N.C.’s nascent Medicaid reform-III: Medicare Advantage as a model?
June 5, 2013 3 Comments
This is the third post in a series on North Carolina’s nascent Medicaid reform, Partnership for a Healthy North Carolina, a reform option being pursued even as North Carolina does not proceed with the Medicaid expansion available in the ACA.
I am skeptical of the plan, but am granting the benefit of the doubt and trying to work through some key issues and asking questions about it in the hopes of helping to move Medicaid reform ahead. The posts in this series are marked with the tag NC Medicaid Plan.
At the May 15, 2013 public hearing in Durham on North Carolina’s nascent Medicaid reform proposal, hosted by N.C. Sec of HHS Aldona Wos and Medicaid Direct Carol Steckel, there was a great deal of tension between the stated goal of having 3-4 “private entities” provide the full Medicaid benefit package statewide and several public statements opposed to Medicaid privatization. One speaker noted her enthusiasm and satisfaction with Medicare since turning age 65, and said this argued against privatizing Medicaid.
Carol Steckel, N.C.’s Medicaid Director correctly pointed out in response that in Medicare, patients have a choice of a private option (Medicare Advantage; 19% of N.C. Medicare beneficiaries are enrolled in such plans) or traditional Medicare. Let’s use the experience with Medicare Advantage to think more about the nascent Medicaid proposal.
- Enrollment in a Medicare Advantage plan is a choice. By default patients are enrolled in traditional fee for service Medicare. Further, patients choosing Medicare Advantage plans can opt out at any time and return, unpenalized, to traditional Medicare. The analogy thus breaks down immediately if all patients will have to pick one of the ‘3-4’ private entities for care. It is still worth thinking through the Medicare Advantage experience.
- What happens if a patient picks a private Medicaid option and is not satisfied? Can they shift to another private entity (insurer)? At any time, or during an open enrollment period only? Presumably they no longer have traditional Medicaid as an option, as those not satisfied with Medicare Advantage do.
- How will the premiums that N.C. pays to private insurers for being responsible for a Medicaid beneficiary be set? In Medicare Advantage, plans offer bids to Medicare for how much they would take to enroll a patient in a given county (they must cover at least the minimum Medicare benefit package); Medicare has a maximum amount they are willing to pay an insurance company to cover someone in each county in the U.S., that is based on historical spending patterns. These maximums are known to all, and any plan offering to cover patients for a premium higher than the maximum that Medicare will pay has to convince patients to pay the difference. Needless to say, this is a complicated process, with the bidding being county-specific. This is important, because the proposed Medicaid plan will require a plan to provide the full Medicaid benefit package in all 100 N.C. counties. Private insurers now pick and choose in which counties to offer particular Medicare Advantage plans.
- Differences in availability of Medicare Advantage plans by county are driven by the choices of private insurers. Private companies cannot be forced to offer a Medicare Advantage plan in a given county, and many offer different plans in different counties. To provide a sense of the variation, peruse this website that provides a great deal of information on Medicare Advantage plans in N.C. Selecting the subset of plans offering a $0 prescription drug deductible and seeking the lowest premium plans in 2013 yields the following list of plans (if you click the county name you will see all MA plans). This scanned map (NCMedAdvtantage.6.5.13_best) with my handwritten comparisons of what is available in selected counties is illustrative. In Durham county, there are two Medicare Advantage plans with a $0 prescription drug deductible that have no additional premium to be paid by a Medicare beneficiary choosing this plan, and another with an additional patient monthly premium of $6. In Lenoir county, there are two plans, but the lowest monthly premium to be paid by a beneficiary for such a plan is $75 per month. I have not done a comprehensive comparison of all Medicare Advantage plans; my point is that the Medicare Advantage market is county-based, driven by insurance companies deciding where they want to offer certain types of plans.
- The Medicaid benefit package is much broader than that covered by Medicare Advantage, or private health insurance to be offered in the federal Obamacare exchanges. Medicaid provides care to a vast array of beneficiaries, and the benefit package ranges from prenatal care to dementia care in a nursing home. I don’t think any state has tried to bid out the full Medicaid benefit package for the entire Medicaid population of a State.
- Won’t N.C. have to set up an exchange or some sort of marketplace through which Medicaid beneficiaries will pick between plans? Presumably so, if beneficiaries are supposed to choose their own plan. At this point, the state has opted to not develop a private insurance exchange/marketplace under the auspices of the ACA, and the federal government will run that in N.C. this next year. Given that people move between Medicaid eligibility and eligibility for income based subsidies in the ACA exchanges it would make sense to create one, unified exchange for these purposes if N.C. is going to embark on the proposed plan. Setting up and running an exchange for major medical insurance for persons under 65 is far simpler than trying to do so for the full Medicaid benefit package. However, a first step toward any Medicaid privatization would seem to be N.C. setting up an ACA exchange first.