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NC legislators battle over plans to trim Medicaid spending

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  • How Medicaid could change

    The McCrory administration and Republicans in the House and Senate have gone a long way to bridge major disagreements on changing the Medicaid program. Still, the differing House and Senate plans are just sketches with instructions for more details to come.

    • McCrory’s state Department of Health and Human Services is supporting a House bill that would have providers take on responsibility for Medicaid cost overruns by 2020. The bill leaves it to DHHS to work out the details.

    • Senate leaders want providers to take full responsibility for Medicaid costs before 2020, though they have not specified a timetable. The Senate would not require the Medicaid health care networks to be based on existing regional networks run by Community Care of North Carolina; the managed-care groups could be led by providers or insurance companies. Senate Republicans want to separate the state Medicaid office from DHHS and want a new agency to set up the managed-care system.


  • Managed care elsewhere

    Managed care and Medicaid haven’t always mixed well.

    Oklahoma adopted managed care in the late 1990s as a way to control costs. The state had intended to have Medicaid managed care statewide, but ended up establishing it in only three urban hubs. In rural areas, the state established a Medicaid system similar to Community Care of North Carolina.

    Managed care worked well at first, and in 1997, the state expanded coverage, said Mike Fogarty, the retired chief of the Oklahoma Health Care Authority, the state office that oversees Medicaid.

    In 1999, the managed care organizations started enrolling elderly and disabled Medicaid recipients, a group that requires more expensive care.

    One of the three companies operating in the state dropped out in 2002, leaving only two – the minimum required – operating in each urban area. The remaining companies asked for rate increases of 18 percent for 2004.

    Oklahoma ended up dropping managed care and expanding the CCNC-type operations to its urban areas.

    Georgia has a managed-care system for Medicaid and has some of the lowest Medicaid costs in the country. Georgia rejected a push in 2012 to move to a system similar to CCNC.

    As Georgia pondered Medicaid changes, the Georgia Hospital Association did an analysis showing that payments to the managed-care companies grew between 2007 and 2011, while the companies’ payments for medical care dropped.

    The commercial managed-care organizations also fell short of health care targets Georgia set in areas such as children’s routine doctor visits, adults’ access to preventive health services, childhood lead screenings and immunizations, according to a report by the Georgia Department of Community Health.



When Gov. Pat McCrory and his health and human services team first announced their planned Medicaid overhaul last year, they described the beginnings of a sweeping managed-care plan. But after months of resistance from doctors, hospitals and the rest of the state’s health care industry, the administration decided to go in another direction.

Hugh Tilson, executive vice president at the N.C Hospital Association, said the group told state administrators it was absolutely opposed to managed care for Medicaid. Managed-care companies would take a percentage off the top for administration, profit and marketing, he said.

“That’s money that’s not available to pay for care for people that really need it,” Tilson said.

Health care providers in the state have embraced arrangements called Accountable Care Organizations, which would reward doctors and hospitals in the provider-run networks for meeting patient health goals while saving money. The organizations would pay the price if they missed targets.

But the decision doesn’t rest with them, or with McCrory. Legislators get the final call, and they’ve been pushing different plans.

By 2020, a House proposal would make the providers responsible for all Medicaid overruns for care of the patients they enroll. It would gradually put much more responsibility on providers for controlling costs, and it’s a change that the McCrory administration now supports. Hospitals and doctors are going along with it too, but they’re nervous.

The House specifies such networks would be “provider-led” and be based on the Community Care of North Carolina networks now operating statewide. Details of the House plan are sketchy, and the proposal leaves it up to the state Department of Health and Human Services to fill in the details.

Senate leaders have made it clear that the networks should oversee all types of care, including physical, mental, dental, and long-term care. And Senate leaders say it’s important to have a new entity separate from DHHS set up the new system, which could include private managed-care companies.

North Carolina doctors dread the idea of commercial managed care taking over Medicaid.

Dr. William Dennis, president of the N.C. Academy of Family Physicians, worries that doctors will no longer see Medicaid patients if insurance companies reduce payments to providers.

“The Academy of Family Physicians and me personally just don’t think that’s the way to go,” he said. To make a profit, he said, companies cut services, require doctors to get permission for more services “and make it generally more difficult to take care of Medicaid patients.”

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