State Medicaid reform remains moving target

by Travis Fain, Greensboro News-Reccord, December 6 ,2013.

The Medicaid proposal at the core of an ambitious reform effort has morphed significantly since it was announced in April.

Instead of the state bringing in three or four insurance companies or other entities to manage Medicaid health costs statewide, the latest proposal splits the state into six or seven regions.

Insurance companies or other entities, perhaps including hospital groups who partner with insurers, would work with Medicaid patients to control costs largely within those zones.

The N.C. Department of Health and Human Services has been working on the project for months, with an outside consultant shepherding things along. Thursday was the first meeting of an appointed advisory committee on the matter, which is headed by former Cone Health CEO Dennis Barry.

The committee will help the department mold a proposal, which will go before the General Assembly next year. The federal government also will have to sign off on major changes, and even that may be just an early step in an overhaul that DHHS consultant Bob Atlas said could take six years.

The committee will meet again next month for a public hearing, but the time and place haven’t been set.

“Whatever the vision is at the moment is different than it was two months ago and is probably going to be different in the future,” Barry said Thursday.

Whatever emerges, the goal will stay the same: Rein in health costs for the 1.7 million or so North Carolinians enrolled in Medicaid. A range of models are available, but Atlas preached the benefits Thursday of signing contracts with groups that would assume some of the risk for cost overruns.

If patient costs go over budget on their watch, they pay the extra, which creates incentives for preventive care and coaches to help people manage their health.

Some fear this would give private companies an incentive to deny care, particularly for the elderly and disabled patients who make up a smaller percentage of Medicaid’s total enrollment, but generate most of the cost.

DHHS Secretary Aldona Wos, who is from Greensboro, has promised repeatedly that won’t happen.

When Wos rolled this proposal out in April, she billed its statewide nature as a strength. Medicaid recipients all over North Carolina could choose from several insurance options and move without changing plans, she said.

But she also stressed that the proposal could morph. In the end, having several entities offer statewide services — something only insurance giant Blue Cross and Blue Shield of North Carolina does now on the private insurance market — was too grand a proposal, according to Don Taylor, an associate professor of health policy at Duke University.

The new plan is “still hard, but more plausible,” Taylor said.

The concern now is that, if the state is divided, Medicaid patients will be limited to care available in their region.

“Boundaries can be great, and they can be really bad,” advisory committee member Peggy Terhune said Thursday.

Terhune is the CEO of Monarch, which works with people with disabilities.

“It’s a legitimate question,” Atlas acknowledged.

There was also a lot of discussion Thursday about combining the state’s mental and physical health programs, since mental problems contribute to physical ailments. Consider alcoholism and liver problems: It’s hard to treat the liver without getting to the root cause.

“The artificial lines drawn leave people in the cracks,” said Courtney Cantrell, policy manager for the behavioral health section of DHHS.

It’s much easier said than done. Sandy Terrell, the department’s acting director for Medicaid, said she doesn’t know of a single state that has “truly integrated” these systems.

Medicaid costs $13 billion a year in North Carolina and is governed by a complex interplay of federal and state regulations. There are a lot of interested parties, as evidenced by the standing-room-only crowd of lobbyists, health industry administrators and state officials at Thursday’s meeting.

Not everyone is pushing for a privatized model. State Rep. Nelson Dollar, a committee member and a key legislator on Medicaid issues, continued to express support Thursday for a reformed system more along the lines of the current one, in which a group called Community Care North Carolina works to keep costs down for some Medicaid enrollees.

Wos and Gov. Pat McCrory have complimented this system, but they often characterize Medicaid as a whole in North Carolina as “broken.” Legislators frequently complain about cost overruns, and the system has been plagued by computer billing problems.

These are some of the reasons McCrory declined to push for a Medicaid expansion to cover more people, which was a key part of the federal health care overhaul.

There has been some pushback lately against the idea that the system is broken. A recent report from the General Assembly’s Fiscal Research Division said the state’s Medicaid administrative costs compare much more favorably to other states than a state audit reported in January. Community Care North Carolina has been held up as a national model for cost management, and information presented Thursday by the financial division of DHHS showed program costs leveling off in recent years after a rapid rise attributed to the recession.