North Carolina hospitals and doctors say the state's push to institute Medicaid managed care will reduce services for the poor and shortchange providers despite the legislation giving them the opportunity to bid on the contracts.
Late last month, Republican Gov. Pat McCrory signed legislation enabling changes that will move the state's $12.7 billion Medicaid program serving 1.9 million residents from fee-for-service payments made directly to providers to capped payments to managed care insurers. North Carolina must get approval from the CMS before making the change.
The legislation allows the state to award three statewide managed-care contracts to insurance companies. But at the same time, it authorized the creation of as many as 12 regional “provider-led" entities—physicians and hospitals in a Medicaid ACO, for instance—that can sign agreements with the state to manage Medicaid populations within their territories.
“Under the current system, we wait until people get sick to provide care and pay for tests—not outcomes," McCrory said in a statement. "This new system will focus on keeping people healthy and delivering care where it makes the most sense for patients. We're going to accomplish this reform by paying providers based on improving patient's health—not how many services patients receive.”
The goal of having both plans and provider-led entities involved is to give Medicaid beneficiaries multiple coverage choices regardless of where they live as the state moves to hold down costs. North Carolina, which didn't expand Medicaid to cover the half million residents who would have been newly eligible under the Affordable Care Act, saw its overall Medicaid budget grow just 1.5% in 2014 over the previous year.
The driving force behind the move to Medicaid managed care in North Carolina, like in the 38 states and the District of Columbia that have already gone that route, is to provide greater budget predictability for the state program, which is only half-funded by the federal government. North Carolina is largest state that has not yet adopted Medicaid managed care, according to the consulting firm Avalere Health.
Providers in the state backed changing the program, but rejected turning to private insurers as the main vehicle for cost control. "We're concerned about the draconian ways (plans) try to control things,” said Robert Seligson, CEO of the North Carolina Medical Society. “Instead of a value-based medicine approach, they focus on financial returns. Wall Street is what drives them.”
“It's not what we wanted,” said Julie Henry, a spokeswoman at the North Carolina Hospital Association. “We wanted an exclusively provider-led system because from our perspective hospitals are already bearing the financial risk for Medicaid patients.”
Patient advocates have also expressed concerns that the bill doesn't have robust patient protection standards, according to Adam Linker, a health policy analyst with the North Carolina Justice Center in Raleigh. Patients may have little recourse if they are unfairly denied care by a plan or in cases where care may be delayed, he said.
To characterize managed Medicaid plans as being bottom-line driven is inaccurate, according to Jeff Myers, president of Medicaid Health Plans of America.
“The state will set appropriate rules, will require plans to report and adhere to quality measures, and will hold (managed-care organizations) accountable for the results that providers inside their networks deliver,” Myers said. “Unlike the antiquated fee-for-service system, where no one was responsible for cost or quality care, the approach taken by North Carolina mirrors what" other states are doing.
Providers, on the other hand, wanted the state to build on the success of a medical home initiative already in place for some Medicaid beneficiaries. The Community Care of North Carolina initiative organized 14 provider-based community networks, which still use fee-for-service but are paid a monthly per-member fee to coordinate patient care.
The model appears to have saved the state money, according to a report from North Carolina's Office of the State Auditor released in August. Community Care of North Carolina saved the state $312 a year for every non-elderly Medicaid patient from 2003 to 2012, which equates to more than $400 million a year.
Despite these findings, lawmakers wanted a system in which both providers and patients would have more plan choices, according to Rep. Sen. Louis Pate, co-chairman of the Senate's Health Care Committee. They also wanted to test which approach to care—either insurer-led or provider-led—would generate better results.
The state plans to submit its waiver application to CMS by June 2016.