RALEIGH — Critics questioned whether a recent state audit attributing a 9 percent savings in Medicaid costs to the nonprofit Community Care of North Carolina was a useful guide to policymakers weighing reforms in the government health insurance program covering 1.4 million poor, elderly, and disabled North Carolina residents.
As the audit noted, “The findings [of the researcher contracted to perform the study] do not speak to the impact of CCNC relative to other possible money-saving or patient care strategies.” In mid-August, House and Senate members negotiating Medicaid reforms came to a preliminary agreement on a new payment system that is likely to reduce CCNC’s administrative role dramatically.
Jeff Myers, president and CEO of Medicaid Health Plans of America, said based on the design of the study, the office of State Auditor Beth Wood “executed it rather well.” There are questions about accuracy of some numbers used in the audit, “but using the numbers provided suggests that in some areas [CCNC] did achieve some savings.”
The larger concern is that the report “doesn’t actually say a whole lot about the value of CCNC,” Myers said. “It picks a couple of areas where they have in fact a reduction.”
Devon Herrick, senior fellow at the National Center for Policy Analysis, said the audit’s “methodology involved the fact that the program was rolled out in different counties at different times. Thus, there were historical claims data for similar people who were ‘in’ [the treatment group] and ‘not in’ [the control group].”
But he did note that — based on the audit’s findings — CCNC, which assigns patients to a “medical home,” or a single team of physicians and practitioners for all medical care “did not change emergency room use, which is usually how people end up in the hospital.” Having “a medical home increased physician visits, but reduced hospital admissions,” Herrick said. “I’ve heard the same strategy used in Medicare Advantage — make sick people see the doctor.”
The analysis compared the group getting managed care through CCNC’s care coordination with those who were in fee-for-service Medicaid. Dual eligible — elderly patients on both Medicare and Medicaid — were excluded from the study.
The structure of the audit “is kind of proving a negative” because it was not designed to compare CCNC’s performance to that full managed care companies, or North Carolina’s Medicaid patient base to other states with a similar population, Myers said. “So it’s really hard to say whether in fact the report actually has any value at all.”
CCNC may have saved money according to this and other studies, “but correlation does not equal causation,” Myers said.
“It could have been the result of chance. It could have been a lot of things,” Myers said. “I think any fair reading of it would not suggest that this is de facto evidence that CCNC is providing better care at less cost.”
He also noted that it is curious the Medicaid program went from losing hundreds of millions of dollars a year to running small surpluses the past two years “with very little change” in the program.
Tom Wroth, CCNC’s acting president, said in a statement that the $279,457 audit “confirms that effective use of local resources to improve care returns significant savings to the state.”
Wroth said an independent study by an external reviewer — the latest in a series of financial examinations claiming that CCNC saves the state money — “shows that CCNC generates a three-to-one return on investment for the state, with every dollar invested in the nonprofit CCNC program generating over $3 in savings.”
He said all of these savings are returned to the state, with savings averaging $312 per member per year after accounting for program costs.
Wroth said a 25 percent reduction in inpatient admissions was the largest saving.
“Meaningful savings” were achieved in pharmacy spending despite increased medication use by shifting to less expensive medications, Wroth said. Ambulatory services costs declined despite an increase in physician visits, reflecting a shift away from expensive services and sites of care.
“We must continue this important model of care as we transition our state’s Medicaid program,” Thomas R. White, president of the North Carolina Academy of Family Physicians, said after the audit was released.
“And we must preserve the medical home model well into the future,” White said. “Our elected officials simply should not ignore the latest evidence that medical homes save money and improve care.”
‘Higher cost to taxpayers’
Another frequent critic of the medical-home model, health care management analyst consultant Al Lewis, said this audit fell short because it did not incorporate readily available and contradictory federal data, or compare North Carolina Medicaid spending and outcomes with that of neighboring states.
North Carolina Medicaid admissions “trend at about the same rates as surrounding states, at a much higher cost to taxpayers. Period,” Lewis said.
CCNC is likely to be phased out under a Medicaid reform plan being finalized by House and Senate negotiators. The savings from ending the CCNC contract would be used to increase rates to primary care doctors and OB-GYNs to 100 percent of the Medicare rate in the hope of luring more doctors into managed care and provider-led Medicaid networks.
Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.