By Richard Craver
The state House’s version of Medicaid reform is headed for a vote after getting today a recommendation from the second of two key committees.
Bill 372 features a provider-led format for addressing the risk involved in the $14 billion state Medicaid program. One of the four co-sponsors is Rep. Donny Lambeth, R-Forsyth.
The bill has been placed on the full House calendar for Tuesday.
Even if the bill is approved by the House, it likely faces a stiff challenge just to get heard in a Senate committee. Key Senate leaders are promoting a drastic program overhaul that features a prominent role for for-profit insurers.
The program covers about 1.9 million North Carolinians. It has had a nearly $2 billion financing gap since the start of the 2009-10 fiscal year.
Similar to the Health committee meeting of June 10, there was robust discussion, as well as notes of caution presented by legislators leery of a put-all-eggs-in-one-basket approach.
“It was much more supportive and understanding for need to transform Medicaid,” Lambeth said following the recommendation.
Medicaid reform arguably is the biggest sticking point between state Republican leaders and Gov. Pat McCrory. The governor declared from day one of his term that the program is broken, though some health-care advocates dispute that assessment.
The House reform legislation would attempt to “modernize and stabilize” the program through a “whole person” strategy of coordinating physical, behavioral, dental, pharmacy and long-term health services. That includes behavioral health MCOs, such as CenterPoint Human Services and Partners Behavioral Health Management, which serve the Triad and Northwest N.C.
The provider-led entities (PLE), such as health care systems, hospitals and physician groups, would take the risk of Medicaid enrollees’ use of services through a capitated, or fixed-fee per individual, payment format. By comparison, the current system is based primarily on a fee-for-service format.
The PLEs would cover at least 90 percent of Medicaid recipients, to be phased in over five years.
“The current system rewards volume – the more you do, the more you get paid,” Lambeth said. “The new system rewards quality and value.”
There have been several Medicaid reform bills submitted in the Senate this session. Although none have been acted upon, legislation from several of them is included in the Senate budget proposal that was approved today.
Lambeth said he has been working behind the scenes on what he believes is “transformational” legislation that would draw bipartisan support and keep Medicaid oversight within the N.C. Department of Health and Human Services.
The legislation borrows from a draft bill recommended in May by the N.C. Hospital Association that emphasizes improving quality care while ensuring budget and spending predictability.
Those are the common financial and operational threads that legislators, such as Lambeth, are trying to sew into a hybrid approach that has a role for PLEs, accountable care organizations (ACO) and for-profit insurers. The reform would occur over a five-year period.
Both Lambeth and Rep. Nelson Dollar, R-Wake, and a co-sponsor, tout the House bill as “building on North Carolina solutions for a North Carolina program within an existing provider network.”
“Our friends (in the Senate) are wanting to more too fast on reform,” Dollar said. “HMOs can start up more quickly and initially offer a lower bid.
“But after the initial contract, you have to be concerned” about for-profit groups pulling out.
Dollar cited as examples a for-profit group exiting Kentucky and for-profit groups in Florida having combined hundreds of millions of dollars in losses, and now requesting a 12 percent rate increase for fiscal 2015-16.
“You don’t want to be held hostage to anybody,” Dollar said. “We don’t want groups to put shareholders between the provider and the patient.”
Some House members questioned that 90 percent of PLE funding be dedicated to recipient services. They wonder if that is enough of a financial buffer to cover administrative and other expenses.
Lambeth said the PLEs would know their financial restrictions before applying capitated payments for physical health would begin within three years of PLEs getting federal Centers of Medicare and Medicaid Services approval. It would start within five years for behavioral health, long-term services, pharmacy and dental.
Senate leaders remain committed to establishing the Health Benefits Authority, an oversight board nominally within DHHS, which currently handles the state Medicaid program.
Supporters of the authority say Medicaid may have become too big for DHHS to handle efficiently. Many key Senate leaders are frustrated with DHHS’ inability to provide timely and dependable cost and budget projections.
The authority would be governed by a paid, seven member board of directors. It would feature experts in administration, insurance, actuarial science, economics, and law and policy.
Sen. Phil Berger, R-Rockingham, and president pro team, and Sen. Harry Brown, R-Onslow, majority leader, said the authority would take a major step toward overhauling the “chronically troubled and over-budget Medicaid program and lead the state toward a patient-focused, cost-minded vision for the program.”