News: CJ Exclusives

Medicaid transformation remains in limbo, and things are getting expensive

Medicaid transformation has become expensive. 

More than a thousand jobs and a massive reform are at stake now that the budget stalemate has thrown Medicaid transformation into chaos. Managed care companies hired about 1,200 people to manage the health care of 1.6 million Medicaid patients, but each company is now losing $3 million to $5 million each month funding remains delayed, says Taylor Griffin, N.C. Association of Health Plans policy consultant. 

Medicaid transformation landed North Carolina in the national spotlight. The state was hailed as a pioneer of value-based care, a reform that promises to cut the cost of health care by paying for better outcomes. But without a budget, that reform is costing payers and physicians. 

“In the short term, plans are taking steps to mitigate the effects of the delay … but that can’t continue indefinitely,” Griffin said. “They care about their employees, they’re determined to make this work. … Nobody’s planning on firing all of their employees right now, but there’s a lot at stake here.”

Medicaid transformation aims to control the soaring cost of health care by privatizing the management of the state’s Medicaid program. The state will pay five managed-care companies $30 billion over five years to manage 1.6 million Medicaid patients, not initially including those with more complex needs.

“The big thing is budget certainty,” Griffin said. “It was only a few years ago when we were seeing $300-million year shortfalls in Medicaid for the state. And if you do managed care right, the health plans take on the risk for any shortfalls, not the state.”

Managed care companies planned to go live in November, but the funding became a casualty of the budget stalemate after Gov. Roy Cooper vetoed the 2019 budget and a separate mini-budget with the funding. The Joint Legislative Oversight Committee on Medicaid and N.C. Health Choice was meeting Tuesday, Feb. 11, to discuss the issue.

One of the managed care plans, Centene Corp., took a $500-million hit to its forecast 2020 revenue, reported Bloomberg. The N.C. Department of Health and Human Services has let 163 contractors go, and the state is now operating to “just keep the lights on,” according to the News & Observer

The state’s attempt to create a “revolution” in patient care is on hold. Value-based care was supposed to neutralize the threat of rising health care costs and secure better care for the state’s most vulnerable residents. 

“We’re buying heath, not health care. And that is what this program is about,” Griffin said. “Not how many treatments you can get people, but how healthy you can get them. That’s where all the incentives are in this program.”

As the state prepared to revolutionize Medicaid, providers began investing in data collection, analytics, and staff. But now, health care providers complain they are having to eat the costs of reforms, says Chip Baggett, lobbyist for N.C. Medical Society, which will partner with Centene to form a managed care company.

“Small, large, all across the state they’ve made that investment,” Baggett said. “You do all this work, you’re ready to go take care of your patients in this new, innovative, what should be a more cost-effective way — and then you get the rug yanked out from under you.”

Medicaid transformation was supposed to accelerate the adoption of value-based care by throwing millions of patients into its payment structure. Physicians are left dealing with two separate payment structures, Baggett said.

“That critical mass is important to our physician practices,” Baggett said. “It just makes physicians’ lives more administratively burdensome at a time where we’re trying to focus on the patient again, and delivering health care to the patient rather than pushing paper and clicking boxes.”

The governor and Republicans have blamed each other for the delays. 

“[This] is a tactic to avoid a comprehensive budget that provides for health care and other important needs like education,” Cooper said in a news release when he vetoed the mini-budget. “Health care is an area where North Carolina needs us to do more, and to do it comprehensively.”

But Republicans blasted him for vetoing the funding and endangering Medicaid transformation. Cooper did not respond to requests for comment.

“It’s a disaster,” Sen. Joyce Krawiec, R-Forsyth, said. “If our DHHS can’t handle Medicaid transformation, how in the world are they going to handle Medicaid expansion, adding 600,000 new people into the system? This needs to be done first, to provide better outcomes and better services for our beneficiaries. And now here we are in the middle of a mess.”

Whether the funding will make it past the legislature and the governor in April remains unclear. 

“I don’t know, I don’t know. We keep trying to resolve it, we tried before we left,” Krawiec said. “It’s not a good thing, not a good process. Most of them are trying to hold on, because when it does go live, they will need those people. They’re trying to hold as long as they can, but I don’t know how long that will be.”