Big Problems: Governor McCrory’s plan to run NC Medicaid like a business means some health care providers may go out of business

Pat McCrory 4On July 1, NC Medicaid moved the way it pays doctors and hospitals to care for Medicaid patients to a new system.  Over the last three weeks, many health care practices have experienced major problems with not getting paid.  I have heard of medical practices who haven’t been paid for a month of claims, who have had to take out $400,000 short term loans to keep operating and who, at this point, are literally about to go out of business.  Clearly Governor Pat McCrory and his Department of Health and Human Services Secretary Aldona Wos are failing the first test of their plans to make big changes in our Medicaid system.

North Carolina’s Medicaid program – health and elder care coverage for low income people – has been tops on Governor McCrory’s list for changing what he has repeatedly called a “broken system” ever since he came into office.  This is the same Medicaid system that US Sen. Richard Burr presented a national award to earlier this year for NC’s outstanding Medicaid “quality and efficiency” while posting the lowest cost growth in the nation.

Nevertheless McCrory used the “broken system” excuse to turn down billions of dollars in federal money available to expand Medicaid to adults in low-income working families under the Affordable Care Act.  McCrory and other leaders also trumpeted again and again the fact that the General Assembly and outgoing Democratic Governor Perdue last year had not projected the Medicaid budget accurately enough and so had to make up the difference with additional money.  Blaming the previous administration for perceived current problems became an article of faith.  However, after a few months in office, that narrative began to lose steam for Governor McCrory.  A closer look at NC Medicaid over the last few years shows low cost growth and budget increases that, given the recession and NC’s growing population, should have been entirely predictable.  And once you’ve been in office a while its hard to blame the previous occupants for everything.

Despite all the rhetoric about a “broken system” and the supposed failure of the Perdue administration, an area where McCrory and DHHS Secretary Aldona Wos were apparently not going to take a chance was NC Medicaid’s transition to a new computer system for paying health claims to doctors and hospitals across the state.  The change to the new system was started before McCrory’s election, but not to take place until this July – six months after he was in office.

Significantly, this change is the first big one in Medicaid where the Governor can’t conveniently blame his Democratic predecessor, Governor Perdue, for any actual or perceived failures.  McCrory has had six months to get the computer system right, change it, or put the changeover on hold until he can fix it.  He created a new “Chief Information Officer” position to oversee the change for the Department of Health and Human Services and promptly hired Joseph Cooper, a private sector technology executive from the Charlotte and Raleigh banking world, at $175,000 a year starting salary.  McCrory and Wos then commissioned what they said was an “independent” IT consultant, Susan Young, who issued a February report on the progress in the system.  The resulting press release from the McCrory administration trumpeted “Replacement Medicaid Computer System on Track, Outside Consultant Tells DHHS.”  Not mentioned was that Susan Young had already been working with Medicaid for a while and been identified the month before in other media reports as the Medicaid project’s “risk management adviser.”  Nevertheless, Chief Information Officer Cooper was soon quoted in the media saying, “We are prepared” for the transition and DHHS was reported as saying that outside consultants and reviewers have given the system a green light for several months.  Finally, Cooper and Wos wrote op-eds for papers boasting that, “When it goes live, our NCTracks [Medicaid payment system] will be a national leader.”

The result, according to the informal reports and discussions I have been privy to with providers is a real mess.  While no one expected a major transition of this size to go completely smoothly, the idea that medical practices are having to take out nearly half million dollar loans just to keep operating is ridiculous.  I am hearing more and more stories every day of major problems affecting the ability of practices to stay in business.  The News and Observer story over the weekend on this should have more people talking, if only for the email uncovered by reporter Lynn Bonner:  56 to 60 percent of calls for help to DHHS from providers are abandoned, where providers get sick of waiting for so long they simply hang up.  That’s perhaps the best indicator of a system in disarray when the agency can’t even talk to the providers having the problems.

Even if the McCrory administration takes responsibility for this disaster, their actions don’t bode well for their stated larger goal:  Take NC’s award winning Medicaid program completely private with changes to the system that will dwarf the transition in how medical claims are paid.  Our lowest-income and most vulnerable North Carolinians deserve better.



