Medicaid privatization on its way to North Carolina

Medicaid privatization on its way to North Carolina


North Carolina is on the verge of privatizing its Medicaid system, the $14 billion program that provides health care for 1.9 million of its most vulnerable residents — low-income elderly, children, pregnant women and disabled persons.

The major overhaul of the state Medicaid system and subsequent privatization, outlined in a 14-page House Bill 372 made public last week, came after several years of talks in the Republican-controlled legislature about how best to contain costs for what is one of the state’s biggest expenses.

But any changes are still a long way off. Years could pass until the reforms outlined in the bill to bid out Medicaid services to managed care companies become reality with a lengthy process ahead to gain federal approval.

Opponents to the plan warned Tuesday that the state’s continuing refusal to expand Medicaid and then privatizing the existing system would leave North Carolinians paying more in the long run for an inferior level of care.

“This is a huge jobs issue,” said state Rep. Joe Sam Queen, a Haywood County Democrat. “This adds to the cuts to our rural hospitals.”

North Carolina is one of 19 states to hold off on Medicaid expansion.

The compromise version (click here to read) of North Carolina’s Medicaid restructuring passed both the House and Senate Tuesday. It now heads to Republican Gov. Pat McCrory’s desk, who has called for changes to a Medicaid system he’s called “broken,” to be signed into law.

The reform measures came after years of disagreements between Republican lawmakers, their Democrat counterparts and McCrory administration officials about how best to overhaul the complicated, $14 billion program funded with a mix of federal and state dollars that provides health care for nearly 20 percent of the state’s population.

Leading Senate Republicans have long wanted to open up the state’s massive Medicaid system to managed care companies while House Republicans and McCrory administration have leaned toward a system where provider-led entities, like Community Care of North Carolina, would continue to have major roles in the future of Medicaid.

North Carolina currently uses a fee-for-service model, where individual medical procedures are paid for, and will now move to a capitated system where the state contracts with managed care companies to pay one price for the bulk of the 1.9 million North Carolinians who access health care through the Medicaid system.

(For a detailed run down of what the bill does and doesn’t do, read this excellent summary from N.C. Health News.)

Absent from both versions, and the compromise version passed Tuesday, was any mention of expanding the Medicaid program and accepting federal dollars to cover as many as 500,000 low-income adults who currently are shut out of the health care marketplace because they make too little to qualify for subsidies.

Federal approval of the changes North Carolina’s legislature signed off on Tuesday isn’t guaranteed, especially because North Carolina is still resisting Medicaid expansion, said Don Taylor, a Duke Professor and health policy expert who has closely watched North Carolina’s Medicaid debates.

The plan unveiled and endorsed by the state legislature this week is lacking many details about just how a shift to managed-care model would work in the state, Taylor said. Those details will need to be spelled out in a long, detailed waiver application the state must submit to federal health officials before getting a green light to move forward.

“If they add Medicaid expansion to it, then they have a chance,” Taylor said.

Federal authorities under the Obama Administration aren’t likely to approve a waiver if North Carolina’s new plan tries to limit or reduce benefits or make it more difficult for patients to get quality care without expanding Medicaid, he said.

“It doesn’t make sense to have some big reform without expansion,” Taylor said. “It’s the obvious next step for this state.”

The bill allows for three managed care companies to submit bids to manage the health care of a large chunk of the 1.9 million North Carolinians who qualify for Medicaid. There’s room to have some smaller provider-led networks provide those services in six regions, which could be appealing to large hospital systems or groups like Community Care of North Carolina, the award-winning program that currently manages much of the state’s Medicaid system.

Supporters of the bill bristled against suggestions during debate in the House Tuesday that the bill was turning the state’s Medicaid program over to private companies to profit from.

“This does not privatize Medicaid,” said state Rep. Donny Lambeth, a Winston-Salem Republican during debate Tuesday, emphasizing that the state would maintain control of the program.

Warnings came from those in opposition to the managed care approach that the changes would end up increasing Medicaid costs for the state in the long run.

“This conference report will increase the cost of Medicaid,” said state Rep. Verla Insko, an Orange County Democrat who voted against the compromise bill Tuesday.

Notable also in opposition to the compromise bill has been a leading Republican on health care issues, state Rep. Nelson Dollar, a Wake County Republican who has been a big supporter of Community Care of North Carolina, the provider-led network that the state contracts with to manage most of its Medicaid program.

CCNC has won awards nationally and been praised for keeping North Carolina’s Medicaid costs low while improving the health outcomes of patients.

“It is by far and away performing better than the majority of managed care states in this country,” Dollar said about North Carolina’s current Medicaid system.

Dollar voted in opposition Tuesday to the compromise bill, saying that North Carolina had already been successful at managing Medicaid costs through CCNC and sending the system to private managed care companies to profit off of could put that at risk.

“We need reform in North Carolina that is based on caring for our citizens and not for a group of stockholders,” Dollars said.

The bill will be sent to McCrory’s desk today, where he is expected to sign it.

Questions? Comments? Reporter Sarah Ovaska-Few can be reached at (919) 861-1463 or [email protected].