McCrory, Wos announce plan to privatize Medicaid

Gov. Pat McCrory announced an ambitious plan Wednesday to privatize the state’s Medicaid system, a move that he said will mean better treatment for patients and save taxpayer money.

But medical groups are already questioning whether the proposed changes will improve the quality of health care, or a way to slice off profits from a taxpayer-funded program for companies.

The head of the N.C. Medical Society Robert Seligson issued a statement Wednesday saying the group was interesting in learning more about the privatization plan, but was prepared to be critical if it didn’t put patient care first.

Gov. Pat McCrory and N.C. Health and Human Services Sec. Aldona Wos at Tuesday's press conference.

Gov. Pat McCrory and N.C. Health and Human Services Sec. Aldona Wos at Tuesday’s press conference.

“[I]f the administration’s idea of reform is bringing in out-of-state corporations so they can profit by limiting North Carolina patient’ access to health care and cutting critical medical services to our state’s most vulnerable citizens, that is not change we can support,” Seligson said.

He added, “We question the wisdom of handing off this important function off to Wall Street.”

McCrory, the state’s new Republican governor, made the announcement Tuesday with his Health and Human Serves Secretary Aldona Wos and said the privatization and move to managed care will be a solution to fix a “broken Medicaid system.”

“The system does not treat the whole person,” he said.

(Meanwhile, U.S. Sen. Richard Burr, the state’s senior senator, was in Winston-Salem to praise Community Care of North Carolina, a public-private partnership at risk of being shut down under McCrory’s proposal. Click here to read more.)

The state would move from managing the $13 billion Medicaid program within state government to contracting out to three or four comprehensive care entities, which would get paid on a monthly, per-patient basis to provide health care, including mental health and dental coverage. Wos said she hopes to put out a request for bids in six months, and have the new system running up in 2015.

The expansive overhaul, introduced just two months after Wos and her Medicaid director Carol Steckel asked for input of how to change the state’s system, will need to get approved by both the state legislature and the federal Medicaid system.  Legislators were briefed on the plan Wednesday morning.

Medicaid provides health care coverage for low-income children, parents, disabled and elderly residents, using federal and state dollars to pay for the required coverage. The shift will be significant for North Carolina, which has been praised national for programs like Community Care of North Carolina, a provider-run network that connects high-risk patients with primary care doctors to better managed care and

The reform, Wos said, would build on that model, though CCNC would have to apply through a bidding process to continue doing work with the state’s Medicaid population.

“The point of this reform is to create a system that’s sustainable,” Wos said. “This is not a budget exercise.”

Wos said it was too early in the process to say if state employees would be cut, as administrative oversight moves to whichever groups the state ends up contracting with.

The reforms stemmed from a February request the department put out to seek new ways of running Medicaid.

The N.C. General Assembly and Gov. Pat McCrory opted earlier this year to reject federal funds and not expand Medicaid to include another 500,000 people in the program hovering slightly above the federal poverty line. The main reason given was a “broken” Medicaid system that state leaders say was detailed in an audit released Jan 31 by N.C. State Auditor Beth Wood, a Democrat. Wood’s audit, done at the behest of state legislators, found the state health department failed to accurately forecast its needs, spending $1.4 billion more in 2012 on Medicaid than what the state legislature budgeted for the mandatory health services.

McCrory and Wos said they want to take the state off the hook for overruns like that in the future, by contracting out  the management of Medicaid.

The auditor’s office also painted North Carolina as having a flush administrative budget in its audit, though comparisons made in the audit were to states that run their Medicaid programs very differently than North Carolina.  Some national experts say it’s folly to make state by state comparisons because of the huge variety and hidden administrative costs in states that, unlike North Carolina’s current system, mostly contract out with health insurance providers to manage Medicaid.

Correction: An earlier version of this post incorrectly stated the day McCrory’s plan was released. It was released on Wednesday.

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