  1. Greg

    July 23, 2013 at 6:01 pm

    This entire system was not properly vetted before it went live. Our office has not been paid since Jun 28 as many other offices have not either. This is a complete disgrace and someone needs to be accountable. These are tax payers dollars earmarked for the underserved that are being held hostage. Jobs will be lost and patients will be left without providers. Nice work.

  2. Alex

    July 23, 2013 at 6:43 pm

    The big problem with Medicaid expansion is that the federal dollars to be given to the states have to be borrowed. The federal government can’t even meet the current liabilities associated with the entitlement programs, much less cover a huge expansion of Medicaid. They are promising something they don’t even have judging by the fact that we are spending $50 BILLION more each month than we take in. If we weren’t printing phony money to cover these debts, the federal government would be just like Detroit and filing for bankruptcy. Wake up folks, we’re broke and no one wants to admit it.

  3. ML

    July 23, 2013 at 7:17 pm

    We lost funding for these programs when we cut taxes for 30 years because that was supposed to bring prosperity and more revenue for the government. Turns out voodoo economics costs more than it’s worth.

    Granted the programs are more expensive now (as is defense, the war on drugs, etc…) but that was predictable as was the point of diminishing returns when we continually lower taxes. There is a point, much higher than our current level, that the job creators are no longer incentivized to invest or provide the benefits and wages for their employees. A principal tenant of both supply-side economics and free markets is the implicit social contract in which the job creators in their infinite wisdom would bestow (trickle down) the necessities required by the social contract.

    As a result of their failure the programs continue to provide for more people with less and less money to fund them.

  4. HTG

    July 23, 2013 at 7:37 pm

    Alex, you speak of “phony money” but I wonder when or if you have ever not had phony money. Can you describe “real” money and how it differs from phony money? I’m just curious because people that speak so confidently of such things seldom, in my experience, have any idea how ignorant they sound. Are you suggesting a return to gold or perhaps an exchange of fine diamonds is your preferred exchange medium.

  5. Keenen ALtic

    July 23, 2013 at 11:52 pm

    Capitalism is all about debt and being broke. You can stop printing money but the working class only has money to spend when profit is converted to payroll. As long as the capitalist class spends on union busting people will keep borrowing money from banks which is what Banks use to get the Fed to print money.

  6. tmedlin

    July 24, 2013 at 9:57 am

    This article is full of rumor and short on facts – for example, “hearing” about companies that haven’t been paid – how about an example, someone who will speak on the record? Medicaid has ALWAYS been late to pay, based on my experience.
    There’s not one single business quoted in the article. Typical BS.

  7. Adam Searing

    July 24, 2013 at 10:32 am

    We are speaking with providers who are willing to talk to the press right now and add their voices to those already quoted in the News and Observer story I reference above.

  8. Adam Searing

    July 24, 2013 at 10:33 am

    And, of course, there is the first commenter who is a provider too!

  9. ncprovider

    July 24, 2013 at 10:34 am

    Oh I think there are dozens of providers across the state who would love to speak on the record about not getting paid. I’ve been working in this system for 15 years, and Medicaid has never been this bad or this late to pay. What frustrates most of us is that when you call CSC and try to get answers no one has a clue. The level of incompetence is mind boggling, and it should not be tolerated.

  10. ncprovider

    July 24, 2013 at 10:35 am

    I forgot to say thank you Adam for covering this story!

  11. J

    July 24, 2013 at 4:55 pm

    The “NCTracks” project began five years ago and was supposed to launch two years ago, long before this administration took office and announced their Medicaid reform plans.

    How is the “first test of their plan,” exactly?

  12. Doug

    July 24, 2013 at 8:41 pm

    I guess these providers need to do like all businesses have to do these days. Become more efficient and effective to compete. This just proves that health care has become a quasi-governmental entity. Expected to just exist off the OPM teat and not held to being competitive.

