To understand why North Carolina’s Medicaid reform plan is a bad idea, it helps to know the history of the state’s dismal mental health care reform.
Over 10 years ago, I was chairman of the Mental Health Committee of the N.C. Pediatric Society and intimately involved in the early stages of reform, working with state government officials to try to make the best decisions we could. Because the mental health care delivery system was extremely expensive, North Carolina decided to get out of the mental health business by privatizing delivery. It would dismantle the system of government-run Area Programs and replace them with privately run Local Management Entities.
The state was excellent at tearing down the infrastructure for mental health care delivery. The private sector, however, was not so good at replacing it. An example is the closing of Dorothea Dix Hospital. The inpatient beds from Dix have yet to be replaced.
The reform process included all areas of the Division of Mental Health, Substance Abuse and Developmental Disabilities (MH/SA/DD). The unfortunate grouping of children with developmental disabilities under the same administrative group as mental health and substance abuse has had similar effects on providing developmental therapies for children.
The major fallacy was the expectation that taking a very expensive state-run system with very low overhead and replacing it with a for-profit middle man would be successful.
There are a limited number of ways for a private system to generate more money on a fixed budget, to pay its costs in addition to providing care:
▪ Limit the types of services provided.
▪ Limit the number of people eligible to receive services.
▪ Limit the payment for these services to the providers.
All three things happened. State-supported mental health care is now available only for the sickest of the sickest of the sick. As a rough rule of thumb in any medical or mental health care delivery system, 20 percent of the people consume 80 percent of the money. The state chose an all-or-nothing response to limit the types of services and the number of people covered. If you were the sickest of the sickest of the sick, then you got 100 percent of your care covered. But as one example, to qualify for state-supported services, a client had to have had two prior psychiatric admissions; one was not enough. The money spent on one psychiatric admission can cover the cost of therapy for many less-ill people, and providing services for these people may prevent them from becoming seriously ill.
Rationing at its worst
The state chose to provide nothing for these people. This is care rationing at its worst.
The closure of state inpatient beds that were not replaced by the private sector has led to the current unconscionable situation where seriously ill people are warehoused in emergency departments for days to weeks, awaiting a hospital bed. They are getting no psychiatric care in the emergency department. And the emergency department is simply not equipped to care for any patient on a long-term basis.
At the same time, services for developmentally delayed children in the birth to 3-year age range were cut dramatically. Developmental services needed by infants and toddlers are frequently not covered at all by private insurance. Yet outreach programs to find these kids were continued. This put North Carolina in the great position of doing a wonderful job finding kids with developmental issues but providing no services to help them.
It is clear that the earlier you treat developmental disabilities, the better the outcome. I have experienced navigating the developmental disability system with my own daughter. We were fortunate to have been able to afford to pay privately for a number of developmental therapies in her early life. This enabled her to grow into a delightful young woman of 24 who is able to participate in our community as a productive citizen, despite still having significant disabilities.
North Carolina is now in the process of repeating this same mistake in its unnecessary and politically driven effort to reform Medicaid, which delivers medical care to the poor, the great majority of whom are children. Unlike the mental health care system, the Medicaid system in North Carolina run by Community Care of NC has been a model of care delivery that has received national recognition. Other states have come to North Carolina to study CCNC and learn how to use our system in their own state.
CCNC has saved the state millions of dollars. It has been budget neutral despite increasing the number of people enrolled. It has provided untold number of kids a “medical home” where providers expert in the care of children – pediatricians, family practice doctors, physicians’ assistants and nurse practitioners – can provide continuity of medical care. It ensures that kids get needed preventive health care, immunizations and coordinated care of both episodic and chronic illness in one place. This prevents needless use of the emergency department as a place of care for routine problems and the needless use of subspecialists when the same care can be provided in the medical home for significantly less money.
And now, in the name of partisan politics, the state wants to dismantle this model system. This is a worse decision than mental health care reform. The Medicaid system is a nationally recognized system of care – a model for how things should be. But once again, the plan is to replace a system with low overhead (all other issues aside, government is at least very good at providing services with much less overhead than the private sector) with multiple for-profit entities, each operating independently and each operating statewide. This will force medical providers to deal with multiple different rules, regulations and payment systems.
For these new entities to make money, they will have the same limited scope of action that the mental health system had: cutting benefits, eligibility and payment to providers. Children receiving Medicaid benefits typically have more medical needs than those with private insurance. Saving money by limiting medical care to children is not the way for a civilized society to take care of its most vulnerable members. We will lose the ability to improve the health of our next generation because we had to ignore treatable medical conditions and allow them to become chronic problems.
Children less valued
Unlike the mental health system, where the majority of providers are employed by the LMEs, medical care under Medicaid is frequently delivered by doctors in private practice. Medicaid pays health care providers significantly less than Medicare, the health insurance program for those over age 65. Children have always been less valued than adults in our medical care delivery system, even though the return of investment, the money saved for each dollar spent on care is hugely greater for kids than the elderly.
In a typical private practice, the overhead cost of rent, staff salaries, medical supplies and other costs of doing business is around 65 percent of receipts. In poorer parts of the state, where more than 65 percent of a practice’s patients may be using Medicaid, the effect of cutting payments will be disastrous. Surveys show that should payment for medical care decrease, many practices would limit the number of Medicaid patients they take or stop taking Medicaid patients at all. In Wake County, nearly 100 percent of pediatricians take Medicaid. Dramatic cuts in payments would most definitively cause this number to go down. This will limit access to appropriate care. Simply because medical care is covered doesn’t mean that people have access to that service.
Almost every professional group that works with Medicaid is against this reform process. The Department of Health and Human Services is aware of this. It held public comment sessions in multiple parts of the state. Every effort has been made to inform the legislature, but this doesn’t appear to have made any difference to our elected state officials
The two biggest items in the state budget are Medicaid and education, so this is not a trivial decision. But it would be foolish to allow the lawmakers to repeat the same disastrous mistake they made with mental health care delivery.
David A Horowitz, M.D., is a pediatrician in Cary.