what they are passing.
  • The biggest fallacy in the entire bill is that the N.C. General Assembly “is not responsible for cost overruns” and so can wash its hands of future mistakes. This is how the entire enterprise has been messaged; if there are cost overruns then the state is not on the hook financially for them, but the managed care companies or or the Provider Led Entities are. That runs afoul of the provision above (if the companies have to eat the losses, why do they have to show the claims?). The impulse of the section above is that the General Assembly knows that cost if not the only important thing, but the care that North Carolinian’s receive is also important. There are some decent ideas in this bill, some bad ones, and most importantly some missed opportunities (not expanding coverage). However, the residual claimant if it all goes bad is the North Carolina General Assembly–they will never be arms length from Medicaid. It, along with education, tax code and corrections, is the fundamental essence of State Government.

We need better data to understand the ACA in North Carolina

Callie Gable and I have an op-ed in today’s Raleigh, N.C. News and Observer outlining why we believe that we don’t have enough information to evaluate the functioning of the North Carolina’s ACA insurance market (~500,000 persons in N.C. are enrolled in private plans). What do Callie and I want to see?

  • A population based tracking poll that answers basic questions about persons who are–and are not–enrolled in ACA plans.

California has the best such resource currently (methodology overview; attrition over time which is a big issue in a tracking poll). The big picture below [ellipsis mine]:

The Kaiser Family Foundation California Longitudinal Panel Survey is a series of surveys that, over time, tracks the experiences and views of a representative, randomly selected sample of Californians who were uninsured prior to the major coverage expansions under the Affordable Care Act (ACA). The initial baseline survey was conducted with a representative sample of 2,001 nonelderly uninsured Californian adults in summer 2013, prior to the ACA’s initial open enrollment period…..The third in the series…after the second open enrollment period in spring 2015 to find out whether more have gained coverage, lost coverage, or remained uninsured, what barriers to coverage remain, how those who now have insurance view their coverage, and to assess the impacts that gaining health insurance may have had on financial security and access to care. A fourth survey in the series will keep…The surveys are designed and analyzed by researchers at KFF and the fieldwork costs associated with the spring 2014 and spring 2015 surveys were paid for by The California Endowment.

We need to start with the population of North Carolina for whom the ACA exchange is most relevant–the uninsured–and understand their experience (anyone could become uninsured, of course). We can never do what California did which is select a random sample of the uninsured prior to the first ACA open enrollment period and follow them, but we could design a survey of uninsured at a future point plus those now covered in ACA plans and ask them retrospectively about their experience prior to the ACA (imperfect methodologically, but we can only start from where we are now).

This chartbook provides the type of information that this survey has answered in California. For example, transition in insurance status for the first to the second open enrollment in Cali (all of whom were uninsured prior to the first open enrollment):

KFFCaliforniasurvey.8.13. 15

The key thing to understand is that this starts with the population of California, and then looks at how they interact with the ACA. We need that in North Carolina.

  • What about premium increases for BCBSNC and other insurers?

California’s tracking poll asks about premiums, choices and options. For example, you can estimate how important premiums were to those who remained uninsured as compared to other reasons, because they asked people. The thing we most need is a population based understanding of how the ACA is affecting N.C.

I wish we had plan level enrollment data by county, on a retrospective basis. If insurer X listed 20 plans in county Y (5 bronze, 5 sliver, 3 gold, 2 platinum), then after the fact say how many people signed up in each plan, in each county. This is the point about a range of premium increases being incomplete information–it is hard to know what they mean without knowing what people actually choose, which is of course a function of the choices they have. Because N.C. has a federal exchange, this information is not released. I wish the federal government would release the data. And as an aside, about a year ago I (Don Taylor, not Callie who co-authored the op-ed) spent some time asking for this plan by county level sign up information, and one federal official told me the State Insurance Commissioner could release the data, but that they could not. Some contacts in the State Insurance Commissioners office told me if was the opposite (feds could release, but they could not). I dropped asking about it, and didn’t make any sort of official request.

The big picture questions people have about the ACA are best answered by a population-based tracking poll, so that is where my focus is going. We are actually trying to raise money and develop such a N.C. tracking poll. Let me know if you are interested in being involved–especially if you want to help pay for it! A credible effort will be in the $500,000-$800,000 (per year) range, we think.

January 1, 2016: Huge Day for Medicare End of Life Policy Changes

January 1, 2016 will be a huge day of changes for Medicare end of life policy. As noted earlier, Medicare will begin paying for advanced care planning and will begin a concurrent hospice care demonstration on New Year’s Day. We now know that on the same day the program will institute the most consequential change in Medicare hospice payment policy since the beginning of the benefit in 1982:

  • Medicare will move from a straight per diem base payment for hospice, to a two-tiered base payment of $187.54/day for the first 60 days in hospice, with a lower payment of $145.15 for subsequent days (column 6 below from August 6, 2015 Federal Register).


