Better Governing Now » NCGA Takes Note Of Illinois' Medicaid Reforms


NCGA Takes Note Of Illinois' Medicaid Reforms

    Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.

Prairie State plan has saved billions as enrollment grew

    RALEIGH     With a philosophical gulf still separating the state House and Senate on how best to reform the costly Medicaid program, Illinois is reporting multibillion-dollar success in a reform plan that closely resembles North Carolina Senate Republicans' framework for the future.

    "It was a huge, huge bill that went through in 2012, and we have saved about $3.2 billion" in reforms under the so-called SMART Act even while expanding the Medicaid rolls, said Joanne VonAlroth, outgoing communications director
for the Illinois Department of Healthcare and Family Services.

    The Illinois plan will be fully capitated, meaning plan administrators will get a set amount of money per patient. Illinois scrapped its fee-for-service Medicaid system that was modeled after the Community Care of North Carolina plan that administers services to most North Carolina Medicaid recipients.

    The CCNC program is still held up as vital to future Medicaid reform by Health and Human Services Secretary Aldona Wos, many North Carolina House members, and some senators. Those policymakers want CCNC to create Accountable Care Organizations operated by health care providers.

    Those entities would, over a period of years, assume a small percentage of financial risk for budget overruns, rather than holding state taxpayers responsible for all red ink as is current practice.

    "This allows health care to do what is best, and what is best is to provide proper care for our patients," Wos said on Jan. 14 at CCNC's Innovation Forum at N.C. State University. She told an audience of almost 300 doctors, medical administrators, and policymakers to push for enactment in the current legislative session of the ACO plan backed by House leaders and Gov. Pat McCrory.

    The Illinois reform, aka Strengthening Medicaid And Repaying Taxpayers, has similarities to a successful plan in Florida approved by the Obama administration and favored by many of North Carolina's Senate Republicans.

    The Illinois plan is built around a coordinated care system of whole-health management. Patients are assigned to a primary care physician and a case manager, ensuring patients get all needed treatment and keep all appointments, with the goal of delivering quality care while avoiding needless duplication of services, emergency room use, and hospital admissions.

    Insurance giants such as Blue Cross and Cigna operate large managed care programs in Illinois. VonAlroth said state officials are pleased with their operations.

    Although three-quarters of the nation's Medicaid patients are in managed care networks, Wos and state Rep. Nelson Dollar, R-Wake, who sits on the Joint Legislative Oversight Committee on Health and Human Services and leads House Medicaid efforts, vigorously oppose managed care in Medicaid reform.

    In addition to managed care companies, Illinois formed Accountable Care Entities, in which several hospitals band together to offer coordinated care to clients.

    "They are acting as a managed care entity, but they are smaller, and they are assuming the risk," VonAlroth said.

    Illinois also has Care Coordination Entities, which provide managed care to special needs, disabled, and elderly populations. They, too, are smaller than the major managed care plans.

    Of Illinois' 3.1 million Medicaid patients, 1.4 million were moved into coordinated care. That is expected to rise to 2.1 million by this spring, VonAlroth said.

    The coverage networks are set up in regions that can cover several counties, especially in rural areas. In more densely populated areas such as Chicago, Medicaid recipients can choose from as many as 15 plans.

    State Sen. Louis Pate, R-Wayne, co-chairman of the Senate Appropriations Committee on Health and Human Services and a member of the Joint Legislative Oversight Committee on Health and Human Services, said North Carolina lawmakers first heard of the Illinois reform plan a year ago.

    Because Illinois is a Democratic-controlled state with a Democratic legislative supermajority attempting a free-market Medicaid reform with private management options, "We always sort of said, 'Well, we'll laugh up our sleeve at them. That won't last,'" Pate said.

    "But it sounds like it is," he said, expressing interest in following up with Illinois officials about their experience.

    "I think this might be the year people are willing to sit down and come up with some type of reform" of the Medicaid system in North Carolina, said Senate Majority Leader Harry Brown, R-Onslow. "When you spend $2 billion more in four years than you have before, you've got to do something."

    Aside from the political chasm hampering reform, Brown said, the multitude of Medicaid complexities is an obstacle.

    "I would be willing to bet that the majority of the General Assembly doesn't fully understand the works of Medicaid, it's that complicated," Brown said. "So trying to get a group of part-time legislators to come together and agree on reform is not easy, and it will never be easy."

    Jonathan Ingram, director of research for the Naples, Fla.-based Foundation for Government Accountability, has researched North Carolina's Medicaid system extensively. As a senior fellow at the Illinois Policy Institute, he worked on the enabling legislation in the Prairie State.

    "It is going to test these new models of managed care, and it's going to have those new models of managed care compete directly with the traditional models of managed care, so I think that's definitely something that's cause for optimism," Ingram said of the Illinois reform.

    Before the SMART Act was enacted, the Illinois legislature passed another law requiring at least half of the Medicaid population to be moved into managed care.

    Ingram said the former governor and his administration lacked enthusiasm for the change "so there were a lot of things that could have been done better during implementation that I'm hopeful will be sorted out in the new administration."

    Illinois will shift its new managed care models into fixed-payment-per-patient plans within 18 months, "and that's a good thing because that's going to bring the state budget stability in a way that your governor's proposal doesn't," Ingram said of the McCrory-North Carolina House concept.

    Wos and Dollar have objected to such short-term turnarounds.

    Ingram said he is not surprised that pushback from doctors and hospitals led the McCrory administration to abandon its initial managed care Medicaid proposal in favor of the provider-operated Accountable Care Organizations.

    "The whole purpose of managed care is to actually manage and coordinate care, which will reduce costs to taxpayers and hopefully improve health, and that means that providers, and especially hospitals, could get less money," Ingram said.

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