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.

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

One Response to North Carolina Medicaid Reform Bill Moves Ahead

  1. Pingback: A Few More Thoughts on N.C. Medicaid Reform | freeforall

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