Medicaid budget goals unmet

Legislator blames federal government for delay in N.C.'s aim to save money.

lbonner@newsobserver.comOctober 9, 2011 

The state Department of Health and Human Services has been working for months to save money on Medicaid, but is missing important milestones crucial to reaching goals mandated by legislative budget cuts.

Rep. Nelson Dollar, a Cary Republican who helped write the Medicaid budget, blamed the federal government for the delay, saying it was hampering state efforts to save money.

Legislators had wanted $350 million in Medicaid savings, and they put a varied menu of provider rate cuts and health service reductions into the budget to reach that amount.

But significant changes to the health services the state offers or how much it pays doctors, hospitals and other health care specialists requires federal approval. That's because the federal government pays most of the bill for the health insurance program for 1.5 million poor, disabled and elderly state residents.

The state's Medicaid budget is $12.8 billion this year, with the state paying about $3 billion.

The state Medicaid office asked federal permission for 47 changes that the budget anticipated having in place Oct. 1, said Lanier Cansler, state Department of Health and Human Services secretary. So far, the state has gotten approval for only one of those changes.

"I'm running out of time to do whatever we're going to do," Cansler told a Medicaid advisory group late last week. The Medical Care Advisory Committee is suggesting ways the department might come up with as much as $118 million in additional budget cuts to compensate, in part, for the federal approval lag time.

Though the details aren't set, meeting Medicaid budget targets likely will mean another round of rate cuts for some health care providers and more limits on medical services for patients.

There are other challenges to staying within the budget.

The legislature included in its plan $90 million in Medicaid savings from the health management network called Community Care North Carolina. Cansler said last summer that the department would need to know by October if Community Care was on track to save that much. If Community Care falls short, he is to cut more medical services or provider rates to hit the savings target.

Uncertainty hurts

But no one knows how much Community Care is on track to save this year.

"Right now, I don't know - they don't know - how close we're going to come to the $90 million," Cansler said.

The savings strategy depended on enrolling 170,000 elderly, blind and disabled Medicaid recipients into Community Care, where patients work with doctors and care coordinators with the aim of avoiding unnecessary tests and getting timely care before illnesses require expensive hospital treatment.

Cansler said enrollment did not grow as quickly as he would have liked in July and August, but a September expense report showed that Community Care was controlling costs.

Cansler said he was encouraged by how closely health care providers are working with Community Care.

"It's not that we can't achieve the goals, he said. "It's 'Can we achieve them quickly enough?' "

Community Care is working on other projects to help save money, such as looking more closely at care for 20,000 Medicaid recipients whose hospitalization costs are higher than expected, said Dr. Allen Dobson, president of the Community Care board of directors.

"We're doing everything we can to help the department," Dobson said.

Dollar, the Cary Republican, said he was confident Community Care would save $90 million this year.

Pressure on Perdue

Dollar put the onus on Gov. Bev Perdue to convince the Obama administration to speed up approval of the changes the state wants.

"We need our partner the federal government to give us the flexibility to run the program so we can have it on sound financial footing," he said.

In a prepared statement, Perdue spokeswoman Chris Mackey said Perdue and Cansler have spoken with federal officials about getting the approvals, but North Carolina is waiting along with every other state.

Perdue's office also pointed out that the governor had warned legislators that federal approval would take time.

"Secretary Cansler was very clear with the legislature that the process to get the state plan amendments approved would be very slow," Mackey said. "Throughout the budget process, the administration warned the General Assembly that its cost savings estimates this year were unrealistically aggressive.

"Gov. Perdue and Secretary Cansler have spoken with federal officials about the importance of moving these amendments along, but there is a timely process for approval and all 50 states are seeking changes to address budget issues. As the General Assembly was told, it is overly ambitious to include these cost savings in this year's budget."

So far, Medicaid patients have been told to expect cuts or limits on optional services such as routine eye care and glasses for adults.

Not really optional

Compared with other states, North Carolina spends a bigger percentage of its Medicaid money on optional services, which include hospice care, mental health treatment, dentures and physical therapy.

But members of the advisory committee said trips to dentists and other optional Medicaid services essential to patient health should not be considered deluxe treatments.

"Hospice patients - a majority want to die at home," and letting people do that costs less than keeping them in hospitals, said Karen Schaede of Greensboro, a lawyer and former nurse. Unchecked dental problems lead to other medical ailments, she said, and people who can't see because they cannot afford glasses could end up taking the wrong medications because they cannot read labels.

"It all fits together," she said. "We really shoot ourselves in the foot when we look at some of these services as optional."

Bonner: 919-829-4821

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