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Rethinking Medicaid


    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.

    Last Monday, the John Locke Foundation hosted a thoughtful health care forum where three expert panelists offered insight on the status of Kansas, Louisiana, and Florida's Medicaid reforms. Featured speakers included Kansas Lt. Governor Jeff Colyer, a pediatric plastic surgeon and leader of Kansas Medicaid reform; Christie Herrera, a nationally recognized leader in Medicaid and health policy at the Foundation for Government Accountability; and Alan Levine, President and CEO of Mountain States Health Alliance, a managed health care system in Tennessee.

    Reforming North Carolina's Medicaid program has been a heavy topic of discussion for the past two years among many stakeholders. The original game plan introduced by the Department of Health and Human Services (DHHS) in April 2013 was for the state to contract with multiple private managed care organizations (MCOs). In return, MCOs would take on full financial risk for the Medicaid program, leaving taxpayers off the hook for hemorrhaging cost overruns. Patients could then choose from among several plans that best meet their individual mental and physical health concerns. These plans would be paid a flat monthly rate for each enrolled individual, risk-adjusted for each individual's health status.

    Within one year's time, however, DHHS went back to the drawing board and decided to advocate for restructuring Medicaid under Accountable Care Organizations (ACOs). Through this approach, provider groups and health systems would partner to manage the cost and health outcomes of Medicaid patients under a defined target spend and still be paid fee-for-service. Any cost savings or losses would be shared between providers and the state. One can think of ACOs as similar to MCOs minus the insurance component.

    At present, a slew of bills have been filed by both chambers calling for either state-wide, competitive managed care encompassing all Medicaid patients, provider-led plans under an accountable care framework, or a mixture of both. The governor, some House members, and a wall of white coats favor implementing an ACO model. They fear that the presence of managed care insurance companies would in some ways limit providers from delivering the necessary care to their patients, because they are at full financial risk for budget overruns. Yet members of the Senate counter that managed care companies won't skimp on care because they will have to abide by the desired health outcomes set forth by the state in their contracts.

    All panelists indicated that full-risk managed care, provider-led plans, or a combination of both have been viable solutions thus far for surrounding states' Medicaid reforms. Here are some takeaways from the panel discussion:

  • The government should stop trying to be an insurance program and allow for MCOs to come in and do what they do best — create health plans for patients based on medical claims and population health data.
  • If hospitals and provider groups think they can act as insurers and deliver care to patients, they should go for it.
  • While the cost of North Carolina's Medicaid program is a serious issue, legislators need to focus less on this argument and more on how a fiscally conservative reform can achieve better patient health outcomes. Patient health outcomes need to better match the value of every taxpayer dollar devoted to Medicaid. Moreover, it is important that, with any Medicaid reform, provider rates and optional services are not cut, since cuts would limit provider participation and restrict patient access.
  • Eligibility audits are a must.

    To view the full event, click here.





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