Section 1814(i)(6)(D)(ii) of the ACA required the Secretary of HHS to consider a new payment methodology for hospice, and the primary discussion by MEDPAC and others had been the development of a so-called “U shaped” payment approach that better matched the differential intensity of care across different links of hospice use. The primary goal of the payment changes seems to be better alignment of the payment methodology with the actual resource use of hospice providers, with tremendous interest in reducing very long hospice stays that many view as fraudulent, or at least not in keeping with the best use of hospice. However, very short hospice stays are also a problem.

The actual payment change is simpler than a U shape payment would have been (higher in the first few days and the last few days and lower in the middle) approach suggested by MEDPAC, though they have publicly supported the change as a first step.

My guess is that it won’t be 3 decades before the next hospice payment approach change is announced by Medicare, and that we are likely entering a period when change is relatively common. I hope we are also going to be clear about policy goals, and collecting data to inform evaluations of same.

New North Carolina Medicaid reform proposal

The North Carolina Senate released a revised Medicaid reform proposal yesterday, that signals the beginning of the last stages of negotiation with the House. Some highlights:

  • Instead of relying totally on private managed care companies as did the initial Senate proposal, the revised version would also allow so-called “Provider Led Entities (PLE)” also enter into capitated arrangements to cover Medicaid beneficiaries (page 1, lines 27-31).
  • Organizes the state into “at least 5 and no more than 8” regions for the purpose of Medicaid contracting, with each county having to be in one region (p 2, lines 3-5).
  • All Medicaid beneficiaries except for Dual-Eligibles must be a part of the new at-risk, capitated program. Excluding the dual-eligibles is a big deal. They are covered by Medicare and Medicaid, and are among the sickest, most expensive Medicaid beneficiaries, in large part because they are receiving lots of long term care in addition to acute care. Excluding them increases the chances this approach will be reasonably successful. However, the dual-eligibles (many posts) are also the most expensive and difficult group of beneficiaries to care for (p 3, lines 14-16).
  • The proposal insists on 3 statewide contracts between managed care companies and/or PLEs that can deliver the full benefit package in all 100 counties; the bill would allow regional contracts as well for subsets of the state in addition to the 3 statewide contracts. Providing such as expansive benefit package in all 100 counties is a big lift for any MCO and PLE (p 2, lines 15-30).
  • Medicaid beneficiaries will have at least 3 choices for open enrollment, but not more than 5 (3 statewide and up to 2 additional in a given region). The proposal also calls for auto-enroll procedures if someone doesn’t make a choice (p 2, lines 29-31).
  • Medicaid contracting for Medicaid primary care case management with Community Care of North Carolina (CCNC) would end as of April 30, 2016 (p 25, lines 15-44). The goal of the Senate (unlike the House) is to end CCNC, but I wonder if portions of CCNC will become a key part of either a statewide and/or regional PLEs?
  • MCOs or PLEs that bid are forbidden from limiting a providers ability to be a part of another bidders network (p 3, 28-29).

I put forward this white paper for Medicaid reform in North Carolina in January, 2014. I don’t have a problem with moving toward managed care, and explicitly favored allowing both managed care companies and providers (like health systems and the like) to bid for covering patients. I have always been skeptical of the grandiosity of the Republican plans (3 choices of plan in each county, rapid shifting of beneficiaries), and would prefer moving slower in terms of adding Medicaid beneficiaries into a such a system. In fact, I would start with newly insured persons covered by a Medicaid expansion (the NC Senate hasn’t proposed such an expansion), while this bill only moves existing beneficiaries without expanding coverage under the auspices of the available Medicaid expansion. This bill does exempt the dual eligibles by my read, which makes good sense.

Key questions that are floating in my mind.

  • Will BCBS NC bid? What will the State Employees Health Plan do? These two entities are the existing N.C. grown groups with the best chance of pulling off the 100 county coverage required for the statewide contract.
  • Is CCNC dead, or will they emerge as important for either a statewide bid, or more likely some regional bids? They are the existing entity in the State with the most experience of coordinating the care of Medicaid beneficiaries.
  • Will the big health systems throw in together in some type of consortia to fight off the out of state managed care companies? I would guess that yes they will.
  • What is the reform plan for the dual eligibles, the most expensive group of beneficiaries in the health care system?

