- Associated Press - Sunday, June 14, 2015

RALEIGH, N.C. (AP) - It looks like North Carolina House and Senate Republicans are nearing the same impasse they reached a year ago over the best way to overhaul how the state Medicaid program pays to treat its 1.8 million patients.

As House leaders began running through committees last week their preferred Medicaid proposal - one very similar to what they voted for in 2014 - Senate budget-writers prepared this week to unveil a government spending plan expected to contain Medicaid reforms like those the chamber’s Republicans strongly backed last year.

And like last year, hospital and physician groups and Gov. Pat McCrory’s administration favor the House proposal, while insurance plans are aligned with the Senate. A lot is at stake, with more than $13 billion spent annually by the state and federal governments on the program serving mostly poor children, older adults and people with disabilities.

But it appears chances may be improved to reach an agreement before lawmakers adjourn this summer.

First, Senate Republicans have made it an official caucus position to get a Medicaid overhaul law completed in 2015.

“They do not want to leave Raleigh until we have Medicaid reform,” said Sen. Tom Apodaca, R-Henderson, chairman of the Senate Rules Committee. By preparing to incorporate their Medicaid overhaul within their budget proposal, senators may force House counterparts to negotiate the Medicaid payment overhaul within the year’s most important bill.

“Hopefully, we can get moving on it fairly quickly,” Apodaca said.

Rep. Nelson Dollar, R-Wake, a primary sponsor of the House Medicaid proposal, remains hopeful that a deal could be reached this year despite the differences. Informal talks have occurred in recent months.

“I believe that we will move forward with Medicaid reform,” Dollar said.

Both chambers agree on moving away from the traditional fee-for-service model, in which Medicaid pays for each procedure or office visit. Instead, medical organizations would receive flat monthly payments for each Medicaid patient served. These organizations would eat cost overruns but could keep what’s left over if costs are less than the amount received.

But the House plan essentially limits doctors, hospitals and other medical providers to forming these organizations. Senate Republicans insist that managed-care organizations and insurance companies be allowed to participate, too. Neither proposal tries to expand Medicaid enrollment through the 2010 federal health care law.

The House wants to get nearly all Medicaid patients covered under its new plan within five years. The Senate plan still envisions a more aggressive timeline, said Sen. Ralph Hise, R-Mitchell, a budget-writer on Medicaid matters. The chambers also have previously disagreed on whether the state Department of Health and Human Services should continue overseeing Medicaid.

Senate Republicans argue it makes sense to bring in insurance companies that already manage Medicaid expenses in other states, and they’re not persuaded “provider-led” entities alone can create enough cost savings.

“We think competition’s important in any kind of Medicaid reform,” said Sen. Harry Brown, R-Onslow, co-chairman of the Senate Appropriations Committee.

Retired hospital president Rep. Donny Lambeth, R-Forsyth, said there will be competition under the House plan, as networks bid to care for groups of at least 30,000 patients. Having medical providers lead the entities will emphasize quality service and patient health, he said.

“We don’t want an HMO between the doctor and the patient,” Dollar said.

Successful cost containment by Community Care of North Carolina - current provider networks where doctors are paid for Medicaid patient management and chronic illness control - reinforces the House position that physician-led networks can work. While Medicaid cost overruns were publicized in the past, House leaders say relatively flat claims growth shows the Senate’s more dramatic plan isn’t needed. McCrory’s veto power also could influence the final product.

Senate Republicans may benefit most from the lack of unity among House Republicans on their proposal compared to a year ago, when it passed the chamber unanimously. The division could help senators gain leverage.

Several Republicans on the House Health Committee debating the bill last week voted ‘no’ or criticized the measure. Some were worried handing responsibilities only to provider networks could be devastating if they fail.

“We are putting all of our eggs in one basket,” said Rep. Justin Burr, R-Stanly, who was a primary sponsor of the 2014 House bill. “There’s a place for managed care … there’s room for everyone to come to the table.”


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