News: CJ Exclusives

Legislative Review Pending For State Medicaid Administrator

Skepticism rises that CCNC is the best deal for patients, taxpayers

RALEIGH — As a growing number of skeptics question the fiscal soundness of North Carolina’s centerpiece Medicaid program, there is a push for a legislative review of the system.

In a recent press conference, state Senate leader Phil Berger, R-Rockingham, spoke of “a continuing and a nagging problem” with Medicaid overspending.

“Quite frankly, we’re concerned about whether we’re getting accurate information from the Department of Health and Human Services about the level of spending that we are committed to at this point,” Berger said.

Free-market advocates contend Community Care of North Carolina, a nonprofit organization that runs the state’s Medicaid program, has contributed to the $1.17 billion deficits in Medicaid that have occurred over the past three years. They say CCNC is not held accountable for cost overruns and simply passes unbudgeted expenses on to state taxpayers.

Yet separate studies commissioned by the state claim CCNC has generated savings of $984 million from 2007-10, and $1.5 billion from 2007-09. Critics have called those savings wildly optimistic.

“We have received a request to look into that,” said John Turcotte, director of the General Assembly’s Program Evaluation Division, which reviews state programs for effectiveness and efficiency. “I think it’s a worthwhile project.”

Turcotte is confident “there will be a project proposal at least. But until that proposal gets in front of the Joint Legislative Program Evaluation Oversight Committee and we approve it, there won’t be a project.”

“It’s a small but positive step forward that the Oversight Committee for the legislature’s Program Evaluation Division may consider authorizing a credible evaluation of the CCNC program,” said Michael Cousins of Clayton. He is a nationally recognized expert in evaluating programmatic health care outcomes.

“Since tens of millions in North Carolina taxpayer money has been spent on CCNC — and the previous evaluations are marred by flaws — the Oversight Committee should take the next step and approve an evaluation that uses credible methods,” Cousins said.

Cousins first wrote about his concerns with the CCNC evaluative reports in 2009.

He said his concern grew since then because methodologies used in more recent evaluations commissioned on behalf of CCNC “are so weak, the conclusions so flawed, that the funding decisions made by [the N.C. Division of Medical Assistance] based on these reports has, by definition, resulted in misguided appropriations.”

Al Lewis, an instructor of health policy at Brandeis University who formerly taught economics at Harvard, agrees that the wrong evaluation tools were used to look at CCNC’s costs.

“There’s a lot of state taxpayer money being spent with impossible results being claimed,” Lewis said.

But state Rep. Nelson Dollar, R-Wake, co-chairman of the Joint Legislative Oversight Committee on Health and Human Services, is a staunch advocate of CCNC. He steadfastly has defended studies of the program’s spending and savings.

If the Program Evaluation Division “wants to look at CCNC and evaluate, I think I am quite confident they would come away extremely impressed,” Dollar said.

“In my view, CCNC has been an outstanding asset for the state and has been an outstanding asset for our citizens and for our health care community, and I think they continue to expand their capability,” Dollar said.

The CCNC system has improved structurally to take on more projects, which “have done extremely well, saved the state money,” Dollar said. With 95 percent of the state’s general practice doctors affiliated with CCNC, Medicaid recipients don’t have health care access issues like those in some other states, he said.

“I think there are a lot of states that would love to have a network like CCNC,” Dollar said.

“I support CCNC and think the feds are going in the right direction to copy it,” said state Rep. Verla Insko, D-Orange, also a member of the HHS oversight committee.

“Other states will tweak the model and find ways to improve it” in an atmosphere of beneficial competition, Insko said.

Meantime, advocates of reforming Illinois’ Medicaid system hope to pull the plug on its program, modeled after CCNC’s “medical home” plan. They say it hasn’t lived up to its national hype in reducing costs in the Land of Lincoln.

The CCNC primary care case management model, “unfortunately, is not working,” said Jonathan Ingram. He is senior health care policy analyst at the Illinois Policy Institute, a free enterprise research and education organization.

The CCNC approach assigns each Medicaid recipient to a primary care physician. It is an enhanced, coordinated, fee-for-service plan, meaning, basically, every time a patient shows up for care, the fee is paid.

Such regular, ongoing and monitored care — a medical home — is intended to reduce more costly hospital admissions and emergency room treatment due to preventable episodes, thus saving money.

Illinois’ goal has been to get 50 percent of Medicaid recipients into a primary care medical home to reduce costs.

“They haven’t actualized any reduction in costs by moving those people yet,” Ingram said.

In response, the Illinois State Medical Society is moving forward “to basically draft a plan and waiver to the federal government to do more choice and competitive reform here in Illinois,” Ingram said.

Ingram said the Illinois Policy Institute is proposing, separately, a complete transformation of Illinois’ Medicaid system. It would replace its CCNC-like fee-for-service model with a program that helps to pay premiums for private insurance plans and, ultimately, deflate costs.

“We would give eligible individuals premium support and then also a medical savings account, kind of like a health savings account,” with a number of private market options, he said. The goal would be to help the recipients eventually move off the tax-subsidized program into the private insurance market.

“Basically, it injects both choice and competition into a market that’s dreadfully lacking,” Ingram said. The proposal is a policy quilt woven from the best ideas showing the most promise in multiple states.

“Right now, bureaucrats here in Springfield and Washington control everything,” Ingram said. “Consumers are very smart. They know what they need, and right now government’s just being in the way.”

Illinois faces a number of government hurdles in dealing with Medicaid reform. Then-state Sen. Barack Obama helped to usher into Illinois’ Medicaid program “multiple aspects” of what later became part of the federal Affordable Care Act, Ingram said.

“They all led to worsening care to the most vulnerable,” he said.

States that choose to expand their Medicaid rolls under the Affordable Care Act “are going to be dumping thousands — and here in Illinois it’s going to be more than a million people — into a broken program,” Ingram said.

The poor would have to compete for care with new Medicaid recipients, some of whom would give up private insurance because they would qualify under Obamacare’s expanded income eligibility guidelines, Ingram said.

As the number of Medicaid patients grew, many already serving a sizeable Medicaid caseload likely would no longer accept them because it would not be profitable, Ingram said.

“There’s just so much the program will be able to take before it collapses,” he said.

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