N.C.’s nascent Medicaid reform V: what N.C. organizations could be an ‘entity’?

This is the fifth 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.

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There has been a battle over the messaging of the Partnership for a Healthy North Carolina plan, with critics using the phrase privatization and “wall street managed” care, while Secretary of HHS Wos and Medicaid Director Steckel insisted at the May 15 public hearing in Durham that the intent was not to have “outside Wall Street companies” come in and take over North Carolina’s Medicaid program.

So what North Carolina ‘comprehensive care entities’ as the plan slide deck calls them could possibly be prepared to deliver via a series of contracts with providers?:

I can think of two obvious organizations that could potentially be a comprehensive care entity. Blue Cross Blue Shield of North Carolina is the most obvious one, the largest insurer in the State that has over 90% of the individual insurance market share, and around 70% of the group business. In fact, if they looked at a finalized version of the Partnership and decided not to participate, it is hard to see anyone else from within the state having the heft to do so.

The second ‘entity’ that comes to mind is the State Employees Health Plan (SEHP), the self-insured plan that provides coverage for around 670,000 persons working for the State (teachers, police officers, employees of State Government including Universities, etc). Now since the SEHP is organized as a division of the Office of the State Treasurer this might be a bit odd for one portion of State government to be negotiating with another, though the slide deck notes the acceptability of private or public entities. However, they have beneficiaries in every county in the State, and the geographic expansiveness of what has been proposed (a Medicaid beneficiary should be able to use care anywhere in the State; emphasized in presentations I have seen) is one of the more difficult aspects of the nascent plan. (It should be noted that Blue Cross Blue Shield NC administers the SEHP, so the two state-specific entities most likely to be able to do this work together now, and would have an inside track on networks state wide)

Of course a provider network like Community Care North Carolina could decide they wanted to be an entity and bid, but they provide integrated primary care and so don’t have experience with hospital contracts and other specialty services like both BCBS NC and the SEHP do (they refer obviously, but that is not the same thing as contracting at risk). It should be noted that none of these organizations–BCBS NC, SEHP, CCNC–now arrange for large amounts of skilled nursing home care, as self pay and Medicaid pay for the vast majority of it. This points out the breadth of the benefit scope necessary to deliver what is called for in the Partnership for a Healthy North Carolina.

Finally, Duke or UNC or ECU etc. could decide to try and put together a statewide network that aimed to benefit from their brand in the State, but these are provider organizations that would have to then arrange the insurance/financing side of the enterprise. Even as large as these organizations are, being able to arrange the full benefit package in all 100 counties would be unprecedented.

Two key questions about comprehensive care entities with regard to the insurance regulation side of things (there are many more questions):

  • What are the capitalization requirements to be able to enter into bidding and to enroll patients?
  • Private equity or Wall Street is an obvious place to get such capital for a venture. If that is ruled out, who will provide the necessary capitalization? the State?

Only Blue Cross in North Carolina would have the necessary reserves on hand to do something like this. Of course other national insurers like Aetna or United would also have the resources. It is hard to see how you can get 3-4 entities from within the State only. Perhaps a national insurance company could join with Duke or UNC or another academic medical center? Many questions to be answered.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

4 Responses to N.C.’s nascent Medicaid reform V: what N.C. organizations could be an ‘entity’?

  1. Pingback: Three insurers will offer plans in the North Carolina ACA marketplace | freeforall

  2. Pingback: The Cost of Not Expanding Medicaid | freeforall

  3. Pingback: Talking North Carolina Medicaid on Plain Talk Politics | freeforall

  4. Pingback: North Carolina’s nascent Medicaid reform VII: new advisory panel | freeforall

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