The state House and Senate are moving closer to agreeing on a Medicaid plan that will require doctors and hospitals to put skin in the game when it comes to managing the state’s $13 billion Medicaid program.
Sen. Ralph Hise, the chamber’s Medicaid expert, said the Senate will introduce a plan Wednesday to reward providers for meeting patient health goals and penalize them financially for cost overruns. The House has been pushing a similar measure.
“The overall concept will be very similar,” said Hise, a Spruce Hill Republican.
Hise and his House counterpart, Rep. Nelson Dollar, said they hope to strike a deal before the session ends that will give legislators some certainty on the cost of a program that has routinely run hundreds of millions of dollars over budget.
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“These are issues that can be reasonably bridged,” said Dollar, a Cary Republican.
Medicaid management has been on the minds of legislators and Gov. Pat McCrory, who has called the program broken. Earlier this month, a News & Observer series, “Critical Condition,” showed that the program’s delivery of care ranks well in the Southeast but found management in disarray, with high vacancy rates and a growing reliance on contractors with no-bid contracts.
Both Hise and Dollar also said that the Department of Health and Human Resources sorely needs experienced Medicaid officials to manage a complicated program that provides care to 1.7 million North Carolinians: the blind, disabled, elderly and poor children and their parents.
Emails recently obtained by The News & Observer point to one reason for the vacancies. Micromanagement by Secretary Aldona Wos helped lead to the departure of Medicaid Director Carol Steckel, whose post then stayed vacant for seven months.
Meanwhile, the department recently doubled the value of its one-year contract with Alvarez & Marsal, a D.C.-area consulting firm, from $3.25 million to $6.8 million. The Alvarez & Marsal principals on the contract list no Medicaid experience on their resumes.
Waiting until 2020?
At the General Assembly, the House has embraced a model known as Accountable Care Organizations, or ACOs, 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. This proposal is strongly backed by the state’s major health care providers, including hospitals and doctors.
By 2020, the House proposal would make the providers take the risk 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 plan has few details but specifies such networks would be “provider-led” and be based on the Community Care of North Carolina networks now operating statewide. The proposal leaves it up to the state Department of Health and Human Services to fill in the details.
“What is most key for the House is to move forward with the reform,” Dollar said. “The House version fits with payment reform, a model where you pay for value, not volume of services.”
Hise said there are still significant differences: The Senate wants Medicaid split off into a separate department to make for accurate budgeting. And he thinks that the House is waiting too long to make the ACOs financially accountable.
“Waiting until 2020 is a long time,” Hise said.
‘At a loss’
Wos, appointed by McCrory, hired Steckel amid great fanfare in January 2013, saying how “pleased” she was with Steckel’s “energy, enthusiasm and considerable talent.” Steckel came to North Carolina with 27 years of Medicaid experience and was paid an annual salary of $210,000.
According to DHHS emails, seven months later Wos muzzled Steckel, saying she could not attend any meetings or give public speeches out of the presence of minders from the secretary’s office.
On Aug. 26, 2013, Steckel wrote a memo canceling all meetings and speeches if Wos’ top aides – chief of staff Mark Payne or senior adviser Joe Hauck – were not present. A vice president at the company owned by Wos’ husband, Hauck was working under a no-bid $310,000 annual contract. Neither Payne nor Hauck list any Medicaid experience on their resumes.
Steckel asked Hauck and Payne for instructions on how to proceed.
“I would appreciate the instructions as soon as possible because we are holding all requests” for speeches and meetings, Steckel wrote. “To be courteous to the people calling I’d like to be able to have (my assistant) follow the Secretary’s instructions so we do not have another case where I am saying something inappropriate.”
In a later email, Steckel wrote that she was perplexed by the secretary’s actions.
“I am at a loss as to what I haven’t done, what I should have done that we weren’t doing and how we could have been any further along than we are,” Steckel wrote to Hauck and and Payne. “I need to know what it is that she is seeking. What is the ‘product’? ”
Rick Brennan, who worked as Medicaid chief financial officer until May, said Wos hired Steckel to be the leader and spokeswoman for Medicaid reform but then ran her out of the department after the 2013 legislative session.
“One day, out of nowhere, the secretary let loose on Carol,” Brennan said in an interview. “She just jumped all over her. ... It just got worse and worse.”
Brennan described several of the weekly Medicaid update meetings called by Wos.
“If Carol tried answering a question, she was told to shut up,” he said. “Yet anyone else at the meeting could answer questions.”
Major decisions at the department boiled down to one thing, Brennan said: “Nobody was allowed to do anything without the permission of the secretary.”
Steckel, who left in September, referred all inquiries to DHHS. Wos was not available to be interviewed for this article, according to DHHS Marketing Director Aaron Mullins.