We need Triage on Medicaid Reform

by Tom Campbell, Executive Producer and Moderator, NC SPIN, December 5, 2014.

Will North Carolina ever reform Medicaid? After more than two years, we aren’t much closer to reform solutions today than we were a year ago.

North Carolina spends more than 10 percent of its General Fund Budget, more than $3 billion, on Medicaid. Until this past year, the combination of enrollment growth, program mismanagement and insufficient appropriations resulted in annual end-of-year deficits, sometimes amounting to hundreds of millions of dollars. These cost overruns have stymied additional appropriations to teachers, education, roads and other programs. The primary goals of Medicaid reform are greater budget predictability, better program management and the best quality of care for recipients in our program.

Most agree a necessary step is to switch from a fee-for-service payment system to a “per member per month,” or capitation model. If that monthly amount is inadequate to pay for service the state and its taxpayers currently make up the difference. State leaders correctly want to avoid or at the least share that risk.

The combatants in the reform battle seem to be the State Senate, on one side, against just about everyone else, including physicians, hospitals, other care providers, the House and the governor. The Senate would turn over Medicaid management to Managed Care Organizations (MCOs), typically large for-profit insurance entities that will take the risks if costs exceed allocations and, conversely, profit if they are less. Opponents to the MCO approach don’t like their for-profit status and the fact they are out-of-state entities, worrying the MCO will care less about quality of care and more about their own profits.

The other side includes a loosely organized coalition promoting Accountable Care Organizations (ACOs). They envision care provider partnerships providing Medicaid services within a region or the entire state; organizations they say would focus more on the quality of care and be more responsive to local health issues. But so far this coalition has no firm proposal how they would divide up the state, manage the care or, most importantly, shoulder the risks.

We’re at a standoff. The Senate is adamant that until they know more specifics they won’t budge from their support for MCOs. But there are other factors. Senate leaders don’t like and don’t trust Community Care North Carolina, an organization that basically uses the capitation model but doesn’t take the risk for insufficient allocations. Senators also don’t like the Hospital Association even though they support their own local hospitals. And there’s no love lost between Senators and Governor Pat McCrory, who favors ACOs. But their real heartburn comes from DHHS Secretary Aldona Wos. Senate leaders have threatened to remove Medicaid from her department or at least set up a governing board to oversee it, a mostly emotional response that largely discredits any substantive arguments they might have.

Forget Medicaid expansion. It will not and should not take place until Medicaid reform is resolved.

These Medicaid reform discussions have gone on long enough. We acknowledge this is a complicated issue, with many moving parts, but two years is long enough. Real leaders care less about who is right and care more about what is right for the majority. If, after this lengthy period, our leaders are saying they cannot or will not reach a resolution, perhaps the wrong folks are leading us.