McCrory embarks on Medicaid overhaul

By Scott Mooneyham | Apr 08, 2013

RALEIGH -- That Gov. Pat McCrory and his administration are prepared to substantially overhaul the state's Medicaid program should come as no surprise to no one.


McCrory had been referring to the program as "broken" for weeks.


The characterization may be not capture the complexities of the situation, but it is apparent to anyone who has looked at Medicaid that it has been gobbling up increasing state tax dollars for years.


Today, the health insurance plan for the poor is a $13 billion program in North Carolina, when accounting for federal and state dollars. It provides care to 1.5 million state residents.


The McCrory administration may have made a critical mistake when it failed to stand up to legislators to prevent the state from turning back Medicaid expansion dollars as a part of national health care reform. Time will tell.


That decision doesn't mean that the changes that the administration now envisions are wrong.


What McCrory and his health care advisers want to do is to have managed care companies oversee Medicaid, paying those companies a set monthly fee for each recipient enrolled.


In essence, it would make Medicaid a pure insurance program, creating an incentive for those companies to hold down costs.


Right now, the state operates a fee-for-service program, under a model referred to a primary care case management. Doctors themselves are given incentives to manage recipient care in ways intended to make patients healthier and avoid higher cost medical treatment.


A nonprofit, Community Care of North Carolina, oversees the case management, and has been cited as a national model.


Doctors, facing the prospect of being squeezed by those managed care companies and losing control of case management, are not too happy about McCrory's plan.


Still, there is nothing radical about the proposal.


The Kaiser Family Foundation reported that 36 states in 2010 were using some form of contracted managed care as a part of their Medicaid programs.


Case management and Community Care of North Carolina also isn't likely to go away for the simple reason that the state may find it difficult to enroll its most expensive Medicaid patients -- the elderly and disabled -- in the managed care plans.


The McCrory administration wants cost certainty with this shift. So will the managed care companies.


For the insurers, the way to have that certainty is to create plans for pregnant women and children, and stay away from the business of insuring the elderly and disabled.


McCrory and his Medicaid moguls are going to have a hard time walking away from that risk.


Finally, there is the question of whether the changes will save money, and will do so without compromising care. Studies of other states show mixed results.


Ditching a fee-for-service plan for a fee-per-patient plan theoretically should create incentives to save. But if all the savings are eaten up by inserting another level of private provider, what have you accomplished?


These are not easy questions.


But what has ever been easy about Medicaid?




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