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Tag: medicaid reforms
The North Carolina Experiment: How One State Is Trying To Reshape Medicaid

The North Carolina Experiment: How One State Is Trying To Reshape Medicaid

By Michael Tomsic, WFAE (TNS)

North Carolina is in the process of overhauling its Medicaid program. The governor and state lawmakers are using a mixture of health care models to put the major players — doctors, hospitals and insurers — all on the hook to keep rising costs in check.

For many of the Republicans who control the state legislature, the reason for the change is simple: budget predictability.

“For years and years and years, Medicaid has been considered the budget Pac-Man that eats up all the dollars that people in this chamber would like to see spent on many, many other things,” Rep. Bert Jones said during the North Carolina House’s debate of the bill last month. Gov. Pat McCrory signed the overhaul into law on Sept. 23.

The state, which has not expanded Medicaid under the health law, struggled with huge Medicaid cost overruns from 2010 through 2013. That sent lawmakers looking for a better way to manage it, even though a signature part of the program has won national awards for quality and cost.

The lawmakers settled into two camps: One camp wanted to use a managed care model, which basically means paying large insurance companies a specific amount per person covered and relying on the companies to contain costs.

“The alternative idea was to contract with what are called accountable care organizations,” said Wake Forest Professor Mark Hall, “which is a newly emerging idea both at the state level and the federal level to organize systems of health care finance and delivery that are led by doctors and hospitals.”

The federal government is pushing that model for Medicare, the government insurance program for the elderly. The idea is to put the doctors and hospitals in charge of the health of a certain population of people. If they can provide care that keeps people healthy and saves money, doctors and hospitals can share some of that savings.

Some state lawmakers worried that the doctor-and-hospital model wouldn’t save enough money. Others worried the insurance company model would skimp on care. So they settled on a mixture of both.

Will that create “a Frankenstein’s monster”? That’s the question Hall, the Wake Forest professor, asked earlier this year.

“We proposed the thought that hybridizing these two separate ideas might be freakish, but in fact, I don’t think it is,” he said. “I think it’s actually a very sound and carefully thought-out use of the best of both models.”

Outside of North Carolina, Oregon is also contracting with both MCOs and ACOs, and a few other states are exploring how to encourage provider organizations to play a bigger role in Medicaid managed care.

In the meantime, North Carolina is drawing from the managed care/insurance company model to change how it pays for Medicaid.

As of now, doctors bill Medicaid after they provide services, so the incentive is to provide more services. In the new system, the state will set budgets up front for whomever it puts in charge of managing care. If those managers go over budget, they’re on the hook – not the state.

That’s becoming the standard approach to payment, says Dan Mendelson, CEO of consulting firm Avalere Health.

“Most states contract for Medicaid through managed care because states don’t want open-ended financial liability,” Mendelson said.

Normally, those states contract with insurance companies. But here’s where the doctor-and-hospital model comes in. North Carolina will open up its bids to insurance companies and doctor-and-hospital systems. It will also set up quality metrics to track how they do.

Game on, says Julie Henry of the N.C. Hospital Association.

“We’re moving in this direction in other arenas in health care, not just for the Medicaid population, but for commercially insured patients and for Medicare patients,” she said.

Henry points out some doctor-and-hospital systems in North Carolina are already meeting quality metric standards and saving money under Medicare. Some insurance companies are posting similar results.

Patient advocates say one system isn’t necessarily better than the other.

“We think it’s important to focus on not just who we hand a big bucket of money to, but what are the rules for spending that money,” said Corye Dunn of Disability Rights North Carolina.

She says making sure the quality metrics are effective will be a crucial part of the overhaul process.

Also, lawmakers set a cap of 12 percent for how much money can go toward administrative costs and profits.

“The challenge lies in the fact that Medicaid is already a very lean program, and there’s just not a lot of fat to cut out there,” said Joan Alker of the Georgetown University Center for Children and Families. “The concern is, will the managed care company save money the right way or the wrong way?”

One of the Republicans who led the overhaul effort, Rep. Donny Lambeth, says Medicaid is not broken in North Carolina. But he says as health care evolves, the state needs to keep up.

“Fact is, we can actually do better in North Carolina for these Medicaid beneficiaries,” Lambeth said on the House floor. “Do you think quality in North Carolina across all the providers is equal and good? I can tell you it is not.”

Lambeth says the new quality metrics will make it easier to track that. He says it’ll take three to four years to get federal approval and implement the changes.

(This story is part of a reporting partnership that includes WFAE, NPR and Kaiser Health News. Kaiser Health News (KHN) is a nonprofit national health policy news service.)

Photo: downing.amanda via Flickr

Perry’s Medicaid ‘Reforms’: $500 Million Misspent With Lethal Consequences In Texas

Both as governor of Texas and as the leading Republican presidential candidate, Rick Perry has established himself as a critic of federal programs – and in particular as a “state’s rights” advocate who accuses Washington of gross ineptitude and waste in providing services such as health care for the poor and elderly. In his 2010 book Fed Up and his campaign speeches, Perry has often asserted that the states could perform far better if they were simply left to do the job without federal interference.

“It is through states that the American people get the job done every day,” he wrote in Fed Up, “often in spite of a deeply flawed bureaucratic federal government.” Late last year, when he was urging Texas to drop out of Medicaid altogether, he said, “We know how to deliver healthcare to more people in a less expensive way than what the federal government doe [sic]. I need more states need to stand up and say we don’t want your strings attached. We don’t want you down here telling us how to run our business.” If only Texas could operate wholly independently of federal rules, he insisted, “you will see more people in the state of Texas who will have more coverage and frankly we’ll save money at the end of the day, as will the federal government.”

Although Perry was forced to abandon that scheme when a state report showed that leaving Medicaid would cost Texas billions and leave even more Texans uninsured, he still claims that the federal government should stop trying to make sure that more Americans have health care – and that programs run solely by the states would be more efficient and effective. But the “golden teeth” Medicaid scandal in Texas, now under investigation by the inspector general of the Department of Health and Human Services, has exposed those claims to fresh scrutiny. A Dallas TV station reported that Perry appointees have allowed tens of millions of dollars to be misspent on orthodontic braces for children who don’t need them – with huge profits for private dental clinics owned by Wall Street hedge funds.

And that is not the only aspect of Perry’s Texas record that belies his boast. One of the most embarrassing episodes during his first two terms as governor involved a plan to let private firms run Medicaid, replacing state employees. The privatization plan was an “innovation” that was supposed to save money. What it accomplished instead was to earn enormous sums for contractors like Deloitte Touch and Accenture, along with their Texas lobbyists, while costing Texas taxpayers hundreds of millions of dollars – and all without achieving its most basic objectives.

Four years after the plan was implemented in 2003, the Austin American-Statesman published a thorough report on its results, and what the newspaper found was a project “in shambles.” The state had been forced to cancel its contract with the Accenture group and continue to use state employees to perform necessary work on an outdated computer system, exactly the same as before Perry’s privatization scheme began. How much had this great innovation cost the state? Approximately $500 million, not including the amount spent using the old system, at roughly $1 million a month.

Perry’s fiasco wasted more than money and time, however. As the Statesman reported, it may well have cost a 14 year-old boy named Devante Johnson his life. Left without health insurance for several months because of the Texas Medicaid enrollment bureaucracy, the Houston boy could not get treatment in time to save him from the kidney cancer that eventually killed him in March 2007.
But none of this fazed Perry at all. He went on to reappoint the Texas health and human services commissioner who had overseen the entire fiasco to another term – and then to run for president as the candidate who will reform the federal entitlement systems.