'Long, bumpy journey' Dogged determination, successful reforms key to Medicaid expansion bill

North Carolina becoming the 40th state to expand its Medicaid program - pending passage of the 2023-24 state budget - is an example of how bipartisanship can work in a deeply divided General Assembly.

It represents a remarkable evolution in how Medicaid expansion went from an Obamacare non-starter for most Republican legislative leaders in 2013 to a calculated embrace in 2023.

Those who might be eligible under an expanded program are those between the ages of 18 and 64 who earn too much to qualify for Medicaid coverage, but not enough to purchase coverage on the private insurance marketplace.

HB76 also is the satisfying reward for the dogged determination of Democratic Gov. Roy Cooper and House Rep. Donny Lambeth, R-Forsyth, to secure Medicaid coverage for between 450,000 and 650,000 North Carolinians.

The 10-year journey that began with a crawl and an inspiration from Lambeth, a former N.C. Baptist Hospital president, finished with a stunning sprint through the legislature once the House accepted Senate insistence on certain certificate-of-need reform measures.

Cooper and Lambeth are polar opposites on many sociopolitical issues facing North Carolina.

However, when it comes to public health reform over the past six years, they have been an odd couple and kindred spirits.

Lambeth said repeatedly during House Bill 76's journey through various committee steps that the bill "is probably the most important legislation that this General Assembly can take up in this session."

Lambeth even teased on the House floor during the March 23 final debate over HB76 about giving a blow-by-blow over his expansion efforts over the past eight years.

"It has been a long, bumpy journey, but we're here to make history, to move North Carolina forward," Lambeth said.

Cooper, meanwhile, said when HB76 passed its third vote by a 95-22 margin, that "Medicaid expansion is a once-in-a-generation investment that will make all North Carolina families healthier while strengthening our economy."

Cooper said HB76 is the "working families' bill of the decade."

During a March 27 interview with MSNBC, Cooper said "it was music to my ears to hear my Republican colleagues and legislators" showing support for expansion after being opponent for about nine years.

As rural sheriffs, county commissioners and chambers of commerce began to see Medicaid expansion as a positive for their communities, Cooper said that "when you look around, there's hardly anybody left who's opposed to it."

GOP opposition

To fully understand why some General Assembly observers are calling House Bill 76 a "legislative miracle," it requires revisiting why there was such rigid opposition in the first place.

The ability to expand state Medicaid programs through the federal Affordable Care Act in 2013 coincided with Republicans flexing their super-majority control of the General Assembly with a compliant Republican governor in Pat McCrory.

McCrory and Senate leader Phil Berger, R-Rockingham, consistently expressed concern about whether the federal government would be able to provide the financing as promised - 90% of the annual administrative costs of expansion. The state's health-care systems continually pledged to cover the other 10%.

Medicaid expansion was viewed as the epitome of socialized medicine by the majority of Republican legislators.

So much so that one of the first bills filed in the 2013 session was Senate Bill 4, which specifically prohibited the option of pursuing Medicaid expansion through a governor's executive order or the actions of another state agency.

Even though SB4 only allowed the legislature to approve Medicaid expansion, McCrory signed the bill into law on March 6, 2013.

It was one of the first signs of McCrory's willingness to acquiesce to the legislative priorities of Berger and then-House speaker Thom Tillis.

McCrory defended signing SB4, and his reluctance to pursue Medicaid expansion throughout his term in office, by insisting he wanted a "North Carolina solution," and not a federal one-size-fits-all initiative.

McCrory, as well as Berger and Tillis, stressed that expansion was unworkable and unthinkable until the Medicaid program halted annual deficits that reached combined a nearly $2 billion funding gap than ran from the start of the 2009-10 fiscal year through 2012-13.

Republican-sponsored legislation that focused on cost cutting, as well as lower demand for services than projected and lower prescription drug costs, led to a Medicaid funding surplus in fiscal 2013-14.

The program has run a surplus each year since even with the COVID-19 surge in enrollment.

Step two

While McCrory remained hesitant to get behind Medicaid expansion legislation even as 31 states signed on by 2016, Cooper made the issue a top campaign priority for his first run as governor.

On Cooper's fourth day as governor, he pledged to pursue expansion by circumventing the GOP-controlled legislature.

His plan was filing an amendment that asked the federal Centers for Medicare and Medicaid Services to amend a state Medicaid reform waiver request submitted by the N.C. Department of Health and Human Services in June 2016.

Cooper said at that time he believed the law prohibiting the expansion of Medicaid in the state infringed on "core executive functions" of the governor's role for negotiating the waiver request with CMS.

Cooper cited a study released in 2016 by Harvard University that found that as many as 1,145 people in North Carolina may die every year because Medicaid has not been expanded and they have no access to screenings and preventive care.

