RALEIGH — As Gov. Pat McCrory moves ahead with attempts to fix what he calls an irreversibly broken Medicaid system fraught with cost overruns and mismanagement, the North Carolina Medical Society believes the current program should remain in place and be enhanced.
In its March 15 response to a request for information issued by the state Department of Health and Human Services, the society doubled down on its support for the nonprofit Community Care of North Carolina program as the state’s administrator of Medicaid services for some 1.5 million people.
The society is lobbying the state to adopt a system under CCNC supervision that would allow physicians to keep the majority of money the state would save through health care delivery reforms, similar to the federally approved Medicare Shared Savings Program.
In its response to DHHS, the society recommends “providing a tax incentive in the form of either a tax credit or tax deduction for physicians enrolling in a value-driven network that is open to Medicaid patients.”
The proposal would increase Medicaid physician reimbursement rates to enhance recruitment of specialty doctors. It also broaches patient cost sharing through “co-pays, coinsurance, deductibles, and other cost-sharing arrangements.” Those could be reduced for patients meeting “certain health metrics or participating in health and wellness activities aimed at those metrics.”
Under the Partnership for a Healthy North Carolina, McCrory and DHHS Secretary Aldona Wos propose a major, market-based Medicaid overhaul using three to four “comprehensive care entities” contracted through competitive bidding.
Those entities would offer statewide services and assume full risk for cost overruns, rather than leaving state taxpayers responsible for covering unbudgeted expenses, which have reached hundreds of millions of dollars annually.
The managed care firms could be for-profit companies, but nonprofits such as CCNC would be eligible to compete for one of the statewide networks. All entities would offer a basic plan but could include a variety of options to improve health outcomes and save money.
“Speaking as a dyed-in-the-wool Democrat, this is the smartest thing I’ve ever seen a Republican do,” said Al Lewis. He is an instructor of health policy at Brandeis University, and a nationally recognized care management outcomes analyst. His book Why Nobody Believes the Numbers harshly questioned the cost savings and health improvements claimed by CCNC.
“Instead of legislating CCNC out of existence, they’re letting the market do the job. If CCNC has truly saved billions, they’ll be the low bidder and they’ve got nothing to worry about,” Lewis said.
“There is now so much inefficiency built into the state’s health care system that it’s going to take years to reverse the financial damage this model has caused, but this is a start,” Lewis said.
“The state will find that their bids are still higher than neighboring states, thanks to both high reimbursement rates and the ridiculously easy access to care that Medicaid members have become accustomed to,” he said.
But the society opposes that competition-centered reform. It believes the state should maintain the responsibility to pay for Medicaid cost overruns and that CCNC is best suited to care for North Carolina’s Medicaid population.
“I’m convinced that the managed care industry, which has grown out of the insurance industry, does some things very, very well,” Stephen Keene, general counsel and deputy executive vice president of government affairs and health policy with the medial society, said during a recent meeting with Carolina Journal.
“They do a very good job of carrying risk because that’s their DNA, the risk management. But they don’t do a good job at medical care,” Keene said.
“They simply do not have the skills to formulate medical care in a way that saves money without hurting people, and that has been the 20- to 30-year history of the commercial managed care experience from a health care provider, physician, and hospital perspective,” Keene said.
“There’s no one who thinks that the current way that we’re doing business in North Carolina for medicine, be it Medicaid or anything else, is being done the right way,” Devdutta Sangvai, president-elect of the medical society’s board of directors, said in the meeting with CJ staff. But he, too, said for-profit managed care is not the solution.
“The family of medicine needs to work in a collaborative way and come out of their silos and say, ‘All right, enough of this, we’re hurting each other,’” said Bob Seligson, executive vice president and CEO of the society. “We’ve got to make it better for ultimately putting the patient in the center, and how to make that as cost-efficient and value driven as possible.”
Rather than focus simply on how much money is being spent, the society said in its response to DHHS, “Movement to a comprehensive, value-driven system for North Carolina Medicaid is the most promising market-based reform the state can pursue. We need to move from ‘pay for volume’ under the (current) fee-for-service system to ‘pay for value;’ from ‘pay for quantity’ to ‘pay for quality.’”
The society said the value-driven system would be designed to provide the highest quality care at the lowest cost.
The proposed system is much like the current CCNC model. It would have physician-directed teams coordinating each patient’s care through a primary care “medical home” network. Primary care doctors would continue to receive fee-for-service payments and an additional per-patient, per-month fee for each Medicaid patient.
Under the society’s auspices, more than 30 medical societies and associations around the state have formed the Toward Accountable Care Consortium in anticipation of Medicaid reform. It is billed as a value-driven approach of higher quality and more efficient care.
The consortium plan “includes the development of clinically valid metrics and benchmarks for delivering and reporting the quality and efficiency of the care they give to Medicaid patients,” the society said in its response to DHHS.
Specialists from optometry, podiatry, dentistry, and a variety of mental health providers could be folded quickly into the value-driven network, according to the society.
To recruit specialists, the society recommends increasing the reimbursement rate for treating Medicaid patients to an amount equivalent to 95 percent of Medicare reimbursement. That is a standard measurement in government medicine, and 95 percent is what primary care doctors receive in North Carolina.
Using the example of the Medicare Shared Savings Program, the state could implement a similar system for Medicaid in which accountable care organizations contracting through CCNC would receive 60 percent of any savings. The state would get the other 40 percent.
That would meet the state’s goal of ensuring providers have a “meaningful stake” in cost control, efficiency, and effectiveness, the society said in its DHHS response. If there were no savings, there would be no shared payout. The state would be obligated to pay any cost overruns.
“As soon as practical,” the shared savings formula would favor the value-driven networks in a 70-30 payout, with the accountable care organizations assuming “limited risk” for cost overruns, the society said.
Dan Way (@danway_carolina) is an associate editor of Carolina Journal.