Medicaid bill draws critics

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Pictured from left to right: Rep. Justin Burr and Sen. Ralph Hise

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RALEIGH, N.C. — Two key legislative leaders may be backing off their demand for a new department-level entity to run the state’s Medicaid program, according to the Winston-Salem Journal.

However, in a proposed bill pitched as an attempt at compromise, Sen. Ralph Hise, R-Mitchell, and Rep. Justin Burr, R-Stanly, still would achieve much of their primary goal of stripping the N.C. Department of Health and Human Services of most daily oversight powers.

The bill, unveiled Thursday by a Program Evaluation Oversight subcommittee, also would hand over much of legislators’ direct responsibility for Medicaid to a seven-member Human Benefits Authority made up of industry experts. The members are projected to receive up to $120,000 in annual compensation.

The full committee will consider the bill at 1 p.m. Wednesday, with the expectation it will be recommend to the legislature. If the bill is passed and signed into law, it would take effect Oct. 1.

The state Medicaid program, estimated to cost $13.6 billion in fiscal 2013-14, covers more than 1.85 million North Carolinians.

The proposed bill would allow the Division of Medical Assistance and N.C. Health Choices and their staffs to stay nominally within DHHS.

A 2014 Senate recommendation pursued by Hise and Sen. Phil Berger, R-Rockingham, and Senate majority leader, would have created a new entity to house those programs. They believe that strategy would provide more cost and budget certainty than DHHS has delivered the past two years.

The authority would be required “to keep the Medicaid and Health Choice programs within their budgets” and publish a rolling four-year forecast of enrollment growth and demographics, potential service reductions and additional funding.

The board would operate independently of the state health secretary, who would not be able to add or remove funds from programs without its permission. It could delegate any of its powers to the state Medicaid director.

“This actually changes the budget of Medicaid from being this entitlement that we just have to fill to an amount like everything else in state government, where we set a spend for Medicaid and are assured that an agency and department will stay within their spending,” Hise said, according to a report on WRAL.com. Hise could not be reached for comment by the Journal.

Medicaid reform has become arguably the biggest sticking point among state Republican leaders and Gov. Pat McCrory, who has declared from day one of his term that the program is broken.

Senate leaders tout privatization, including hiring out-of-state insurers, as the best way to fix the program.

Meanwhile, House leaders, health Secretary Dr. Aldona Wos and McCrory prefer having providers and health-care systems involved in accountable care organizations (ACO) that carry a larger risk-reward expenditure role. Wos has asked for several months that legislators give DHHS the flexibility and the time it needs to complete internal reforms and produce cost savings.

Hise serves on the Program Evaluation Oversight Committee, while Burr is in an advisory role. They are co-chairmen of the Joint Legislative Oversight Committee on Health and Human Services.

After months of intense internal and public debate, they were unable in December to get the health and human-services committee to agree to more than the barest details on a three-year proposal for Medicaid reform.

In one show of frustration with the process, Hise accused Sen. Nelson Dollar, R-Wake, of “sabotaging” recommendations structured in large part by Hise in favor of Dollar’s preference for a lead public-sector role in reform.

“The bottom line is we oppose the creation of this board because we just think it’s adding complexity to a situation that’s already very complex,” state Medicaid director Dr. Robin Cummings said Thursday, according to WRAL.com.

The reforms listed in the bill had some legislators questioning whether they actually would result in reduced Medicaid expenses, more accountability and transparency, and overall improved quality of services.

“As I understand it, the purpose of this proposal is primarily to create a more cost-predictable system with capitated costs,” said Rep. Verla Insko, D-Orange. Insko has been among the more outspoken critics of how Wos and DHHS have handled the program.

“That’s consistent with the Affordable Care Act, so capitation is in our future whether we move to a board of directors model or not.

“What is the estimated administrative cost?” Insko asked. “N.C. Medicaid has one of the lowest administrative costs in the nation. It would be hard to make it any lower, so are the probable increases in administrative cost really worth what we get in exchange?”

Rep. Donny Lambeth, R-Forsyth, said the proposed bill “makes for good debate.”

“Fundamentally, structure is not the real problem to reforming and reengineering Medicaid. I do believe we have a significant program in size that is worth an in-depth analysis to make sure it is not more inefficient and costly to the state.”

Lambeth said there are potential unintended consequences from the proposal. “It could, for example, result in a lower match in federal funds, or actual administrative cost could go up by additional duplication,” he said.

Rep. Julia Howard, R-Davie, and Program Evaluation Oversight Committee co-chairwoman, said she has not taken a position on the bill.

“It is a viable hybrid option that needs to be on the table to be discussed by the full committee for its likes and dislikes,” Howard said. “The bill may not be recommended by the full committee. It may not pass the legislature.

“It does propose allowing DHHS to focus on other things they are trying to and not be smothered by Medicaid reform.”

McCrory has said he would rely on Wos in determining whether — and when — to expand the program. McCrory recently discussed with President Barack Obama his requirements that North Carolina be given significant, but undefined, federal flexibility in how the state program would operate its Medicaid expansion.

Wos has said multiple times since mid-September that she could make an expansion recommendation “soon.”

Wos’ confidence in a potential expansion comes in part from announcing in September a $63.6 million budget surplus for the program in fiscal 2013-14, as well as executing the first phase of a major restructuring within the DHHS. Some legislators from both parties have questioned how the surplus was obtained.

Several key Republican legislative leaders have dismissed expanding the program.

Insko said the bill did not clarify if the state would separate the Medicaid services and payments from the state and local supported services and payments. “We did that once before and it failed,” Insko said.

“What is the formula that will create the annual budget? Will it produce a budget that will force reductions? Who will create the formula? Who will interpret it?”

Insko said she supports the bill’s plans for re-creating a Medicaid reserve account with non-reverting special funding. “It’s smart to bring that back,” she said.

Insko said she expects groups supportive of the ACO platform, such as Community Care of N.C., the N.C. Hospital Association and the N.C. Medical Society, to oppose the bill.

“North Carolina hospitals support having a functioning Medicaid program that supports patients and providers and is accountable to the public for its work,” the N.C. Hospital Association said in a statement. “Based on our initial review of the proposed legislation, it is unclear how an independent agency would be accountable to taxpayers.”

Community Care had no comment on the bill.

Another major concern to Insko is how would consumer complaints and constituent services be handled by the proposed authority. The board composition would contain three members appointed by the governor, two each by the House and Senate, and the health secretary serving in a non-voting role.

“Now, if a constituent has a problem and I refuse to help, the constituent can vote against me,” Insko said. “If enough people are unhappy, I get voted out of office.

“Doesn’t this (bill) separate the accountability too far from the elected officials who are responsible for overseeing taxpayer funds and needs?

“The General Assembly can change a bad decision the board makes, but can they stop one before it is implemented?”

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