Republican legislative leaders responded by filing a lawsuit to prevent Cooper from gaining approval. When Berger and Moore filed their lawsuit, they referred to the state Medicaid program as a "welfare entitlement program" and Cooper's request as "an expansion ploy."

Although Cooper's effort did not gain CMS approval under the Trump administration, it did spur the governor to make Medicaid expansion a centerpiece of his annual state budget proposals.

That included vetoing the budget bills for 2019-20 and 2020-21.

Meanwhile, Lambeth filed his second attempt at Medicaid expansion legislation in April 2017 even as he acknowledged referring to his bill in that context was off-putting to still too many Republican legislators.

The 2017 version, titled "Carolina Cares," require "participant contributions" as a carrot to his Republican colleagues.

Lambeth said that expansion initiative would work "more like an insurance product for those working who can pay a portion of the cost, and the benefits and coverage are built around preventive and wellness care."

For example, participants must follow protocols for routine physicals and screenings to improve their health if they have conditions such as diabetes, overweight, etc."

However, the bill was never heard in a committee.

Step three

Even with the state Medicaid program running a surplus since 2013-14, there remained great reluctance to consider expansion for several years.

However, some Republican legislators began to embrace Lambeth's vision for expansion, but they first wanted to see more stability in the existing program.

Lambeth responded by championing in 2015 a Medicaid transformation initiative also known as managed care.

Managed care is a system under which people agree to see only certain doctors or go to certain hospitals, as in a health maintenance organization, or HMO, or a preferred provider organization, or PPO, health-insurance plan.

A key selling point for transformation is focusing on a patient's overall health for those experiencing mental health, substance abuse and developmental disability issues.

At stake was three-year prepaid health plan contracts for four insurers that are projected to be worth $6 billion a year.

With two optional one-year extensions, a contract could be worth a total of $30 billion - among the largest vendor contracts awarded in state history.

Under the previous Medicaid system, providers were paid on a fee-for-service model administered by DHHS.

Under managed care, the PHPs pay health-care providers a set, or capitated, amount per month for each patient's costs. DHHS reimburses the plans, and people will be able to choose which PHP they want to sign up for, or a provider will be assigned to them.

DHHS announced in February 2019 that the four PHPs are Centene (operating as WellCare of N.C.), AmeriHealth Caritas N.C., Blue Cross and Blue Shield of N.C. (operating as Healthy Blue) and UnitedHealth Group.

Managed care went into effect in July 2021 covering nearly 1.8 million North Carolinians, and has operated mostly smoothly since.

Sen. Joyce Krawiec, R-Forsyth, and a leading Senate health-care expert, has said managed care "has worked to improve to access and the quality of care for our Medicaid beneficiaries."

Step four

With managed care in place, the focus returned to Medicaid expansion with more public pressure being put on Republican legislative leaders, particularly as more Republican-controlled legislatures approved expansion.

Still, in January 2020, Berger stressed that "there are not the votes to pass Medicaid expansion (in the Senate)."

"That's not an ultimatum, but a factual statement that it would not pass."

Yet, by May 2022, Senate Republican leaders had embraced "a new reality" about Medicaid expansion in introducing a multilayered health care reform bill.

Berger and Krawiec acknowledged during a May 2022 press conference they had been among the legislature's top critics of Medicaid expansion.

"If there's a person in the state of North Carolina who has spoken out against Medicaid expansion more than I have, I'd like to meet that person," Berger said.

"In fact, I would like to talk to that person about why my view on this has changed because this is the right thing to do."

Krawiec opened her comments by saying "meet the second person who has talked more about not expanding Medicaid in North Carolina, next to (Berger)."

Senate GOP leaders say their opposition has thawed in part because of the federal government's track record - during the Obama, Trump and Biden administrations - on paying 90% of what it costs to expand Medicaid in the 39 states that allowed more people to be covered.

"I had concerns the federal government would break its promise ... leaving states, such as North Carolina, holding the bag with bigger and bigger health care expenses and holes in our budget," Berger said.

Berger also acknowledged that "The Affordable Care Act is not going to go away."

"At this point in time, all legal and legislative attempts to overturn that act have not succeeded, and I do not think they will succeed in the future. It's highly unlikely that the 90% cost share will change."

The House and Senate had submitted separate Medicaid expansion plans in May 2022.

The House wanted a "clean" expansion bill with no other health-care reform measures included.

Meanwhile, the Senate pushed for major certificate-of-need reform in its legislation, saying restrictions must be loosened or eliminated in order to serve the 450,000 to 650,000 new Medicaid enrollees.

Previous attempts to reform CON laws have drawn objections from the state's not-for-profit health-care systems.

Those certificates are required from state health regulators before providers can build new health care centers or add certain equipment. The goal of the CON process is limiting unnecessary duplication of services in a community.

The Senate bill includes a controversial work requirement for new recipients and easing restrictions that could allow more health care providers, including for-profits, to enter the state's marketplace.

