Consolidation is coming for the state’s 10 managed-care organizations, particularly CenterPoint Human Services.
The agency’s board of directors and management can either passively wait to be merged out of existence or try to convince state Health Secretary Aldona Wos between now and mid-March to keep a public-management niche for behavioral health through a major consolidation likely to involve significant job losses.
CenterPoint oversees mental health, substance abuse and developmental disability services for more than 70,000 eligible Medicaid recipients in Davie, Forsyth, Rockingham and Stokes counties. Its budget for fiscal 2013-14 is $160.4 million, including $128.3 million in Medicaid financing, state financing of $21.7 million and local financing of $8.2 million.
The primary MCO goal is combining the management of Medicaid and state funds at the community level, in a manner similar to an insurer, to reduce costs and add more accountability and consistency to reform. The change allows MCOs to operate with fewer local restrictions, but with more state and Medicaid oversight.
The focal point of Gov. Pat McCrory’s plan, announced in February, is putting three to four for-profit companies or nonprofit agencies in charge of all aspects of the state’s $13 billion Medicaid program — physical, behavioral and dental — by July 1, 2015, and offer statewide coverage.
For example, Blue Cross Blue Shield of N.C. could apply to serve as a statewide group, but it would have to create a behavioral health division to do so.
The state Medicaid program serves more than 1.5 million residents, most of whom are poor children, older adults and the disabled.
Ron Norwood, CenterPoint’s chairman, said the MCOs are working to present Wos with a proposal between November and February that outlines their case for keeping behavioral health as a public-management enterprise. Wos’ plan for implementing McCrory’s strategy is due before the General Assembly on March 17.
If the legislature and the federal Centers for Medicare and Medicaid Services approve McCrory’s proposal, the best-case scenario for the MCOs may be serving in a subcontracting-type role for one of the selected groups.
Consolidation, meanwhile, is likely to result in staff reductions because combined MCOs would not need the same number of administrative and back-office personnel.
CenterPoint held a specially called meeting Thursday in which Betty Taylor, its executive director, said “collective wisdom” has led the agency to two consolidation options. Taylor could not be reached for comment Friday.
However, in her PowerPoint and hand-out presentations, Taylor said “if MCOs cannot deliver, private insurers will.”
u Forming management agreements with two other MCOs — Partners for Behavioral Health Management and Smoky Mountain Center — to create a Western region of 35 counties of which Forsyth would be the largest.
It would have an eligible Medicaid population of 392,125, covering a quarter of the state. Taylor said the projected minimal Medicaid population to be a surviving MCO would be 300,000.
u Merging with the state’s largest MCO, Cardinal Innovations, as part of Cardinal’s effort to surpass the 300,000 eligible Medicaid population threshold. By adding CenterPoint, it still would be about 22,000 short of that goal.
It is not certain how CenterPoint management and staff would function or offer local services under either scenario, particularly who would run the Western region.
Brian Ingraham, Smoky Mountain’s chief executive, said the MCOs are “so early in the stage of trying to determine what would represent a region, but our ‘A’ plan right now would be forming an alliance with CenterPoint and Partners.”
“We’re exploring ideas absent a specific set of guidelines and requirements from the state. We’re trying to get as close to the governor’s vision as possible while preserving the public-management role,” Ingraham said.
Merger with Cardinal likely would result in some loss of local autonomy in decision making. Norwood said that Pam Shipman, Cardinal’s chief executive, could speak to the CenterPoint board at its Sept. 26 meeting.
It is clear the MCOs face an uphill climb in trying to stay in existence.
The sector already has shrunk from 41 local management entities in 2003 to 10 because of state preference for larger oversight groups.
McCrory’s proposal has drawn significant criticism from health advocates and medical officials because it could exclude successful North Carolina-based groups, such as the nonprofit Community Care of North Carolina series of Medicaid managed care networks. The agency saved the state nearly $1 billion from mid-2006 to mid-2010, according to an independent actuary’s report in 2011.
“If the administration’s idea of reform is bringing in out-of-state corporations so they can profit by limiting North Carolina patients’ access to health care and cutting critical medical services to our state’s most vulnerable citizens, that is not change we can support,” Robert Seligson, the N.C. Medical Society’s chief executive, said in a statement.
DHHS spokesman Ricky Diaz said the agency “continues to get feedback and input from all stakeholders, but the department remains committed to Medicaid reform that treats the whole person.”
Taylor said in the presentations that consolidating to three to four MCOs would meet Wos’ statewide coverage goal.
“The regions must consist of contiguous counties to support collaboration, synergy and standardized administration processes,” Taylor said.
She said shrinking to three or four MCOs would create financial and functional efficiencies, maintain local customization and “mitigate the risk by spreading it across a higher number of covered lives.”
“Ten years of change has achieved financial predictability and sustainability for Medicaid specialty sector services. It also has brought client confusion, provider depletion and an environment of uncertainty.”
CenterPoint converted to an MCO in February — a hard three-year implementation push that strained the agency like never before and required one-time loans of a combined $1.26 million from the four counties. The overall transition is expected to continue well into 2014.
“Privatization would impose another massive change on a stabilizing but fragile system,” Taylor said. “The LME-MCOs have the opportunity to avoid that outcome.”
DHHS spokeswoman Julie Henry said in April that contrary to the initial reaction to McCrory’s proposal, “the intention is not to privatize the state Medicaid program. We expect to receive applications from for-profit and nonprofit and community groups.”
Each group would set up networks of medical providers that would provide statewide coverage.
They would be paid a set monthly amount for each Medicaid patient enrolled, with increases for those groups that have sicker patients and for inflation. Their contracts with the state would require them to focus on patient outcomes rather than paying for each test or procedure, Wos said during a town hall in May at Forsyth Medical Center. At that time, Wos said North Carolina is in “uncharted waters” with Medicaid reform.
The groups would be “responsible for the outcomes and for managing their own risk so the taxpayer will no longer be on the hook for all of the overruns,” Wos said.
Henry said CenterPoint and the other MCOs could find themselves in the position of auditioning the quality and efficiency of their services between now and early 2015.
Consolidating may not be the only method used to reduce the number of MCOs.
For example, through the passage of Senate Bill 208, which McCrory signed into law June 12, legislators gave the Health and Human Services secretary the power to dissolve an MCO in as few as 10 days if the secretary determines he or she cannot sign a certification of compliance for the MCO.
The certification is required from the secretary every Aug. 1 and Feb. 1.
Local advocate Laurie Coker said she is not surprised CenterPoint is facing consolidation with limited control of its destiny because it is one of the smallest MCOs.
“What is disappointing is that MCOs, as a whole statewide, haven’t been around long enough to know whether they would be able to fulfill their obligations and contracts,” said Coker, director of the N.C. Consumer Advocacy, Networking and Support Organization.
“I would think the state would like to keep a hub of services where the MCOs are based now. There could be advantages to Cardinal coming in because of its willingness to work with advocates.
“I just want a group or groups to provide efficient services, particularly in reducing hospitalization with preventive care, regardless whether they are for-profit or nonprofit.”
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