Physicians, health administrators wary of for-profit insurers in Medicaid reform [Winston-Salem Journal, N.C.]

May 20--Through all the clamoring surrounding the state's latest Medicaid reform effort, one message is coming through loud and clear from physicians and administrators: Let North Carolina providers resolve Medicaid financial and operational issues, not for-profit insurers and out-of-state providers.

Dr. Aldona Wos, head of the N.C. Department of Health and Human Services, and state Medicaid director Carol Steckel have heard that recommendation at most of their statewide stops, which are aimed at raising support for Gov. Pat McCrory's health-care overhaul.

That includes their presentation and question-and-answer session last Thursday at Forsyth Medical Center.

The Medicaid program serves more than 1.5 million North Carolina residents, most of whom are poor children, older adults and the disabled. McCrory's goal is implementing Medicaid reform by July 2015.

Several audience members expressed concern that allowing for-profit insurers to be one or more of the projected three statewide community-care entities could put the reform effort in unnecessary vulnerability. Because those providers aren't based in North Carolina, they could choose to leave if they don't get the revenue levels they expect.

Steckel responded to each variation of the question with the same answer: each community-care entity would have to uphold the same rules, standards and thresholds, including being required to pour most of their profit back into services.

"We certainly never want to repeat mistakes of the past that any other state has made," Wos said.

"Our goal is to create a healthier North Carolina with a Medicaid system that is predictable and sustainable financially. We want a seamless system that takes care of the patient as a whole -- mind, body, disabilities, teeth and so on."

Jeff Lindsay, president of Forsyth Medical Center, told Wos and Steckel during his closing remarks that "we have the resources and talent -- in this room and statewide -- to resolve these problems, to improve the system, create budget certainty and eventually expand Medicaid in North Carolina."

Speaking after the presentation, Lindsay added that for-profits will take profit off the top and send it out of the state.

"We can't afford to have one dime leave this state and provide the level of service needed in a transitioning health-care industry."

On Friday, state Senate budget officials said they will ask Wos and Steckel to submit a Medicaid reform proposal to the General Assembly by March.

McCrory has proposed -- but provided few details to date -- converting the state's $13 billionMedicaid program to managed care with a willingness to privatize key elements.

He has urged President Barack Obama, including in a national address, to approve the state's request for a waiver to adopt reform measures. The waiver request must first get the General Assembly's approval before being submitted to the federal Centers for Medicare and Medicaid Services.

McCrory and the General Assembly say they won't consider an expansion until Medicaid reform they approve of has taken place.

The decision not to expand has been lamented by health-care executives at the not-for-profit systems because they have ramped up their infrastructure in part because of the expectation of those additional citizens with health insurance. The additional revenue from Medicaid expansion could help reduce the bad debt they absorb from patients unable or unwilling to pay their bills, as well as increasing demand for charity care.

When Wos and Steckel were asked if they were concerned that the federal government could require the state to expand Medicaid coverage to get the necessary waiver for reform, they answered by saying federal officials have been open-minded to individual proposals from other states. They expect the officials would do the same for proposals from North Carolina that hold promise.

Wos stressed that Medicaid reform has never been a budget issue for McCrory.

Still, part of McCrory's design for having three community care organizations is saving money.

The entities' contracts with the state would require them to focus on patient outcomes rather than paying for each test or procedure, Wos said. 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.

The Medicaid overhaul is likely to throw a monkey wrench into the managed-care organization initiative for behavioral health that began in earnest statewide just five months ago at the implementation cost of hundreds of millions of dollars.

If the legislature and Medicare approve McCrory's proposal, CenterPoint Human Services and the other nine managed-care organizations could have a significantly diminished oversight role at the start of the fiscal 2015-16 year, or could possibly serve in a subcontracting-type role for one of the selected groups.

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 oversight.

Although the MCOs could apply to become one of the companies or agencies, it's unlikely most of them, including CenterPoint, would have the financial ability to pay for the startup costs.

CenterPoint required one-time loans from the four counties it serves -- Davie, Forsyth, Rockingham and Stokes -- at a combined $1.26 million to help pay for its $3.7 million in MCO transition costs.

CenterPoint oversees mental health, substance abuse and developmental disability services, with its fiscal 2012-13 budget of $105.7 million coming mostly from Medicaid reimbursement fees and taxpayer money. It has about 180 employees.

When asked about why isn't the state giving the MCO initiative a longer opportunity to prove itself, Wos said some already are struggling financially and may fail before Medicaid reform is completed.

"Time will play out over the MCO model," Wos said.

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