Berger said recent Medicaid reform legislation, highlighted by the managed care transition that began in July, has made the state's system "capable of handling the additional (450,000 to 650,000) people who will be covered without creating problems for the state budget."

"It was a broken program that was mismanaged and burdened taxpayers with billion-dollar shortfalls on a regular basis," Berger said.

"Fortunately, over the past decade, Republican leadership in the General Assembly has turned Medicaid around in N.C. with eight straight years of solid Medicaid budgets without cost overruns."

Medicaid expansion opponents have downplayed an annual $758 million that the state's hospitals and health-care systems have agreed to provide to help cover the state's 10% share.

Another enticement for Senate Republicans: the 2021 federal COVID-19 relief law would give North Carolina $1.5 billion to $1.8 billion over two years to treat traditional Medicaid patients if it accepts expansion.

"Medicaid expansion has now evolved to the point that it is good state fiscal policy and helps us address the mental health crisis we're facing," Berger said.

Krawiec added "we're not likely to get a better deal (from the federal government) than is being offered now."

Step five

With the regular 2022 session winding down, the House and Senate could not reach a compromise on Medicaid expansion.

Both Berger and House speaker Tim Moore, R-Cleveland, said in November it would take into the 2023 session for a compromise to be secured.

On March 2, Berger and Moore announced they had reached an expansion compromise.

The announcement comes two weeks after the House completed the fast-tracking of its latest expansion legislation - House Bill 76 - by a 92-22 vote on Feb. 16.

The compromise inserted several key CON exemptions into the expansion language.

"This is a very carefully crafted and balanced way to approach (expansion) for North Carolina," Moore said. "This is something we can all be very proud of."

Although Berger said "there isn't any one thing that broke things loose," the proposed legislation would accomplish several Senate GOP CON reform goals.

Those include, according to Berger:

Removing CON requirements for behavioral health beds, substance-abuse/chemical dependency beds;Increasing the replacement equipment threshold to $3 million and index that total to inflation;Raising the threshold for diagnostics centers also to $3 million and index that total to inflation;Eliminating CON requirements for MRI equipment and services for the 23 counties with a population of more than 125,000 - which would affect Guilford, Forsyth, Alamance, Davidson and Randolph counties in the Triad.Ending CON requirements for single-specialty and multispecialty ambulatory surgical centers in those same 125,000-population counties. They would have a 4% charity care requirement.

"I believe this agreement represents the most significant modification of CON law in North Carolina since those requirements" became law, Berger said.

Lambeth thoughts

Lambeth said that finding common ground on certificate-of-need reform proved to be the key to the Medicaid expansion compromise.

"In our budget debates in past years, we spent hours trying to reach some CON reform measures but just could not get it done," Lambeth said.

"The main one out of the CON items that helped us reach an agreement was the provisions on diagnostic centers, MRI and ambulatory surgical centers.

"The N.C. Healthcare Association also were involved in reaching a compromise on the population threshold of 125,000 (where much of the CON reforms will occur) and the 4% charity care were key to finishing this up and moving forward."

The final primary emphasis to push Medicaid expansion across the finish line, according to Lambeth, was the reality that nearly 300,000 North Carolinians receiving COVID-19 pandemic-related Medicaid coverage could face being removed as a recipient as soon as July 1.

Those North Carolinians qualified for temporary Medicaid coverage as part of the Families First Coronavirus Response Act that Congress passed in response to the start of the pandemic in mid-March 2020.

Medicaid currently covers 2.71 million North Carolinians, according to the N.C. Department of Health and Human Services.

The planned May 11 ending of the national COVID-19 public-health emergency is the catalyst for several significant changes.

According to a Jan. 27 letter from the federal Centers for Disease Control and Prevention to state health directors, the May 11 deadline triggers the March 31 ending of eligibility for the temporary Medicaid coverage.

The March 31 expiration "enables states to terminate Medicaid enrollment of individuals who no longer meet Medicaid eligibility requirements on or after April 1."

"We recognize people will lose coverage in this process, but our goal is to ensure people eligible for Medicaid do not lose coverage, and those no longer eligible are transitioned smoothly to affordable health plans," DHHS said.

April 1, however, does not have to serve as a strict cut-off designation.

CMS amended the conditions that states must meet to allow for a gradual removal of the temporary beneficiaries that could extend coverage through at least the end of the year.

That includes determining if the temporary beneficiary now qualifies for permanent Medicaid coverage.

Lambeth said that by moving HB76 forward, the counties will not need to do a redetermination only to add them later back when North Carolina expands.

"The thought is that these covered lives can roll over under the expansion criteria once the state budget is signed," Lambeth said.

"This will be the earliest a House budget has been done in modern times. Senate is prepared to move fast as well.

"We are working hard to get the budget done in early June."

[email protected]@rcraverWSJ