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Competition is a beautiful thing.  It makes us all work harder.  And it encourages personal responsibility.

The time has come for North Carolina to roll up its sleeves and follow through with its proposed Medicaid Reform, Healthy Partnership for North Carolina.  North Carolina has chosen to revamp its Medicaid system by opening its doors to competitive contracting amongst three or four managed care organizations, known as Comprehensive Care Entities (CCEs). These entities will compete against each other by offering a variety of medical services to eligible Medicaid recipients. 

Defining Managed Care Organizations

Managed Care Organizations (MCOs) operate on limits.  Services that are provided by contracted medical providers to patients are limited.  Payment is also limited, or capitated, as physicians are reimbursed on a per-member, per-month (PMPM) basis.  This means that no matter how many times a Medicaid patient sees a physician in one month, that physician receives the same fixed amount of payment.  

One may cringe at the thought of "limited health care."  However, these limited services focus on preventative health measures.  If properly run, MCOs allow their contracted networks of providers to offer quality preventative health services to patients, yielding positive health outcomes.   

The tandem of limited services and limited payments aim to achieve health care cost-effectiveness.  North Carolina’s current and only Medicaid MCO, Community Care of North Carolina (CCNC), operates through this framework.  The medical home model seeks to offer preventative health services to the Medicaid population to control chronic illnesses and reduce unnecessary and costly ER visits.

More is Better

But having just one statewide MCO providing Medicaid services simply does not work.  CCNC proponents boast that North Carolina now has the slowest-growing Medicaid spending in the country.  But costs per enrollee continue to increase rapidly.  North Carolina’s costs per enrollee significantly surpass its Southeastern neighbors.  This is because CCNC does not carry the weight of fiscal responsibility; the organization does not follow spending limits.  This is a big problem.  

Governor McCrory envisions CCEs carrying fiscal responsibility — fixing any cost overruns themselves and providing comprehensive care for ALL Medicaid enrollees via "risk-stratification." If a patient requires intensive medical care, medical providers will be reimbursed at higher rates. This incentive will prevent cherry picking, in which providers choose to care for less costly, healthier patients.    

Multiple MCOs also help to promote patient choice.  Medicaid-eligible citizens will be able to choose from a variety of benefit packages from multiple networks that best fit their individual medical needs.  While patients are presented with options, the CCEs essentially compete against each other to gain more consumers by offering more services, yielding lower rates. 

Responsibility Restoration

Just as medical providers and administrative management will be held fiscally responsible for providing quality services, Medicaid beneficiaries should also bear responsibility.  When glancing around the nation, some states effectively enforce this standard.  

Florida is expanding its five-county Medicaid pilot program, Medicaid Cure, statewide.  Medicaid Cure operates through the state paying a fixed monthly amount to 11 different private health plans.  Medicaid beneficiaries then choose customized benefit packages tailored to their medical needs. 

Furthermore, a new proposal for beneficiaries to receive a CARE account (Contribution Amount for Reasonable Expenditures) is making its way through the Florida legislature.  These accounts simulate Health Savings Accounts (HSAs), where patients spend a fixed amount on health care expenses at their own discretion.

As low-income beneficiaries receive an annual $2,000 in their CARE accounts, they must also contribute $25 a month and follow a part-time work requirement.    

Indiana’s Healthy Indiana Plan (HIP) employs the same state-funded HSA concept, known there as POWER (Personal Wellness and Responsibility) accounts.  Beneficiaries earning income below 200% of the federal poverty level must contribute up to 5% of their income to their account and may roll over unused funds from year to year.  Copays are also required for non-urgent ER visits.  

The Weekly Standard sums up the critical need for introducing Medicaid recipient responsibility:  

The idea behind consumer-driven health plans is that people are careful shoppers when paying for services piecemeal but tend to overuse what seems to be free — think of an open buffet.

When money is placed in the hands of a consumer, it is more likely to be spent wisely.  Until North Carolina instills the concepts of competition and ownership in its Medicaid reform, the system cannot be fixed.

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