- Associated Press - Wednesday, July 16, 2014

RALEIGH, N.C. (AP) - Senate Republicans offered a Medicaid overhaul on Wednesday that’s more sweeping than a House plan because it would recruit private managed-care companies to coordinate patient services and shift North Carolina’s Medicaid agency to a new department.

The proposal unveiled in a Senate committee also would accelerate dramatically the reform process compared to the House timeline, which envisioned a majority of the Medicaid recipients treated under its model by mid-2020.

The Senate wants its new program up and running in July 2016 and all Medicaid enrollees covered in 2018 under health plans that would no longer receive conventional reimbursements from the state for each procedure or test performed.

Instead, managed-care organizations or hospital or doctor networks would receive a fixed amount of money from Medicaid for each patient they see. The groups would likely bid to serve patients in regions of the state.

Both House and Senate plans are based on a model designed to reduce Medicaid cost overruns by leaving the potential medical losses to the providers.

The House proposal, which is backed by Gov. Pat McCrory’s administration and state hospital and physician groups, would allow only provider-led networks. But it doesn’t go far enough and quickly enough to control costs and get a handle on annual Medicaid shortfalls, said Sen. Ralph Hise, R-Mitchell, a co-author of the Senate plan, which wasn’t voted on Wednesday but possibly Thursday.

Legislators and governors in recent years have been weighed down by annual Medicaid shortfalls reaching hundreds of millions of dollars. The state spends $3.5 billion annually to treat 1.7 million Medicaid recipients.

“The plans that are out there simply don’t do enough to control the cost growth and the out-of-control (Medicaid) spending that we have in state government,” Hise said.

While the House keeps the state Medicaid office within the Department of Health and Human Services, the Senate would move Medicaid to a new department led by a seven-member board, appointed by the governor and legislative leaders. The board would choose a state Medicaid director.

Services for the mentally ill, substance abusers and people with developmental disabilities are currently handled by separate public managed-care entities. Hise said he expected those entities would partner with networks or private managed-care companies to offer mental health and medical services together.

“You have got to have a whole person care if you’re ever going to get control of the costs and provide better health outcomes for the individual,” Hise told reporters.

Representatives of the North Carolina Medical Society and N.C. Hospital Association both objected to the Senate plan because private managed-care plans would enter the mix. Society CEO Bob Seligson said the proposal would “upend North Carolina’s Medicaid program” and “harm our state’s most vulnerable patients.”

The Senate plan “brings in Medicaid HMOs that are going to provide more regulatory and administrative burden on your health care providers,” said Gregory Griggs, executive vice president of the North Carolina Academy of Family Physicians.

DHHS and McCrory have pushed for overhauling Medicaid for more than a year. But Adam Sholar, representing McCrory’s Department of Health and Human Services, told the committee the agency is concerned about the Senate’s timeline and the “potential destabilizing effect” the proposal may have on mental health services.

McCrory spokesman Josh Ellis later also said in a release that the Medicaid reorganization “raises some serious constitutional issues and should not be raised in the closing days of the … session.”

Hise said the measure was modeled on Florida’s full-risk model approved by legislators there.

Jeff Myers, CEO of the Washington-based Medicaid Health Plans of America, called the complaints of North Carolina medical groups “more scaremongering than anything else.” He said 37 states have similar fixed-costs models for Medicaid spending, and that managed-care health plans meet quality standards for both patient care and administration.

“Ultimately, I think the Senate’s on the right path,” Myers said. But he acknowledged some states are moving away from provider-led networks that can’t accumulate the resources to take on the full risks of Medicaid patient costs.

Any bill that clears the Senate would return to the House. Rep. Nelson Dollar, R-Wake, the chief proponent of the House version, suggested differences could be worked out in a compromise committee. But, Dollar said, there “are some very different approaches and there are lots of questions obviously that need to be answered.”

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