Commentary

Medicaid reform bill will not deliver on quality or predictability

Last week the Senate released its latest version of Medicaid reform calling it a compromise measure with the House. There are some changes to the Senate’s original proposal.

Under the amended plan a new Department of Medicaid is created but it remains within the Governor’s purview. It also allows for regional provider led entities to compete for Medicaid contracts with statewide managed care companies. For the most part, however, the bill is a radical revamping of Medicaid. It is difficult to see how adding all of this complexity will increase predictability. Instead, this restructuring creates a system with many moving parts that will require a new oversight regime. In the end patients are likely to get pinched between gaps in this structure and the state will spend time and money tracking problems and pursuing legal claims against private insurance companies.

Due to consolidations in the industry there are not many insurance companies that will bid to control Medicaid delivery in the state. Companies like Amerigroup and Centene and United HealthCare will likely get contracts under the Senate plan. North Carolina will get glittery promises and great deals in the first year. Then the problems will start.

Whether it’s discriminating against pregnant women, or improperly denying speech-therapy services for children, or denying patients timely access to critical medical services,  or delaying payments to doctors and hospitals, or pulling out of a state before completion of a contract, private managed care companies introduce a  great deal of uncertainty.

Although the Senate allows regional provider led entities to form, these organizations have major disadvantages when trying to compete with large corporations. The provider groups, for example, must meet the solvency requirements of a private insurance company. They must also move within a year to take on full risk. That means if they give too much care at too much cost the providers are stuck. They only get the amount of money they originally budgeted. This is not a huge problem for an insurance company with billions in revenue. It is more difficult for a small collection of rural clinics and hospitals. Also, if a big insurer is losing money it can pull out of the state never to return. Not so with a doctor’s office.

The Senate persists in wanting to end contracts with Community Care of North Carolina, our state’s Medicaid medical home model that has won national recognition.

It is difficult to see what problem the Senate hopes to solve by injecting so much complexity and uncertainty into the system. Trying to negotiate with large insurance companies and regional provider entities will introduce opportunities for fraud, waste, and abuse. It will also mean a major loss of state control over our Medicaid program.

The biggest beef legislators have had with Medicaid is the agency’s difficulty in projecting costs. Now that private insurance companies are having to deal with constant policy change, and now that they can’t cherry pick customers, we are seeing that they also have trouble predicting costs. Tearing down our entire Medicaid structure to get more reliable budget numbers seems like a bit much. We could, after all, move to a full-risk capitation model using provider agreements and CCNC.

Ultimately, the most short-sighted part of both the House and Senate proposals is that neither includes expanding Medicaid eligibility. Most states across the country are now expanding and reforming Medicaid at the same time. This allows governors to negotiate more conservative reform deals with the federal government. If we are going to ask patients and providers to undergo a painful reform process we could at least cover more people.

2 Comments


  1. emma

    August 10, 2015 at 10:46 pm

    Introducing opportunities for waste, fraud and abuse appears to be a feature, not a problem.

  2. LayintheSmakDown

    August 11, 2015 at 1:25 pm

    So Emma, you mean business as usual then. Those opportunities are already huge in the system.

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