NC Health agency mapping Medicaid overhaul plan

by Emery Dalesio, Associated Press, published in News and Observer, February 26, 2014.

Gov. Pat McCrory's health agency on Wednesday planned to unveil its latest version of ideas on how to change North Carolina's $13 billion Medicaid health care system for about 1.7 million poor and disabled people.

The state Department of Health and Human Services was scheduled to present its framework for revamping Medicaid to an advisory group set up by McCrory. The plan could get some touch-ups before it's presented to state lawmakers next month. The Legislature is expected to take up the proposed changes beginning in May.

It's been almost a year since McCrory and state health Secretary Aldona Wos proposed largely privatizing management of Medicaid while keeping ultimate responsibility in state hands. About $3.5 billion of the shared state and federal program's cost is paid by state taxpayers.

McCrory and Republican legislative leaders have blamed spiraling Medicaid costs left by preceding Democratic administrations for not providing teachers and state workers with raises last year. But Medicaid has also proved tough to manage under the GOP's watch.

McCrory has said overhauling Medicaid is at the top of his legislative agenda and "may be the toughest battle" with lawmakers cool to earlier ideas to pay managed-care organizations a set fee and force them to work out how to deliver care within that budget.

The North Carolina Medical Society — which represents about 12,500 physicians and physician assistants in the state — the North Carolina Hospital Association, and other advocates for medical professionals and consumers have proposed a more conservative shifting of the risk for cost overruns.

The groups proposed expanding the more than 20 accountable care organizations already operating across North Carolina. The small networks of physicians or hospitals are paid by Medicaid for each procedure they perform. Organizations that meet savings and treatment goals get to keep a portion of the savings generated. If patient costs exceed standards, it must share losses with the state.

Problems in North Carolina's Medicaid program have persisted for years and haven't quit since McCrory took office last year and installed Wos as DHHS secretary.

A decision by the agency to delay recalculating Medicaid patient eligibility for three months could cost the state up to $2.8 million. Lawmakers have criticized the agency for not reporting those costs while they were developing the state budget last summer.

A group of North Carolina doctors filed a class-action lawsuit last month after flawed computer programs severely delayed payments they were due for treating Medicaid patients. The lawsuit alleges that managers at DHHS and its contractors were negligent in launching NCTracks, a nearly $500 million computer system intended to streamline the process of filing Medicaid claims and issuing payments.

The lawsuit alleged NCTracks's software was riddled with thousands of errors that led to delays of weeks and sometimes months before doctors and hospitals received payment. That forced some medical practices to borrow money to meet payroll and others to stop treating Medicaid patients, the lawsuit said.

Earlier this month, DHHS announced it would spend up to $3.7 million on no-bid, personal service contracts with two firms that would advise the agency on running the Medicaid program. Internal McCrory administration memos released to The News & Observer of Raleigh describe understaffed and underskilled workers in the Medicaid division needing emergency help.