RALEIGH — The state’s Medicaid program is on pace to come in under budget for the third consecutive fiscal year, state health officials told legislators Tuesday.
Trey Sutten, the finance director for the state Medicaid program, said the program was $181 million, or 9.3 percent, under budget through Dec. 31.
Medicaid covers about 1.9 million North Carolina residents and is a $14 billion a year program.
Sutten said there are three factors for the current budget status: lower service consumption by beneficiaries; flat enrollment levels being below budget projections; and lower costs driven by changes in population profile, clinical policy and legislation.
For example, the state Medicaid program added 350,000 North Carolinians from fiscal years 2010-11 to 2014-15, but just 20,000 through the first half of fiscal 2015-16.
“Year-to-date activity suggests that Medicaid will finish the year under budget,” Sutten said, although he cautioned that the division is working on the final 2015-16 estimate.
Sutten said a decline in the use of emergency departments — typically the highest cost of care — by Medicaid beneficiaries played a big role in the savings. Sutten said the N.C. Department of Health and Human Services is better able to track usage trends through the controversial NCTracks information-technology system.
An inability to provide timely and reliable financial data and forecasts, along with millions of dollars spent on contractors for operational functions with mixed results, resulted in bipartisan criticism of DHHS and former health Secretary Aldona Wos
Legislators from both parties expressed a comfort level with the budget projections.
“We’re getting much better numbers, in a timely fashion, that we believe are sustainable,” said Sen. Tommy Tucker, R-Union. “There’s not a honeymoon with the new secretary (Rick Brajer) because he has received his share of criticism since taking over” in August. “But he has put things into motion that is showing progress.”
Sen. Floyd McKissick Jr., D-Durham, said the proof will come if the DHHS does not report a budget shortfall.
“We’re having better communication between staff of Office of Management and Budget, legislative staff and DHHS,” McKissick said. “To the point they are not operating in different silos has been positive for the budget process.”
Senate Republican leaders pushed for Medicaid reform in part because they said that having a capitated system, where a flat fee is paid to cover all care services for most recipients, will provide “better budget predictability and sustainability.”
The current system operates on a fee-for-service format.
Dave Richard, deputy secretary for N.C. Division of Medical Assistance, said that 203,000 potential Medicaid beneficiaries have been identified through the federal health exchange marketplace since July 1, 2013.
Federal regulations require that Medicaid applicants be covered by a state program until proven ineligible, known as auto extensions. Of that number, just 23,683 qualified for Medicaid coverage.
Richard said that a new auto-extension policy goes into effect March 1 that is expected to accelerate the review process and to help relieve application backlogs at the county level.
Brajer stressed that the DHHS is “absolutely on track” for meeting a March 1 deadline for submitting the Medicaid reform report.
Brajer also said that the DHHS is on pace for preparing the draft waiver request with the U.S. Centers for Medicare and Medicaid Services by June 1. The reform plan coordinates Medicaid’s physical, behavioral, dental, pharmacy and long-term health services.
The goal is having reform in place within three to four years, but there is little clarity on how long it will take to gain federal approval that could be tied to expanding the state’s Medicaid program for about 500,000 North Carolinians.
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