Medicaid reform not as bad as it could have been, not as good as it should be

by Tom Campbell, Executive Producer and Moderator, NC SPIN, September 25, 2015.

There’s something for everyone to dislike in the Medicaid Reform bill passed this week.

The goals should have been to provide better care for the 1.9 million Medicaid recipients in North Carolina, to administer Medicaid more efficiently and do so with more budget predictability, but you wouldn’t know it because all the discussion was about dollars. Our lawmakers started with the premise that this $14 billion program was broken. For years Medicaid incurred cost overruns, many of them due to poor management, but lawmakers failed to acknowledge their own culpability in passing budgets they were warned in advance would create overruns. While there’s room for improvement there is ample evidence Medicaid is on much sounder footing.

Everyone agreed we need to transition from a fee-for-service approach to managed care, where entities are given a set amount per patient per month (capitation), changing from just treating chronic or episodic conditions to coordinating preventative care, known as a “medical home.” CCNC, or Community Care North Carolina, had a track record of managing and bringing down Medicaid patient costs, but poor communications, coupled with getting on the wrong side of politicians has landed them on the outside looking in.

Risk became the crux of the reform debate. For-profit managed care organizations (MCOs) like big insurance companies, willing to take the risks, were adamantly advocated by the Senate. The House of Medicine was just as adamantly opposed out of fear the MCOs would be more concerned about the dollars and less concerned about care for either patients or care providers. There are already enough doctors and hospitals not wanting to accept Medicaid patients that we don’t need more reasons for either to refuse to see our Medicaid patients. The state House wanted a system of provider led entities (PLEs) to take over the care management, but these providers initially balked at assuming the risks if costs exceed payments.

The compromise between the two houses was a hybrid system consisting of up to 3 MCOs and 10 PLEs that won’t fix the problems and could make them worse. We can easily see where MCOs will underbid the PLEs to get the business, run them off, then after two or three years of losing money come back and demand that either the state pay considerably more or they will quit. They have done so in other states, leaving them in a mess.

Another sticking point was who should administer the new system. The Senate didn’t trust DHHS and didn’t like Secretary Aldona Wos, so they insisted on the creation of a separate agency. Untangling Medicaid from DHHS was irrational and impractical and, even though cooler heads prevailed, we still aren’t sure how this new division within DHHS is going to work. But it is better than a new agency.

As Bob Seligson, chief executive of the NC Medical Society said, the Medicaid reform debate isn’t over. For starters the federal government will have to approve this new plan, which could take up to two years. It could take as many as three years to get the entire program operational.

What we are left with is a Medicaid reform plan that’s not as bad as it could have been, but isn’t as good as it should be.