Newest Medicaid Reform Plan Gets Tepid Reception

July 17, 2014 - North Carolina Health News

Members of the Senate presented yet another version of a Medicaid reform plan Wednesday. They are expected to have more public-discussion comment on Thursday morning at 9.

By Rose Hoban

Dr. Conrad Flick’s primary care office in Raleigh is not the kind of place where you’ll see a lot of ties. Instead, the eight doctors and nurse practitioners at Family Medical Associates of Raleigh are more likely to wear polo shirts or scrubs and take the time to sit and listen to patients.

But Flick’s easy-going demeanor drops away quickly when he starts talking about the Senate’s latest plan to reform North Carolina’s Medicaid program. His voice becomes frustrated and angry.

“They’ll give great press releases about how this is all about patients, but not a single one of them takes care of patients on a day-to-day basis,” Flick said Wednesday afternoon. “Not a single one of those people knows what it’s like to have to deal with the system that they are about ready to create.”

The system Flick refers to is one presented by state senators during a meeting of the Senate Rules and Operations Committee Wednesday morning.

In the plan, senators call for moving the state’s Medicaid program to a “fully capitated” managed care system whereby doctors and hospitals are given a set amount of money to care for patients, no matter how complicated, and are compelled to live within that budget.

The plan also opens the door for for-profit managed care companies to bid on contracts to cover regional care networks.

This differs from the latest House version of the reform plan, which calls for physician and provider-run accountable care organizations to manage patient care and share in both financial risk and reward. That plan allows for a slower transition to bearing full financial risk for providers.

Managed care is a type of arrangement akin to what existed in the 1990s, when private managed care insurers predominated in the health care market and doctors complained that insurance bureaucrats tied their hands.

And that was the basis of Flick’s complaint.

“Their job is not so much managing patients as it seems to be managing costs and managing the expenses and managing finances,” he said. “To me, it puts another layer between you and the patient.”

On board

The new plan would pull state oversight of Medicaid out of the Department of Health and Human Services into a new Department of Medical Benefits. Planning would start Aug. 1. The transfer to the new department would be complete by July 2016.

The new department would be managed by a seven-member board consisting primarily of appointees who have experience in the insurance and managed care industries. The plan would exclude academics from the state’s medical universities from serving on the board because they work for universities with hospitals that contract with Medicaid.

Minority leader Dan Blue (D-Raleigh) asked why the board would not allow for having health economists from one of the departments at the state’s medical schools.

“They are the ones who write about [health care], who study it intensely – academicians who understand this better than anyone,” Blue said.

Sen. Ralph Hise (R-Spruce Pine), who presented the new version of the bill, said they were looking primarily for people with corporate experience. He said they also didn’t want board members with any ties whatsoever to Medicaid, no matter how peripheral.

“We don’t want to allow providers to set their own rates,” Hise said.

Chip Baggett, who represents the North Carolina Medical Society at the legislature, expressed frustration that there would be no providers on the board.

“While it’s important to have insurance experience on this board, non-provider-led experience on this board, we also need provider-led physician ideas … as we look at what the Medicaid plan is going to be going forward,” he said.

Others made the point that people with insurance company ties could be on the board while insurers would be benefiting from the rates being set.

Aggressive

Members of the committee expressed concern about the “aggressive” timeline, which would have the fully risk-bearing managed care organizations up and running within two years. Provider-led plans would have an additional two years to move to being fully risk bearing.

“We don’t have until 2020 to wait to get a system in place that can control the problems we’ve had in Medicaid for nearly a decade now,” Hise responded.

Providers and DHHS representatives also voiced concern about the timeline.

“I’m not sure [the Centers for Medicare and Medicaid Services] would approve some of these things within this timeline,” said Adam Sholar, the legislative liaison for DHHS.

Sen. Josh Stein (D-Raleigh) worried that the short time frame would be too quick for any provider-led organizations to get up to speed and be able to compete with large managed care companies that would arrive with the actuarial and accounting expertise already in place.

“It’s not inconsistent to what’s happened in other states,” Hise said. “ At this point, you basically have a four-year time window in which we expect plans to be fully capitated.”

He cited examples, primarily from Florida, in which he said full capitation was reached within two years. But the Florida expansion came after a multi-county pilot plan that started in 2005. Parts of Florida are only this month coming online for Medicaid managed care.

Deja vu all over again

This latest plan was created because the House and Senate continue to have differing visions for Medicaid reform and is similar to the plan originally floated by Gov. Pat McCrory in April 2013.

In the interim though, there have been public hearings, a study committee, an “official” plan and at least five versions of the current bill.

“We have had a budget problem that over the last four years has cost us $2 billion,” said Hise. “If we put that off another six years to wait to where we can have a controlled system in place to allow a slower build up, that is at a huge cost to the taxpayers.”

But Republican House lawmakers, such as Health and Human Services Committee Co-chair Nelson Dollar, have pointed out that one of the biggest problems is with forecasting Medicaid spending. He has said on numerous occasions that Republicans have fixed many of the structural problems with the program since taking the majority in 2010.

Wednesday afternoon, Dollar would only comment that he was “pleased” the Senate had presented a plan.

“There have been those budgeting and forecasting problems, but the problems have been related to that, not to care delivery,” said Greg Griggs, head of the North Carolina Association of Family Physicians.

This plan “ignores 16 months of hard work that we’ve all done to develop a plan that works for taxpayers, works for our most vulnerable citizens and works for health care providers,” Griggs said.

McCrory spokesman Josh Ellis called the proposed reorganization “impractical,” saying it “undermines the progress that has been made during the past year and a half.”

“This legislative overreach also raises some serious constitutional issues and should not be raised in the closing days of the short session,” he said.

Additional reporting provided by Jasmin Singh.