Medicaid overhaul shifts to regional managed care plans

lbonner@newsobserver.comDecember 5, 2013 

DHHS Secretary Dr. Aldona Wos, left, talks during a press conference with Gov. Pat McCrory, and Carol Steckel, who was then the state's Medicaid's director, in Raleigh Thursday, January 31, 2013.

ETHAN HYMAN — ehyman@newsobserver.com Buy Photo

— A new proposal for changing North Carolina’s Medicaid program would divide the state into regions to be served by medical and insurance networks rather than having companies bid to offer government insurance coverage statewide.

Gov. Pat McCrory’s administration is moving to change the government insurance program for 1.7 million of the state’s elderly, disabled and poor residents to a system where providers are paid set rates for each person they treat. As it is now, the government pays fees for each medical treatment or service.

A government advisory group held its first meeting on the proposals Thursday. The group will have three more meetings before it sends a recommendation to the legislature. The federal government picks up about two-thirds of the state’s Medicaid costs, and federal administrators would need to approve any changes to the program.

McCrory has repeatedly called Medicaid “broken”; the program routinely runs over budget. Changing to managed care would allow the state to better control costs in the $13 billion state and federal program. As it is now, the government is responsible for paying bills that are over budget. Under managed care, health care providers share or take on the risk of cost overruns. Supporters say physical and mental heath care can be better integrated in managed care.

A change of plans

The outlines of a plan presented Thursday differed from the proposal state Department of Health and Human Services Secretary Aldona Wos and the state’s former Medicaid director floated earlier this year. The earlier idea was to have three or more managed care plans covering the entire state.

Requiring statewide coverage would make it more likely that only large managed care insurance companies would be able to qualify for the work. Breaking the state into regions would make it easier for provider networks already in the state to bid for contracts, said Bob Atlas, a DHHS consultant working to develop the plan.

“We want to allow for local solutions and variations across the state,” Atlas said. The shift to managed care would take place gradually, he said, and probably not take full effect until 2020.

The N.C. Medical Society, the trade group for doctors, came down hard on the original plan, calling it a scheme to hand off Medicaid to a for-profit corporation.

Medical Society CEO Bob Seligson was more muted about the latest ideas, saying any assessment would be premature.

“There are a lot of details to be worked out,” he said. “We want to give them the support they need to be successful.”

The Medical Society and the N.C. Hospital Association have supported the Community Care of North Carolina, a patient-care management network.

Solution questioned

Rep. Nelson Dollar, a Cary Republican and advisory committee member, said he was concerned about managed care insurance companies coming in to take over big parts of the Medicaid program. He asked whether insurance companies would be needed.

“Are those really needed to get to payment reform?” he asked of managed care companies. “Can that be done without them? If they are needed, at what cost, and to whom?”

Dollar, chief budget writer in the state House, is a supporter of Community Care of North Carolina. He said he wants Medicaid “to incorporate the best of North Carolina’s current system.”

Adam Searing, director of the N.C. Health Access Coalition, has been critical of McCrory’s rap on Medicaid. Searing, whose organization advocates for low-income and working class people, was also critical of Atlas for not presenting what Searing said would have been a complete picture of managed care.

There was no mention, for example, of Connecticut, which stopped using managed care for Medicaid two years ago, or states where managed care faltered.

“He’s not providing examples of states where there were big problems with managed care,” Searing said. “I think he would have enhanced his credibility if he did that.”

Medicaid enrollment has been largely flat in the last two years, said Rick Brennan, state Medicaid office CFO. Spending on Medicaid claims increased 2.7 percent last year and 2.2 percent the previous year.

The national average increase in total Medicaid spending last year was 3.8 percent, according to a Kaiser Foundation report.

Slight miscalculations of future Medicaid expenses have big implications for the state, Brennan said. In most places, 99 percent accuracy means “you’re doing pretty well,” but in Medicaid, 1 percent means a swing of $130 million.

“That’s a pretty steep hit,” he said. “We almost have to be miraculous in our forecasting ability.”

Bonner: 919-829-4821; Twitter: @Lynn_Bonner

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