North Carolina's revolution in healthcare

Published August 23, 2018

By Tom Campbell

by Tom Campbell, Producer and Moderator of NC SPIN, August 22, 2018.

North Carolina is about to undertake the greatest revolution in healthcare since the 1965 advent of Medicaid and Medicare. And yes, that includes Obamacare. North Carolina will soon become the largest state in the nation to make a shift to managed care for our 2.1 million Medicaid recipients.

Following several years of Medicaid deficits, improved budget forecasting and more efficient management oversight from our Department of Health and Human Services (DHHS) resulted in Medicaid surpluses.  But our legislature and leaders felt we could save taxpayer dollars while also improving care for recipients by instituting Medicaid reforms in 2015.

Managed care eliminates the fee-for-service each time a person visits a doctor, hospital or other provider. Instead, the state will pay a capitation fee (a certain amount per person per month) to a managed care organization or care provider group. The state sets the monthly amount; if the provider can supply proper care for less, the contractor can earn up to 12 percent profit. While there are some potential problems, it is hoped this change incentivizes the contractors to focus attention on the overall wellness of a person, not just the treatment of sicknesses.  

Four statewide contracts and six to ten regional contracts will be awarded, with proposals to be turned into DHHS by October 12th. These contracts are estimated to amount to approximately $6 billion annually, the largest ever issued by state government. The RFPs will be reviewed and hopefully contracts will be awarded in February of next year, a pretty ambitious time schedule.  

It is imperative that we make this monumental transition work well. North Carolina’s Medicaid program costs more than $14 billion a year, with approximately $3.5 billion of that coming from our state. Medicaid is second only to public schools in state spending.

Whenever great changes are undertaken it is important that great preparation be made in advance. It is safe to say there has never before been a program that has been better researched, analyzed and prepared for than our Medicaid managed care transition. Great effort has been made to involve the public, the medical and care provider community, insurers and others. Detailed study has been made of other states’ efforts to learn what works and what doesn’t. What has been learned has been well communicated, as is demonstrated in the 700-page report recently released by DHHS that outlines the progress to date, as well as steps needed going forward. Managed care, like Medicaid itself, is highly complicated and has many moving parts.

We can take great comfort in the leadership team for our state. DHHS Secretary, Dr. Mandy Cohen was previously a top administrator for CMS (the Center for Medicaid and Medicare Services) in Washington and knows Medicaid, the people involved with it and is an excellent leader. Deputy Secretary for Medicaid Dave Richard assumed his role in 2014 and has been a part of all the discussions regarding reform and is knowledgeable and effective. Kudos also need to be shared with the dedicated team at DHHS that has met the challenge well. Let us also point out that this has been an example of how state agencies and the legislature can work cooperatively together.  

We hope this cooperative spirit will continue as managed care evolves.

August 27, 2018 at 10:13 am
Jeff Leston says:

I suggested readers - especially state legislators- look at last week's hearings in the US Senate Homeland Security and Government Affairs Committee, along with recent GAO reports, (GAO-18-598T and GAO-18-687T)all of which are crying out for increased oversight of Managed Medicaid because the Managed Medicaid companies have done little to nothings about reducing fraud in the NC Medicaid program, which the State Auditor pegged at over $1 Billion in 2016. THis move is not a panacea and should not be treated as such.