Senate Set To Take Up Managed Care Medicaid Plan | Eastern North Carolina Now

    Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.

House remains committed to keeping fee-for-service delivery


    RALEIGH     Today's Senate calendar includes a measure revamping Medicaid from the current fee-for-service model to one paying providers a set per-member-per month fee, moving Medicaid from the Department of Health and Human Services to a new department, and allowing hospital- and physician-led accountable care organizations to bid against insurance-based managed care organizations for regional contracts. The health plans would pick up expenses exceeding budgets.

    The Senate Rules Committee Thursday rewrote House Bill 1181, including the managed care model, and passed it.

    The earlier version of H.B. 1181 that passed the House mirrors Gov. Pat McCrory's proposal for ACO provider-led plans. That bill contains far fewer details than the Senate's version.

    Florida Medicaid Director Justin Senior is not surprised that some North Carolina doctors and hospitals object to the Senate's Medicaid plan. The Sunshine State experienced provider pushback while implementing a similar plan that this year is expected to save taxpayers $600 million.

    "Change is difficult for providers to get used to," Senior said. "They have a certain way of doing business in terms of the way that they bill, and how they provide services. It is set up in accordance with the incentive structure of the fee-for-service system, and they're comfortable with it."

    Fee-for-service systems pay health providers for every patient visit and service delivered. North Carolina taxpayers footed $2 billion in budget overruns the past four years under that current model.

    It is unclear whether either the Senate or the House plan will be enacted into law in the waning days of the legislative short session. Sen. Ralph Hise, R-Mitchell, said budget negotiators have discussed the Senate plan as part of a budget compromise, and he is guardedly optimistic that there would be time to pass the bill before the General Assembly adjourns.

    Like other critics of the Senate's plan, Rep. Marilyn Avila, R-Wake, a primary sponsor of the House plan, says the Senate's timetable is impractical. She appeared more skeptical that Medicaid reform is imminent.

    "Everybody's patience is at the breaking point in terms of being here," Avila said. "I still think we need to sit down and go item by item" over the plans to determine what is best for the state, taxpayers, and Medicaid recipients. She said she would not be averse to extending the session to reach a decision on Medicaid reform.

    The Senate plan draws heavily from Florida's reform model, which started as a five-county pilot project in 2006, and is now in its second year of statewide rollout. Senior said 54 of Florida's 67 counties are now on board; the rest will enroll Aug. 1.

    This year's results, compared to a benchmark year, show Florida saved about 5.1 percent on its per member-per month payments, or "about $600 million," Senior said.

    Florida allows provider-led and managed care entities to compete for five-year contracts in a defined region.

    Providers rendered price concessions, and "significantly enhanced benefit packages," Senior said. "They started offering services that had never been offered before in the former Medicaid program."

    That was particularly true for adult services such as dental, expanded outpatient benefits, and expanded physician services.

    "Overall, the plans have committed to increasing provider reimbursement rates for physicians significantly after two full years of operation," Senior said. That is the opposite of what critics of the North Carolina Senate plan have said would happen to provider rates under managed care.

    In an environment where patients can choose among competing options, plans must attract good doctors and nurses, offer innovative service packages, and do quality work. Plans that fail to meet health quality outcomes and patient satisfaction metrics could be assessed damages or lose their contracts.

    Senior said Florida encountered two types of physicians when moving to competitive bidding and fully capitated plans.

    "There were some providers who really pushed back hard, that were ambivalent about the new system, didn't like it," he said.

    A second group of practices "have embraced the system, [and] have done very well," Senior said. Pediatric Associates of Broward County is just one example of a practice that has done so well that it is expected to expand statewide.

    Gregory Griggs, executive vice president of North Carolina Academy of Family Physicians, is among critics of the Senate plan. His group backs the House version.

    "Any cost savings they achieve are going to be taken out of state and not reinvested in North Carolina," he said of managed care organizations. "If you look at the quality metrics that other states have put forward, the Medicaid HMOs fall well behind what Community Care of North Carolina does."

    But critics of the nonprofit CCNC, which administers Medicaid for North Carolina under contract, say federal data demonstrate that CCNC does more poorly than managed care on a number of measures, and Kaiser Family Foundation reporting lists North Carolina's Medicaid costs under CCNC among the highest in the nation.

    Some states, including Louisiana and Georgia, embraced the CCNC model but shelved it after failing to achieve savings or improved health outcomes.

    Jeff Myers, president and CEO of Washington, D.C.-based Medicaid Health Plans of America, said studies "clearly show" health plans under managed care organizations "are generally more robust" than bronze plans under the Affordable Care Act.

    Managed care entities "have a very significant program integrity model, which other types of models like fee for service or ACOs have less of, which means that the money that is being spent [by MCOs] is more likely to be spent in an appropriate fashion," Myers said.

    He also argues that critics of managed care are wrong to portray managed care entities as greedy, out-of-state corporations seeking to siphon profits from North Carolina.

    "I can't think of a state that has a significant population that is covered by a capitated risk plan where our members don't have a significant investment in that state of people that have jobs paying taxes, and facilities where those individuals work," Myers said. Large managed care plans typically employ between 500 and 700 people in a state.

    "Even nonprofits still have to derive some form of profit to continue to run. Doctors have to do that, too, or they would close up their facilities. Hospitals have to do it or they would close their facilities," Myers said. "Everyone is making a margin because that is how business works, and that's the way our economy is designed."

    Although critics rail against corporate managed care plans, the state is not powerless to prevent or punish abuses, including the authority to terminate contracts.

    Many states impose medical loss ratios that restrict how much money an MCO can receive in administrative costs. North Carolina was moving in that direction under a managed care plan former Medicaid Director Carol Steckel was helping to build before she left the McCrory administration.

    "No state just tells the insurance company 'We're going to let you cover our Medicaid beneficiaries' without dictating to them a lot of the structure of how that network should work," Myers said.
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