Archives

Commentary

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.

News

The Senate’s budget proposal for the next two years had some significant health policy changes packed into it, namely a proposal to peel Medicaid oversight away from the N.C. Department of Health and Human Services and open the door for managed-care management of the $14 billion program.

House and Senate Republicans have spent the last few years debating what to do with Medicaid and how to address routine budget overruns from the federally-mandated program that provides health care coverage for low-income, seniors, the disabled children and some of their parents and the disabled.

House members favor keeping Medicaid within DHHS, and phasing in changes that would open up the Medicaid program to management from non-profit groups (called ACOs, or accountable care organizations).

Sen. Ralph Hise, the Republican senator from Spruce Pine who has long pushed for a managed-care solution to Medicaid, said that beginning the Medicaid reform process and moving Medicaid administration into a stand-alone division would allow the legislature to better predict and cap costs for what is the state’s largest program. (Scroll down to watch video of Hise talking about the Senate budget proposal.)

The Senate proposal does have room for ACOs, with options to have managed-care companies offer state-wide coverage while also having six regional divisions that will have slots for ACOs to work, Hise said.

Any changes to the state Medicaid program will need federal approval as well.

The Senate budget, which is expected on the floor for a vote tomorrow, would also cut ties with Community Care of North Carolina, a provider-led network that had been credited with keeping Medicaid costs down by closely managing patient cases, and pairing high-risk patients with primary care physicians. The contract with the state would end by Jan. 1. The cut will amount to a $32 million cut in the 2015-16 budget year, and savings of $65 million in the second year.

There were plenty of other note-worthy details in the budget proposal, with some re-investments in some areas of the budget, and cuts in the others. To read the 504-page budget, click here. The accompanying money report is herehere.

Among the proposed changes were proposals to:

  • Eliminate 520 slots in the state’s pre-kindergarten program, which currently offers early education offerings to 28,700 low-income children.
  • Get rid of the state’s “certificate of need” process by 2019, in which hospitals and medical centers need to make a case to state regulators for adding surgical or other specialized medical offerings, in favor of a more free-market approach that’s been a cause long championed by conservative groups in the state.
  • Extend the foster care age to 21, offering more help for children instead of cutting them off from state services at age 18.
  • Shut down the Wright School, a part-time residential facility in Durham County that provides inpatient help for children with severe disabilities and behavioral issues.
  • Get rid of the Office of Minority Health in DHHS (cut of $3.1 million). Senate Republican leaders said Monday the elimination would allow more money to flow through to actual services that affect minority populations including teen pregnancy and sickle cell programs, but Democrats argued an office dedicated to looking at overall health disparities between racial groups was important.

N.C. Health News has a great rundown as well about what’s in (and what’s not in) the budget. You can read that here.

 

YouTube Preview Image
News
UNC Board of Governors Chair John Fennebresque at the Feb. 2015 meeting. (Photo taken by Sarah Ovaska)

UNC Board of Governors Chair John Fennebresque. (Photo taken by Sarah Ovaska)

The N.C. Senate made their choices Wednesday for appointments to the University of North Carolina’s Board of Governors. The House will vote on their slate of candidates tomorrow.

Several of the 30 candidates vying for the 16 open slots on the UNC Board of Governors have also been significant contributors to political campaigns, with more than $1 million in contributions coming from the nominees and their immediate family members.

The new members will join the board at the start of the next fiscal year, on July 1.

John Fennebresque, the chair of the UNC Board of Governors who was reappointed on Wednesday, has personally written more than $250,000 in checks to state political campaigns since 2007. (Click here to read my report from earlier today about the connection between the UNC Board of Governors and political campaigns.) Read More

NC Budget and Tax Center

AF-Jobs

As long as North Carolina’s overall job creation remains anemic and rural regions continue to lag behind the rest of the state, it will be critical to adequately invest in proven economic development strategies like increasing small business lending, supporting development in economically-distressed communities, and strengthening the nexus between cutting edge research and innovative industrial development in key sectors. These are many of the types of investments that made North Carolina a leader in innovative economic development over the past 30 years.

Although significantly less supportive of these efforts than in past years, the House budget proposal for FY 2014-2015 does a better job of funding the state’s most effective economic development investments than does the Senate proposal, which relies on largely unproven strategies like fracking.

Both proposals are ultimately constrained by the continued commitment to tax cuts that primarily benefit the wealthy and profitable corporations that are also unlikely to deliver on the job creation promises that their proponents have made.

In the years since 2011, the General Assembly has largely dismantled much of the state’s most innovative economic development efforts. It eliminated the nationally-acclaimed rural development entity—the N.C. Rural Economic Development Center, dramatically scaled back investments in the biotech sector, abolished the state’s regional economic development planning partnerships, and eliminated state support for 13 nonprofits performing community-based economic development in the state’s most distressed communities. Both budgets continue this long-term trend of dismantling North Carolina’s system—the House just restores some of the lost investments.

Read More

Uncategorized

ff3072013We’re just a couple of weeks into the 2014 session of the North Carolina General Assembly, but the annual legislative silly season has already commenced. Not familiar with silly season? That’s the time of year in which legislative leaders force their members to work all kinds of silly, late night hours in order to limit media coverage and handicap/wear down those who might want to criticize or contest their agenda (i.e. the minority party).

Usually, silly season doesn’t start until there have been several months (or, at least, several weeks) of actual, semi-normal  legislative process, but this year, in keeping with the current majority’s increasingly pathological aversion to sunlight and transparency, it’s starting just days after the session itself commenced. The Senate is kicking silly season off today with a wholly unnecessary Friday afternoon session, followed by an even more unnecessary post-midnight session early tomorrow morning, during which it will ram though its destructive 2015 budget proposal.

And lest you get the mistaken impression that lawmakers will actually be working longer hours during silly season, rest assured that this will almost certainly not be the case. Read More