Governor’s plan marks ‘critical step forward’ to improve N.C. Medicaid

May 28, 2013

Click here to view and here to listen to Katherine Restrepo discussing this Policy Report.

RALEIGH — Gov. Pat McCrory’s Medicaid reform plan marks a “critical step forward” to help create a pro-patient, pro-taxpayer health care safety net. That’s the conclusion of a new Policy Report from the John Locke Foundation and the Florida-based Foundation for Government Accountability.

The report offers nine ideas to help upgrade McCrory’s model, dubbed the Partnership for a Healthy North Carolina. “Although North Carolina policymakers should explore additional ways to make the governor’s proposal even stronger, the Partnership for a Healthy North Carolina represents a major step forward in transforming Medicaid into a truly affordable and successful health care safety net,” write co-authors Katherine Restrepo, JLF Health and Human Services Policy Analyst, and Jonathan Ingram, FGA Director of Research.

North Carolina’s Medicaid program urgently needs reform, Restrepo said. “Costs are skyrocketing, patients lack choice and control over their health future, access is limited, and health outcomes are poor.”

Enrollment has jumped from 815,000 people in 1998 to 1.6 million people in 2012, with costs rising in just a decade from $8 billion to $14 billion in state and federal tax dollars. North Carolina has the highest per-person Medicaid spending rate in the region and a substantially higher rate than the national average.

“This exorbitant per-person spending has led to budget overruns year after year, requiring annual supplemental appropriations to fill North Carolina’s Medicaid budget deficit,” Restrepo said.

“For the last four fiscal years, North Carolina’s Medicaid spending exceeded its appropriated budget by an average of 11 percent,” Ingram added.

While costs have grown, Medicaid outcomes have deteriorated. “In 55 percent of the most widely tracked patient health outcome measures, North Carolina scored worse in 2011 than it did in 2010,” Ingram said. “This is not a single-year anomaly. North Carolina’s Medicaid performance has been on a downward spiral for the past several years.”

McCrory’s plan offers an “innovative, patient-centered” alternative to traditional Medicaid’s “one-size-fits-all” approach, Restrepo said. “The Partnership for a Healthy North Carolina embraces the idea of multiple comprehensive care entities to deliver care more efficiently to Medicaid patients.”

Among the potential benefits of McCrory’s plan: patients can choose from among several competing private plans, those plans will receive a fixed amount of funding per patient, plans can get additional compensation for improving patients’ health, consolidated payment systems streamline the reimbursement process for health care providers, and the reforms should save the state about 8 percent per year, or more than $1 billion in state and federal tax dollars.

Restrepo and Ingram highlight positive outcomes linked to similar reforms in Florida, Louisiana, and Kansas. “Louisiana taxpayers saved about $160 million during the first year of their Bayou Health program, while the KanCare program in Kansas topped its initial savings target by $67 million in the first year, suggesting that Midwestern state will beat its target of $1 billion in savings over five years,” Ingram said.

Along with the praise, the report outlines potential “upgrades” for the Partnership for a Healthy North Carolina.

“First, expand the number of contracted comprehensive care entities beyond the three or four included in the initial proposal,” Restrepo said. Florida offers four to six plans in each of 11 geographic regions, while Louisiana selected five statewide plan options from among 14 bidders.

Restrepo and Ingram also recommend allowing physician practices, hospitals, health centers, and other “provider-led plans” to compete with the comprehensive care entities. That includes the idea of guaranteeing a spot for the state’s main Medicaid provider, Community Care of North Carolina.

A third recommendation involves permission for specialty plans targeting patients with specific health challenges such as acute mental health needs or HIV/AIDS. Fourth, a “robust” choice counseling program would help patients selecting a plan.

The report recommends protections for both providers and patients, including a guaranteed rate floor for providers and penalties for plans that breach contracts or abandon patients. In addition, comprehensive care entities could offer customized and “extra benefit” packages to cover items such as over-the-counter drugs, vision care, and preventative dental coverage.

Restrepo and Ingram recommend “enhanced benefit rewards,” such as the Florida Medicaid Reform Pilot’s feature allowing Medicaid patients to earn up to $125 per year for receiving certain preventative services, complying with maintenance and disease management programs, and keeping appointments. A final recommendation focuses on allowing working Medicaid patients to buy employer-sponsored or individual coverage when it’s available and cost-effective.

“Gov. McCrory’s Partnership for a Healthy North Carolina is an innovative, patient-centered approach to tackle Medicaid challenges head-on,” Restrepo said. “It will improve the health of Medicaid patients and protect taxpayers from the Medicaid program’s mismanagement. The strategy already has worked in Florida, Kansas, and Louisiana, and it will work in North Carolina, too.”

The John Locke Foundation and Foundation for Government Accountability’s Policy Report, “The Partnership for a Healthy North Carolina: Medicaid Reform that Works for Patients, Providers, and Taxpayers Alike,” is available at the JLF website. For more information, please contact Restrepo at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].