McCrory plan would open state's Medicaid business to private companies

lbonner@newsobserver.com April 4, 2013 

— Gov. Pat McCrory wants to overhaul the state’s Medicaid program by having managed care companies offer health care plans for poor, elderly and disabled people.

The overhaul, unveiled by administration officials Wednesday, would diminish the role of a nationally recognized nonprofit agency while opening the state’s Medicaid business to private companies that now provide such services in more than half the states in the country.

McCrory said Wednesday that the change would benefit health care providers and the state by bringing predictability to Medicaid expenses, which the state has trouble estimating from year to year.

The 1.5 million North Carolinians enrolled in the program also would be healthier, he said, because the managed care companies would be responsible for overseeing their physical, mental health, and dental needs.

“We are proposing to overhaul the entire Medicaid system,” said Aldona Wos, secretary of the state Department of Health and Human Services. The change will “provide comprehensive care, better outcomes, better customer service, better efficiency and sustainability. To do this we must be bold.”

Critics of the proposal quickly denounced it as a privatization scheme.

Adam Linker, health policy analyst for at the N.C. Health Access Coalition, said companies would deny medical tests and other health services to preserve profits.

“For someone to say ‘just turn it over to us and we’ll improve quality’ is just a fiction,” said Linker, whose group advocates for poor and working-class people.

Under the proposal, Medicaid patients would have the choice of enrolling in a health plan offered by one of three or more companies working in the state. The companies would be responsible for setting up networks of doctors, hospitals and other services.

The companies would receive a set amount of money for each person enrolled in their health-care program. The companies would be liable if they overspend their per person allotments. The state and federal government spends about $13 billion annually on Medicaid in North Carolina, with the federal government picking up more than 60 percent of the cost.

Partisan split

The state must receive federal approval to make the changes announced Wednesday, but administration officials hope to have the new structure in place by 2015. The state legislature would also have to sign off on the overhaul.

While Democratic legislators denounced the move, Republican legislators reacted cautiously, saying they’re ready to work with McCrory.

“We still need to hear more details,” said state Rep. Nelson Dollar, a House budget writer.

The change would be significant for the state, which until now has relied on a home-grown managed care agency called Community Care North Carolina. The agency creates networks of doctors to care for Medicaid patients and works with people with chronic illnesses such as asthma. It has been lauded as a national model for Medicaid management and received a national award for quality and efficiency on Wednesday.

CCNC would be able to compete for a contract to offer one of the health plans, but the agency likely wouldn’t continue in its current form. Dr. Allen Dobson, Community Care’s president and CEO, said it’s too soon to tell whether CCNC could win one of the contracts.

“I think we have an incredible infrastructure to help them accomplish their goals,” he said.

More than 25 states have Medicaid patients enrolled in managed care, though the plans are optional in some states.

“The managed-care model is becoming a lot more mainstream,” said Melissa Hansen, who works on Medicaid and primary care issues for the National Conference of State Legislatures.

Companies campaign

North Carolina is one of the larger states that currently does not pay managed care companies a flat fee based on how many patients they sign up. Managed care companies have been trying for years to convince legislators to give them a chance at the business. One of the larger managed care companies, Virginia-based Amerigroup, has had lobbyists working in North Carolina on its behalf for about eight years.

A spokeswoman said Wednesday Amerigroup is interested in working in the state.

“Many states have established public-private partnerships to improve the quality and delivery of care while containing taxpayer costs for their Medicaid program,” Maureen C. McConnell, vice president for public affairs and communications, said in a statement. “We look forward to exploring the opportunity to bring our care coordination model to North Carolina and engaging community advocates and local providers who are instrumental to the program’s success.”

Experts say it’s difficult to draw general conclusions about states’ experiences with Medicaid managed care because each is different.

“There’s a huge amount of variation in what you see,” said Julia Paradise, associate director at the Kaiser Commission on Medicaid and the Uninsured.

State officials outlined a managed care plan that would cover both basic health care and long-term care, mental health, and other more expensive services. Traditionally, states have not included people with disabilities, older people with complex medical needs, and people in long-term care, said Dee Mahan, director of Medicaid advocacy for Families USA.

Caution on extensive needs

She cautioned that Medicaid patients with extensive medical needs may not receive proper services under managed care.

“To rush and say we’re going to have commercial plans do this – commercial plans don’t have enough experience,” Mahan said. “I think that you would end up making a guinea pig out of people in the system.”

Reaction from the healthcare industry was mixed. The N.C. Medical Society, which represents doctors, said it wanted to learn more about the idea, but was critical of handing the job to profit-driven companies.

“If the administration’s idea of reform is bringing in out-of-state corporations so they can profit by limiting North Carolina patients’ access to health care and cutting critical medical services to our state’s most vulnerable citizens, that is not change we can support,” CEO Robert Seligson said in a statement.

Dr. William Roper, CEO of UNC Health Care, called the administration plan “a bold initiative to improve Medicaid.”

“I look forward to working with them and others on this important endeavor to better serve North Carolina’s patients,” Roper said in a statement.

Bonner: 919-829-4821

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