  13. PD

    July 25, 2013 at 9:49 am

    I am in a provider’s office. There are MAJOR issues. I understand that HP Enterprise had the contract until December 2013. I wish that there had been more thought regarding the magnitude of the “launch”. I do not know all the details but it looks like it would have been better to add a group of providers at a time on NC Tracks. Such as the dental offices, then the NC Healthchoice providers, and so on until all of the providers were on board. The “bugs” could have been worked out in a more timely fashion. The CSC provider representatives, NC Medicaid providers, and all the entities that are attached to NC Tracks are overwhelmed to say the least. I have taken all the training provided, seen the webinars, and went to the seminars. On the outside it looks very good. It doesn’t look to be difficult. HOWEVER, when you try to apply what you have learned it doesn’t work. When you call CSC; IF you get thru; and after you have waited a LONG time (my longest wait time has been 92 minutes – my shortest time has been 48 minutes to date) you get no satisfaction. You are limited to 3 questions. Then you start over. I would not mind the LONG wait if I received CORRECT information. I have 9 expedited items that have been sent to the “supervisor” dating back to 7-3-13. Numerous questions sent thru the “contact us”. To date none have been answered. From something as simple as how do you delete a message? I am in a specialty area which also had problems at HP Enterprise. I need specific codes. No one seems to be able to help. I have requested a site visit. I understand from my meeting at Charlotte on the 18th. There are several hundreds of providers that have requested site visits. I understand they are on the road, but someone needs to at least be scheduling visits. I don’t have a problem with being “lumped” into like providers and have a session specific to our needs. In fact, I have proposed to my rep that my clinic, my sister clinics and my corporate office would like to all meet together. I know that they are working on everything. It was demonstrated in the meeting that I attended that EVERYONE is trying BUT there is so much that no one can see the forest for all the trees. I have tried to submit the same claim over and over again to no avail. Each time I call I get a different incorrect answer. I am trying to be patient, but we are getting more and more behind. When we finally get a claim to go thru and then send them all at once, the system may not be able to handle it. This has been a long time in the making but I think it would have been better to change in smaller groups and not everyone all at once. Again, I do not know all the details behind “why” that didn’t occur. I do thank you for letting me “vent”.

  14. Doug

    July 25, 2013 at 11:39 pm

    It is only going to get worse. This Obamacare thing is going to bring our country down to second world status behind Europe. The only result as with ALL government programs….a poor quality product, less of it, and a higher price.

  15. smallprovider

    July 26, 2013 at 11:44 am

    we had a bump last week but are fine now. we are a small provider and took the time to register and follow all steps as directed, yes we have had long holds but EVERYONE we have talked to has been pleasant, we prepared for delays in payment and prepared our staff months ago. Im tired of listening to you all. Most payers are on a 30 day payment meaning most companies have to float a minumum of 30-45 days. Private insurance companies take months to pay. Medicaid is generally weekly. come on people, if you planned and prepared better maybe it wouldnt be such a mess

  16. Greg

    July 26, 2013 at 7:32 pm

    Ok small provider. That is probably all you are. We have never had to wait for payment for this long Sure some insurance companies are 30 days out, but that’s not the majority of your income and you have other sources trickling in. We did prepare not to be paid for a little while the problem is they promised to have it fixed by now. And sure they are pleasant they are getting paid! It’s obvious this was not ready for the masses and its someone’s fault. So don’t complain when you pay more in taxes when kids go the ER for a toothache and charge up a $1500 bill they can’t pay instead of a $ 50 visit to a dentist. I would like to see how other businesses would deal with something like this. One of thier main sources of income just not paying for services for over thirty days.

  17. smallprovider

    July 27, 2013 at 3:24 pm

    well Greg unless you are pharmacy you werent supposed to get paid until last week, so thats 2 weeks behind schedule yea a pain but not a complete disgrace as you stated, do we still have open tickets? yes. Do we have to wait for an hour while on hold? Yes we do but the awesome part is we know immediately if we will get paid or not and if denied you get a chance to fix it before the cutoff. The old system you had to wait until you received the EOB and by the way was only available by mail until last year so your delay in payments could be 2-4 weeks depending on if there was a skip in the checkwrite.

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