Better Governing Now » A Rundown Of The House's Medicaid Reform Bill


A Rundown Of The House's Medicaid Reform Bill

    Publisher's note: The author of this post is Katherine Restrepo, who is the Health and Human Services Policy Analyst for the John Locke Foundation.

    The prescription for improving North Carolina's Medicaid program has been a repetitive talking point for the past two years. The initial game plan back in April 2013 was for the state to contract with at least three private managed care organizations (MCOs) to take on full risk for managing holistic medical needs for all Medicaid patients — carve outs not included.

    The following year, the Department of Health and Human Services went back to the drawing board and began advocating on behalf of provider-led groups to accept the job under an Accountable Care Organization (ACO) framework. These ACOs would share any savings or losses with taxpayers if they were to exceed or come in under their defined budget. Incentive-based bonuses would also be allocated if providers met benchmark quality metrics reflective of patient satisfaction and health outcomes.

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    At present, the Senate seems steadfast on allowing both managed care companies and provider-led organizations to coordinate health services for medical assistance patients. Meanwhile, the House advocates for providers and hospital systems to play the role of both provider and insurance company.

    Wednesday's House Health Committee meeting provided a more in-depth explanation of the chamber's modified HB 372. Some key components are as follows:

  • North Carolina's Department of Health and Human Services (DHHS) would contract with multiple Provider-Led Entities (PLEs). In return, each PLE would be responsible for delivering, coordinating, and managing physical health care for a minimum 30,000 Medicaid patients under a fixed payment.

    * Note that PLE is an interchangeable acronym for ACO. It's just another health care acronym to wrap your head around.
  • Dual eligibles — patients who qualify for both Medicare and Medicaid are carved out of PLE risk, along with prescription drugs, dental, and mental health services.
  • Payments to each PLE will be adjusted for its Medicaid pool's health status.
  • A governance board will oversee PLE networks to ensure that defined quality metrics are met, such as patient satisfaction and improved health outcomes.
  • PLEs will have to abide by a medical loss ratio, with 90 percent of their budgeted Medicaid spend devoted to patient care and the remaining 10 percent covering administrative costs and capital.
  • If the feds approve an 1115 demonstration waiver submitted by the state after next year, then complete reform is scheduled to phase in over a five-year period. It is intended for PLEs to cover all 100 counties in North Carolina, encompassing 90 percent of the state's Medicaid population.

    Overall, major stakeholders in the House of Medicine have made enormous strides within a year's time to agree on assuming full financial risk for their Medicaid patient pool. This is huge. However, to ensure Medicaid reform allows for healthy competition, it would be ideal to have both PLEs and MCOs compete to deliver tailored health care to Medicaid patients under the flexibility of an approved Centers for Medicare and Medicaid Services (CMS) 1115 waiver.

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