By Dan Way
Carolina Journal Online
North Carolina lawmakers grappling with Medicaid reform should combine elements of competing proposals in the state House and Senate to give patients more choices while remaining accountable to taxpayers, a panel of experts at an April 13 briefing for policy makers and industry officials said.
“Don’t think you have to link Medicaid reform with Medicaid expansion [under the Affordable Care Act]. Medicaid expansion is fraught with its own problems,” said Christie Herrera, a health policy expert at the Florida-based Foundation for Government Accountability, a think tank studying health care issues.
“If the legislature does not want to do expansion, that does not diminish the need to reform Medicaid because the cost growth and the quality of the program is the issue” that must be addressed immediately, said Alan Levine, CEO of Mountain States Health Alliance, a 14-hospital system in northeast Tennessee.
“It’s the worst thing to do an expansion when you have a program that’s already a runaway train in terms of costs,” said Levine, who devised Medicaid reform plans in Florida and Louisiana.
The John Locke Foundation sponsored the reform panel discussing Medicaid, the government-run health insurance program for the poor and disabled, at which Herrera, Levine, and Kansas Lt. Gov. Jeff Colyer spoke to legislators, insurance company officials, and health care providers.
Florida, Kansas, and Louisiana have added elements of competition to their Medicaid systems, saving hundreds of millions of dollars. None has expanded Medicaid under Obamacare.
North Carolina reform has stalled because the governor and members of the two legislative chambers cannot agree on a model for delivering services.
The North Carolina House and the McCrory administration support an Accountable Care Organization model, placing hospital- and physician-driven networks in charge of Medicaid.
The Senate prefers Managed Care Organizations generally run by large insurance companies, with hospital-led ACOs and doctor-created networks as part of the competitive mix. The Senate also has called for Medicaid to be pulled from the state Department of Health and Human Services, and placed under an independent, appointed authority.
“We had the same growing pains in Kansas” while crafting KanCare, said Colyer, a pediatric plastic surgeon, and former Kansas legislator. KanCare is expected to save taxpayers $1 billion over several years even though the state’s Medicaid population is about one-quarter the size of North Carolina’s.
“Try to think about it as an entire state, and an entire ecosystem, and then if an ACO wants to compete against MCOs, then you can do something. Don’t let them carve out pieces of all the best parts” for one type of system, Colyer said.
Levine agreed that competition should be part of any reform Florida offers up to 14 plan options to Medicaid recipients, and Louisiana chose five plan administrators from among 14 bidders. Both states have saved hundreds of millions of dollars while expanding patient choice.
The cost savings prompted the federal government to add $350 million annually to a state low-income program for charity and uninsured care in hospitals that offered a lot of services for the poor, Levine said.
He said ACOs and MCOs should operate on a level playing field and given “the opportunity to prove if they can do it. If they can’t, the system will evolve, the market will work,” and those not able to meet financial and healthy outcomes goals would be weeded out.
However, he opposes the Senate pitch for an independent Medicaid authority.
“I do think that creating a separate organization creates more bureaucracy. You want the governor to be held accountable for managing the program through the person that he or she appoints,” Levine said.
“Kansas had problems with its health policy authority. In fact one of the first things Gov. [Sam] Brownback did after taking office [in 2011] was to dismantle the health policy authority because it had ran amuck,” Herrera said. Oklahoma’s Medicaid authorityalso “has its share of problems.”
“North Carolina, like many states, can’t afford to wait to reform Medicaid,” Herrera said. “In the last decade your Medicaid spending has nearly doubled,” enrollment is growing four times faster than the population, and North Carolina spends more on Medicaid than any other state in the region and the national average.
“You spend 50 percent more than Florida spends on Medicaid … but your value for your dollar really isn’t that great,” Herrera said, noting that more than half of the health outcomes North Carolina Medicaid tracks have been declining since 2008.
“When you unleash the power of the private sector, you are able to create Medicaid plans that tailor themselves not to the needs of the bureaucrats, but to the needs of the Medicaid patients themselves,” Herrera said.
Aside from MCOs and ACOs, Florida has specialty plans for foster care, HIV/AIDS, and severe mental health needs.
“The more Medicaid plans that you have in your reform, the more you have leverage over them. When you have fewer plans, the more they have leverage over you as the lawmaker,” Herrera said.
She also encouraged lawmakers to weed out enrollment fraud aggressively, noting it costs taxpayers millions of dollars while depriving eligible recipients of services.
Kansas had a $500 million deficit in 2010, had raised taxes and cut its budget, with a Medicaid program growing by nearly 10 percent a year, Colyer said. The legislature then created KanCare.
KanCare’s three insurer-led programs were not allowed to cut provider rates, Medicaid recipients, or level of services, had to contain costs, and focus on improving outcomes for the most costly patients, he said.
In North Carolina, hospitals, physicians, and professional organizations adamantly oppose MCOs. Gov. Pat McCrory and Department of Health and Human Services Secretary Aldona Wos want to let providers create their own networks under the ACO model.
Conversely, in Kansas, hospitals and doctors supported the coordinated care reforms. In Florida, the hospitals were on board with change, but doctors took longer to convince for fear their rates would be cut.
Ironically, Levine said, the managed Medicaid programs were able to pay higher rates than ACO models, and participating doctors could negotiate rates rather than the government-set rates of ACOs.
“Over time the hospital provider networks found they couldn’t achieve the same savings as the MCOs,” so they developed relationships to split services, Levine said.
North Carolina has great hospitals, “but just because you’re a great hospital doesn’t mean you’re a great insurance company. You have to invest a lot of capital and a lot of human resources into creating something that the market has already created” at a cost of billions of dollars, Levine said.
“I promise you,” he said, “good providers, good hospitals, and doctors that work together with the payers, they find ways to be very successful in that model.”