News: CJ Exclusives

Lawmakers Not Yet Sold On Medicaid Expansion

Oversight committee wants more assurances of fiscal soundness

RALEIGH — State Secretary of Health and Human Services Aldona Wos has been crisscrossing the state with an optimistic message that she is preparing to recommend Medicaid expansion for North Carolina to Gov. Pat McCrory.

But two key lawmakers with oversight responsibility of her agency made it clear that, given Medicaid’s checkered history, and lingering problems resolving years of mismanagement and budget overruns, the belief that Medicaid — the government health insurance program for the poor and disabled — is ready to accept more participants is a Pollyanaish view.

Wos has told several media outlets that the foundation is in place for a more efficient and more effective Medicaid system, and that she will ask McCrory to expand Medicaid in the near term. McCrory has said through a spokesman that he is confident in Wos, and she will advise him when the time is right to expand. But before that happens, the governor will have to convince skeptical legislators.

“I will say that the original rejection of the Medicaid expansion by the General Assembly required that any plan for expansion had to come through the General Assembly, and not through an executive decision, and I don’t feel that we’re in any position right now to consider expansion under the Affordable Care Act,” said state Sen. Ralph Hise, R-Mitchell.

“We’ve had a lot of trouble in the last year enrolling the 120,000 additional applications that have come in,” said Hise, who is co-chairman of the Senate Appropriations Committee on Health and Human Services, and co-chairman of the Joint Legislative Oversight Committee on Health and Human Services.

“You start trying to think what would happen to our state and our system if 600,000 additional individuals were approved for Medicaid in one year. We have no ability to handle any of that type of enrollment growth to even consider it on a practical level even if it weren’t a huge cost to the state,” Hise said.

“I don’t think anyone on the budget side’s prepared to bring in the additional cost that expansion would do,” he said.

“I think Sen. Hise summed it up. We haven’t had any discussions with them up to this point about any type of expansion,” said state Rep. Justin Burr, R-Stanly. He co-chairs the Joint Legislative Oversight Committee on Health and Human Services with Hise, and is vice chairman of the House Health and Human Services Committee.

“There’s still quite a number of members concerned about moving in that direction as our folks are cleaning up the existing program, and continuing to try to make sure we’ve got real [budget] numbers,” Burr said. Gaining a comfort level with the budget numbers, and moving forward with more accurate budget forecasting is “where our focus is right now,” Burr said.

According to an editorial in the Charlotte Observer, Wos praised other states that have expanded Medicaid, and told its editorial board members there is a “clever” solution to fears the guarantee of federal funding for expansion are likely to be broken. If the feds fail to hold up their end of the funding bargain, the state would simply pull out.
But national health policy experts say there is a “Hotel California” clause in the law covering Medicaid expansion. The Supreme Court ruled that states cannot be forced to add to their Medicaid rolls, but language in the act forbids them from withdrawing from the program once they choose to sign on.
“I’m not sure under the Umstead Act that we have the legal standing to take it away” once a Medicaid program or service has been provided to a particular population, Hise said. “You’d get sued, and it would end up being all state dollars if you discontinued it.”

“It’s hard to unring the bell, and that would basically be what you would be doing,” Burr said. “Taking an entitlement away after you’ve given it is a near impossible thing to do.”

Hise and Burr made their comments after the Joint Legislative Oversight Committee met Tuesday with Wos and other DHHS staff to receive updates on a variety of programs.

Wos did not broach the subject of expanding Medicaid at the meeting. But updates and concerns were shared about how much progress has been made fixing the agency.

Rudy Dimmling, acting director of finance in the Division of Medical Assistance, under which Medicaid operates, said spending in the first two months of fiscal year 2015 already is $325 million higher than the comparable months in 2014.

That sparked the following exchange with Hise:

HISE: “Right now we spent total dollars $325 million more than we did in the first two months of last year. That would be about $107 million in state dollars. The entire annual increase we anticipated was about $143 million in the budget for the entire year in overspending.

“If you forecast those numbers out annually, we’re setting over a $680 million state shortfall that’s coming out if this trend continues, and isn’t attributable to other factors.”

DIMMLING: “You can’t extrapolate it that way. … We are tracking very, very closely. We are confident that our end-of-year results will be within budget, so it’s important to see how this works out seasonally. … I understand your concern.”

HISE: “Having done this for three years, in October we’re always in great shape. We hear we’re running a $40 million surplus, we’re running an $80 million surplus. By December that tends to evaporate. By January and February it turns into a deficit, and then the big numbers come. And that has been the historical trends we’ve had for three or four years.”

State Rep. Marilyn Avila, R-Wake, and Sen. Tommy Tucker, R-Union, also pushed Dimmling on the higher spending right out of the fiscal year gate.

“In Sen. Hise’s extrapolation, which you said is not the best way to go about it, in terms of you looking at the trends and the analysis that you’re doing at this point, my heartfelt hope is that we have improved over past abilities to interpret what we’re looking at,” Avila said.

“Should we trust you with these [numbers]?” Tucker asked. He said state Rep. Nelson Dollar, R-Wake, “was staunch in the budget negotiations” that the financial situation would improve in Medicaid. As a result, House and Senate budget negotiators compromised by putting just $180 million in contingency reserves.

Dimmling said the reason spending is up so much the first two months of the 2015 fiscal year is because in 2014 the budget numbers were artificially depressed.

Due to mistakes in the rollout of the NC Tracks computer program, many Medicaid participants were not enrolled properly, and claims payments were not made in those early months when they should have been. They became part of a giant backlog, with payments spread out over the rest of the year.

As this year progresses, monthly budget numbers should become lower than those at the same time last year because the 2014 numbers include catch-up payments that should not be in the 2015 budget, Dimmling said.

But he added a caveat.

“There are certain outliers that you can’t predict,” such as what might happen during flu season, or with the enrollment for Obamacare, Dimmling said. But based on trends now being monitored, “We are confident that we will come in within budget.”

Dimmling gave a report about wide-ranging structural and operational changes being made in the Medicaid program. Those include adding 50 percent more staff in budget and finance areas at no extra cost by shifting money from vacant positions.

“We’re building a model that really is kind of modeled off the private sector” in hopes of achieving greater budget forecasting and predictability, Dimmling said.

“Probably the most important part of what we’re doing is we built a scenario manager,” Dimmling said. “As we’re looking at changes in enrollment, if we’re looking at changes to specific programs, we can update our model, and it allows us to do that calculation within less than a minute.”

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.