We will see now what the House says.

update: revised for clarity and fixed a couple of typos

CMS Concurrent Hospice Demo

CMS has announced the hospice concurrent care demonstration that I blogged about in March 2014. The big idea in concurrent hospice care is that people can receive services from a hospice provider without having to “unelect” curative treatments, which has been required to receive hospice since 1983. Concurrent palliative care was one of three “non covered” benefits that around half of Medicare beneficiaries said they would fund via reductions of other care in some of my past work. This is not exactly that, however, because the demo announced yesterday requires that a patient be hospice-eligible, which means a physician certifies they are likely to die within 6 months.

A few thoughts on this.

  • Cudos to Medicare for innovating. In hospice, Medicare has always led the way, and will do so again. Further, over 8 in 10 people who die annually in the U.S. are Medicare beneficiaries, so getting end of life care straight in Medicare is key.
  • The biggest limitation to the demo is the fact that patients must be hospice eligible (a physician must say they are likely to die within 6 months). I would prefer to see a concurrent demo that attempted to push further up the disease course, say to the last 12-15 months of life.
  • Because a patient is hospice eligible, the $400 payment that hospice providers receive per month, is less than what they would receive in roughly 3 days of providing full fledged hospice care (after unelection of curative). Since the patient is able to continue receiving curative care, the notion is the services provided by hospice providers will be less intensive. However, my read is that the hospice is on the hook for delivering all of the hospice benefit. One thing to watch in the evaluation: how many patients start this and later stop the hospice concurrent care demo because they want more care than perhaps the hospice planned to provide (I think most hospice providers will do phone based monitoring, but we will see what happens).
  • In one sense it is surprising so many hospice providers applied. There was much grousing about the low payment and fact that providers have to be prepared to deliver the full hospice benefit. However, I think many thought they needed to be involved in such a demo, and the general concept of concurrent care is the way most who look closely think this end of life care should go.
  • Another key metric for the demo will be conversion rate of patients who start this demo into full-fledged hospice. In one sense, why would they? However, hospice providers will have lots of incentive to get them to do so, both due to payment and their normative belief that what they do is best for dying patients.
  • The evaluation design presents lots of interesting opportunities. Demo hospice providers, hospices who wanted to participate and weren’t selected, and other providers. Non experimental inference is key for policy research and this will be an interesting one from a methodological perspective.
  • We have a CMMI demonstration of early palliative care (further up the disease course) with Four Seasons Hospice and we are attempting to evaluate the impact on quality and cost to Medicare of this model (CMMI billboard May 16). The announcement that Medicare will begin paying for advanced care planning in January introduced an intervention into our control group, and maybe even the demo. There there is another new intervention to be accounted for.

New MEDPAC study says some past work (mine) overstates hospice savings

A MEDPAC contractor report considered the question of “does hospice reduce Medicare costs?” from three perspectives, and concluded that a matched-control approach that only compares costs from the time of hospice initiation to death overstates savings. This is the approach that we used in 2007, and that was replicated (and improved upon in terms of covariates) by Amy Kelley and colleagues in 2013.

The essence of the approach we used is to take hospice decedents, match them to otherwise statistically similar decedents, and then compare costs for the period of hospice use (if used for 10 days, compare only last 10 days of life).

I will blog more about this next week, but a couple of quick thoughts:

  • The MEDPAC report notes that the methods we used to pick a control group and that Amy Kelley adapted are not the most appropriate way to address the question “does hospice reduce Medicare spending?” I think the method we used is better than that alternatives, but I want to leave that aside for a second and say that all of the action in a non-experimental study of this type is how you pick the control group. As compared to what? is always the most important policy question.
  • In our ongoing work on palliative care, we are planning to use multiple methods of picking a control group, and further plan to think deeply about why the answer to the seemingly simple cost saving question can differ so much by method. There is information in this uncertainty, and non experimental inference is just about the most important thing for policy evaluation that will never be subjected to a randomized trial.
  • The answer to the question could differ by market area, as well as across time as an area becomes “fully exposed” to hospice and palliative care concepts. This part of the report (that I have not read carefully yet) looks to be very important. It is hard to think that the early hospice cost assessments that looked at the last year of life–for example–when the median stay was 15 days is the best way to evaluate this question. A market approach might be better.
  • I agree with MEDPAC that cost savings is not the most important question to address. Here is a list of many others.
  • Non experimental policy evaluation is hard. On January 1, 2016, about halfway through our CMMI project, Medicare will start to finance advance care planning. That means any control group in the last 18 months of our study had ready access to a key palliative care intervention that was not present from the beginning. I am not sure exactly what the answer to all these questions are, but I am confident that more data is better than less.

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