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Medicaid reform request heads to D.C. without expansion on board

Medicaid reform request heads to D.C. without expansion on board

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The state Medicaid reform waiver request is headed to Washington with Gov. Pat McCrory’s approval and — as expected — without an expansion proposal piggybacking along.

The request starts a three- to five-year process with an end goal of Medicaid oversight being placed in the hands of three statewide managed care organizations, likely pre-paid health plans from commercial insurers, and up to 12 provider-led entities, likely to involve not-for-profit health care systems.

Each of the six regions established by the reform legislation could have up to five of these groups providing services.

Before McCrory signed the cover letter for the request, Health Secretary Rick Brajer told a House Health committee Wednesday that state health officials heard strong support for expanding the program to about 500,000 North Carolinians at 12 forums held statewide.

Yet, Brajer said the request is clear that “expansion is not part of our vision.”

Senate legislative leaders have called expansion “a non-starter,” in large part because they say they don’t trust the federal government to pay at least 90 percent of the state program’s administrative costs. McCrory has expressed similar reservations.

According to political and health-care analysts, bringing reform to completion by July 2019 may be optimistic, particularly if the Obama or future administrations try to encourage, if not insist, on approvals of Medicaid policy waivers being tied to expanding Medicaid.

Brajer cautioned that the Centers for Medicare and Medicaid Services (CMS) may say no to the waiver request — at least initially — if expansion is not included. If CMS insists on expansion, Brajer said negotiations would be brought back to the legislature.

Brajer and several key Republican House leaders sought to keep the focus on the recently formed N.C. Division of Health Benefits’ ability to meet the legislative deadline for submitting the request for a series of waivers from standard federal Medicaid policies.

The hybrid reform compromise reached in September culminates state House and Senate leaders’ pursuit of coordinating physical, behavioral, dental, pharmacy and long-term-health services.

It also represents a major legislative victory for McCrory, who has claimed the state Medicaid program is broken and in need of major repair.

“Our proposal provides a N.C. Medicaid plan that focuses on patient-centered care and improves health outcomes at more predictable costs,” McCrory said.

“Health plans and providers share responsibility with the state for achieving healthy outcomes within budget — instead of only the state facing financial risk.”

Even though McCrory has hinted at pursuing a “North Carolina-specific” expansion plan with the Obama administration, and the program is on pace for a third consecutive surplus, he did not mention expansion in his statement.

Brajer said he expects negotiations with CMS to be a two-way conversation.

“Everything in the request is up for negotiations,” Brajer said. “CMS could require a greater level of financial savings as a negotiating point.”

DHHS projects about $400 million in savings in the first five years of implementation.

“Innovations, such as provider-led entities, are of great interest to them,” Brajer said. “We will continue to revise and improve this plan and engage partnership along the way.”

Several legislators expressed concern about whether reform would foster competition between the MCOs and PLEs that could serve to lower costs. They asked about DHHS’ plans if a commercial insurer opts to leave the state if it if not making enough money, or a PLE can’t afford to keep its financial commitment.

Brajer said having MCOs and PLEs sign four- or five-year contracts should ease some of those concerns. Each group’s financial status would be reviewed by the N.C. Insurance Department.

Rob Schofield, a policy analyst with the left-leaning N.C. Policy Watch, said expanding Medicaid “would have saved thousands of lives per year, pumped billions of dollars into the state’s economy and strengthened an already highly effective program.”

“State leaders will give away this enormously valuable public asset to a handful of giant corporations that will, in turn, squeeze profits out of it by denying services to people in need.

rcraver@wsjournal.com (336) 727-7376 @rcraverWSJ

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