Doctors in NC face reduced pay for rejecting networks. Would they drop patients?

Doctors who don’t join new managed-care networks for low-income patients would lose money under a state Senate proposal that has some worried that sick people would lose their longtime physicians as a result.

The proposal to reduce payments to doctors who treat Medicaid patients if the doctors don’t sign managed-care contracts is part of a proposed rewrite of the massive law that the state passed in 2015 with the aim of privatizing the government health-insurance program.

The new ideas were discussed publicly for the first time Thursday in a Senate committee.

“We’re very concerned about keeping access to care,” Greg Griggs, executive vice president of the N.C. Academy of Family Physicians, said in an interview.

About 95 percent of primary care physicians in the state accept Medicaid patients, he said. Rural doctors would likely continue treating Medicaid patients despite the threat of financial penalties, he said, but doctors in Wake County and other urban areas who see only a few Medicaid patients are more likely to stop taking the government insurance.

The state is in the middle of a significant change to its $14 billion Medicaid program. It is asking the federal government for permission to privatize Medicaid by paying managed-care organizations set fees for each patient instead of paying doctors and hospitals for each office visit, X-ray, or operation. The aim is to make the state better able to predict Medicaid costs and encourage better patient care.

About 2 million North Carolinians use Medicaid; more than half are children. The insurance also covers some of their parents, the elderly and the disabled. The federal government pays about two-thirds of the cost, with the state picking up the rest.

Sen. Ralph Hise, the Spruce Pine Republican proposing the changes, said reduced payment is equivalent to setting rates for out-of-network care.

Managed-care plans “can’t control costs if they don’t have a network,” Hise said.

Under the proposal, doctors would see their Medicaid payments cut 10 percent if they reject managed-care contracts or if the managed-care networks freeze them out for not meeting quality standards.

Senators questioned the provision. “Are we doing nothing more than price fixing?” Republican Sen. Jeff Tarte of Mecklenburg County asked.

Chip Baggett, a lobbyist for the N.C. Medical Society, the professional group for doctors, called the reduced payment “absolutely terrible.” It would pressure doctors to accept bad contracts, he said.

The Senate proposal is a rewrite of a much narrower House bill aimed at reining in the regional mental-health offices that use Medicaid and state money to pay for patient treatment. The largest of those offices, Cardinal Innovations Healthcare, was the subject of a scathing state audit last month that found its leaders were paid $1.2 million more than the law allowed, and that the office was paying for extravagances such as first-class plane tickets, charter flights and out-of-state retreats at luxury hotels.

Instead of focusing on how those offices function and spend money, Hise proposes to dissolve them as soon as the state turns responsibility for patient care over to the managed-care companies. Current law allows the mental-health offices to continue operating for several years alongside the managed-care companies focused on physical health.

Dentists, who wanted to be left out of the managed-care plans, would be included under the new proposal.

The regional mental health offices aren’t working well, Hise said, and the legislature shouldn’t wait to make changes.

“I am committed to fixing the mental health system until it works,” he said.

Senators and health-industry lobbyists opposed the bill, saying it would trigger chaos in the mental-health system, job losses and loss of dental coverage for low-income patients.

Sen. Tommy Tucker, a vocal critic of Cardinal Innovations, said he preferred the original bill and its narrow focus. He called the revision “a get out of jail free card for Cardinal.”

The Senate bill prohibits many of the spending excesses that the audit describes.

Though few people spoke in its favor, the committee approved the bill.

If it gets through the Senate, the House is not likely to accept it as it stands.

“We are very concerned with the changes,” said Rep. Nelson Dollar, a Cary Republican and one of the bill’s sponsors. The changes were made with little negotiation with House members who worked on it, he said.

This story was originally published June 15, 2017 at 5:18 PM with the headline "Doctors in NC face reduced pay for rejecting networks. Would they drop patients?."