Highlight On North Carolina: The Quest for Medicaid Reform

The North Carolina Medicaid System serves approximately 1.8 million people.  The program accounts for roughly 75 percent of the state Department of Health and Human Services’ budget.  Per capita, it spends 14 percent more than the average state Medicaid program, according to a Menges Group analysis.  The state chose not expand Medicaid in accordance with the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), but is opting to pursue its own path toward Medicaid reform.  In 2013, the General Assembly passed Session Law 2013-360, in which it directed the DHHS Division of Medical Assistance to create and submit a detailed plan that would create a predictable and sustainable Medicaid program for North Carolina taxpayers, increase administrative ease and efficiency for Medicaid providers, and provide care for the whole person by uniting physical and behavioral health care.  DHHS was to create the plan in conjunction with a Medicaid Reform Advisory Group, which consisted of three citizens appointed by Republican Governor Pat McCrory–two health care system CEOs and one former hospital chief of staff and department chief–and two representatives of the North Carolina legislature–Republican Representative Nelson Dollar and Republican Senator Louis Pate.

Plan for Reform

On March 17, 2014, DHHS submitted its plan to the General Assembly, noting that its overall goals were “patient-centeredness, cost predictability and sustainability, and whole-person care.”  It made five recommendations in three categories:  physical health; mental health, intellectual/developmental disabilities and substance abuse services (MHDDSAS); and long-term services and supports (LTSS).

Physical Health

Under the proposal, physical health services would be coordinated through accountable care organizations (ACOs) that share savings and losses with the state.  The ACOs’ coverage and responsibility would increase over time, with DHHS monitoring their progress by benchmark measurements of access, cost, and quality.  DHHS goals for access–the extent to which Medicaid beneficiaries would become associated with ACOs– range from 40 percent in the first year of implementation to 90 percent in the fourth year and beyond.  DHHS hopes that by the second year of implementation, the rate of growth in physical health costs will be diminished by two-fifths, such that a projected cost growth trend of 5 percent would be reduced to 3 percent.  Finally, DHHS would develop quality scores that ACOs must meet depending on the year of implementation in order to receive increasingly higher shares of the savings they produce; the agency would measure quality by the fraction of ACOs that achieve such scores.  DHHS anticipates that ACOs would work together with Local Management Entity Managed Care Organizations (LCE-MCOs), local health departments, and other providers, such as LTSS and dental care providers.  Community Care of North Carolina (CCNC), a public-private partnership that brings together regional networks of professionals to provide coordinated care through a medical home model, would be expected to evolve over time to best support the ACO model.

Mental Health, Intellectual/Developmental Disabilities and Substance Abuse Services

DHHS also proposed to enhance the state’s Medicaid MHDDSAS system. Since April 2013, the state’s 10 LME-MCOs have operated under a waiver to provide MHDDSAS to North Carolina’s residents.  According to DHHS, while public feedback suggested room for improvement, it cautioned that specialty care could be lost in a new system.  In fact, “Almost all feedback encouraged change that incorporated gradual shifts and common sense approaches.”  Under the DHHS plan, the 10 LME-MCOs would consolidate to four organizations based on region that would undergo heightened performance contract monitoring and receive additional technical assistance.  The merger would be complete by July 2016, with benchmarks at 6-month intervals.  Services and new contracts between DHHS and the LME-MCOs would emphasize “whole person” care.

Long-Term Services and Supports

DHHS proposed to “strengthen and streamline [LTSS] case management,” having characterized LTSS recipients as “one of the most vulnerable and least coordinated of all Medicaid beneficiary populations.”  Improvements would include the creation of uniform points of entry into the LTSS system so that beneficiaries could access information about services.  In response to a Stakeholder Engagement Group’s plea for “a person who helps me enroll and has nothing to gain from my choice of services,” DHSS would also explore the creation of a computerized “usher” to inform beneficiaries about their options.  Services would be expected to support the whole person.  DHHS would also need to evaluate its information technology (IT) platform to ensure that LTSS systems effectively communicate and share data with each other.

Future Action?

The General Assembly has yet to take any concrete steps for or against the plan. Of the five members of the Medicaid Reform Advisory Group, four seemed to support the plan generally, while making additional suggestions; two of them used the word “endorse” outright. However, the two lawmakers in the group disagreed with each other. Representative Dollar offered his support for the plan, provided it built on the state’s current primary care medical home model.  He called it “an important and historic reform” in moving from fee-for-service to value-based purchasing. Senator Pate, however, respectfully disagreed, referring to the proposal as “a list of tentative steps” rather than true reform and expressing concern that it “create[d] a new, complex administrative structure to manage a reworked version of the existing, chronically over-budget, fee-for-service payment model.” Group member Peggy S. Terhune summed up the future of the proposal by stating that it was up to legislators to move forward with improvements to the Medicaid program and “implor[ing] them to . . . truly consider the potential impact on these decisions on the vulnerable citizens of NC.” Noting that most legislators have not experienced both poverty and significant health issues, she continued, “We must listen carefully to the individuals affected by and working within the system. Only in this way can we create a Medicaid Reform that will be meaningful, person-centered, and effective.”