Legislators near Medicaid deal as agency fights for its future

House and Senate negotiators said Thursday that they’re nearing a deal to reshape Medicaid and reduce its cost to state taxpayers.

The two chambers have been at odds over the future of the government insurance program for the poor, elderly and disabled for more than a year. Both sides want to change the current structure under which doctors, hospitals and other medical professionals are paid for patients’ office visits and procedures.

Instead, legislators want the state to pay for the program through a flat fee per patient. They have been focused on bringing more certainty to the program’s budgeting, which has had large shortfalls in recent years.

But the House and Senate have differed on who should manage the program: Groups of medical providers or managed care entities run by insurance companies?

Rep. Donny Lambeth – a Winston-Salem Republican and a key House leader on Medicaid – said Thursday that legislators have tentatively reached a compromise that mixes both approaches.

Medicaid patients would likely be able to choose between medical providers and managed care entities, similar to a plan floated by Senate leaders earlier this month. The House Republican caucus agreed to support the agreement this week, he said.

“We’ve gotten over the big hurdles ... now we’re working in some of the weeds,” Lambeth said. “I am very optimistic that we’ll be able to get that done in the next week.”

Earlier this week, the House voted down the latest Senate Medicaid plan, launching closed-door conference committee talks. But even as those begin, much of the negotiating has already been done informally, according to Sen. Ralph Hise, a Mitchell County Republican who’s leading the process in his chamber.

“There’s not a lot of moving parts left in the negotiations,” he said.

News of a compromise came as State Auditor Beth Wood released an audit of the network the state has used for years to coordinate Medicaid care, known as Community Care of North Carolina, or CCNC. It assigns a case manager to each Medicaid patient and keeps tabs on their doctor visits and medications.

That agency would likely be sidelined in the proposed Medicaid changes.

But its supporters seized on the audit, emphasizing the positive findings they say show CCNC’s approach is working.

The audit found that the program saved the state about $300 annually per patient, compared with expenses for other Medicaid patients – about 13 percent in the state – who aren’t enrolled in CCNC.

“Clearly, Community Care has saved this state hundreds of millions of dollars over time,” said Rep. Nelson Dollar, a sponsor of the House’s Medicaid plan. “This audit is just confirmation of what people have known for some time.”

CCNC interim president Tom Wroth said the audit shows the program’s success in containing Medicaid costs. “The report shows that CCNC generates a three-to-one return on investment for the state,” he said in a news release. “This represents a savings of about 9 percent of N.C. Medicaid costs.”

While the original House plan would keep the state’s contract with CCNC in place, the Senate wants to cut ties and would give those duties to the new managed care agencies.

Hise downplayed the results of the CCNC audit. “There are some marginal savings,” he said. “It’s not going to change the world.”

The senator pointed to audit numbers indicating the annual savings from CCNC’s program has dropped over time. Detailed audit results list the biggest savings from 2003 to 2007 and no savings from 2008 to 2013, but auditors say their study isn’t designed to track changes in CCNC’s savings over time.

“We’ve reached a point now where we’re saying we need to do more than the Community Care model we currently have,” Hise said, adding that the Senate proposal would regularly review contracts with service providers to “hopefully avoid any declining returns.”

Lambeth said the CCNC contract would likely remain in effect while the state transitions to a new system, and the organization could contract with the managed care agencies to offer similar services.

“They’ve played a vital role in keeping costs down in Medicaid, but at some point CCNC has to reinvent and reengineer themselves,” he said.

This story was originally published August 20, 2015 at 5:32 PM with the headline "Legislators near Medicaid deal as agency fights for its future."