A willingness to take a breather in the midst of years’ worth of intense and heated debate over the state’s Medicaid program has led to the legislature reaching an unexpected compromise.
Nearly a year ago, the House and Senate hit a loggerhead over which groups should be in charge of oversight for nearly 2.1 million Medicaid recipients in North Carolina — for-profit insurers, behavioral health managed care organizations, or not-for-profit health-care systems and providers.
That decision represents a key piece of how North Carolina plans to shift to a capitated Medicaid program as it pursues federal health regulators’ approval for its ambitious waiver transition to integrate behavioral and physical health care for recipients.
A capitated system is where a flat fee is paid to cover all care services for most Medicaid recipients. The current system operates on a fee-per-service format.
People are also reading…
In June 2016, the McCrory administration submitted a Medicaid reform plan that allows a role for up to three commercial insurers providing prepaid health plans (PHP) statewide, and not-for-profit health groups supporting between 10 and 12 regional provider-led entities (PLE).
It has been considered possible, but unlikely, that one of the state’s seven behavioral health MCOs could expand into providing prepaid health plan services.
The Cooper administration updated the waiver in November 2017. An answer from the Centers for Medicare and Medicaid Services could come any day.
On Friday, the House and Senate agreed in the latest version of House Bill 403 on how to divvy up which groups have oversight over which individuals with mental health, substance abuse and intellectual/developmental disabilities.
If Gov. Roy Cooper signs the bill into law, which is expected, the seven behavioral health MCOs would continue for up to four years to oversee individuals with severe behavioral health symptoms or episodes. Those MCOs, including Cardinal Innovations, would pick up responsibility for those individuals’ physical well being.
Cardinal oversees providers of services in 20 counties, including more than 96,000 in the Triad. It handles more than $675 million in annual federal and state Medicaid money.
Meanwhile, the pre-paid health plans would oversee the behavioral and physical health care for individuals considered as “mild” to “moderate” for behavioral health care.
The bill also expands the number of statewide oversight groups from three to four.
The number of regional provider-led entities stays at 12. The PLEs would be allowed to serve multiple regions, but those regions must be contiguous.
“The integration of physical and mental health is essential to delivering whole-person-centered care, which has long been a priority of the Department of Health and Human Services,” the department said in a statement.
“We are pleased to see progress on the passage of this bill and the inclusion of behavioral health integration that the department proposed after gathering input from stakeholders across the state.”
DHHS, however, cautioned that “hard work still remains in the effort to change the way we pay for and deliver care in a way that is comprehensive and focuses on the whole person.”
Oversight
The intensity over behavioral health oversight the past 5½ years epitomized the often-heated attempt at reforming a state Medicaid program that had a nearly $2 billion financing gap from July 2009 to July 2014.
Legislative steps over the past four years that tightened eligibility amid an improving economy reduced state funding and required MCOs to spend from their fund balance surplus contributed to what will be four consecutive fiscal years of an annual budget surplus.
Yet, there were key Senate Republican leaders, led by Sen. Ralph Hise, R-McDowell, who sought to eliminate the MCOs as part of privatizing the entire state Medicaid program.
A scathing State Auditor’s Office audit, released in May 2017, found taxpayer funding was used for Cardinal expenses for alcohol, first-class airfare, charter flights, holiday parties or similar social expenditures and holding board meetings, whether formal or informal retreats, outside of North Carolina at high-end venues.
The audit also cited nearly $500,000 in “unreasonable” non-core spending, such as a $1,000-a-month car allowance for former Cardinal CEO Richard Topping.
That report was requested by legislators in February 2016 “relating to Cardinal operating outside of its statutory mission and extravagant or excessive spending.”
The administrative and oversight actions of Topping and the Cardinal board of directors went from ruffling feathers at the legislature to a crescendo of bipartisan outrage over Topping’s pay and cutbacks on recipient services while the MCO believed it was not subject to state executive compensation rules.
HB403 was submitted in the House in March 2017 as a way to clarify oversight responsibilities over the MCOs, including executive compensation and board responsibility.
When HB403 was sent to the Senate, Hise opted to spend much of the bill discussion revisiting the previous three years of debate over the oversight issue.
Hise added, and the Senate approved, language that eventually would have dissolved the MCOs, potentially as early as 2019.
The Senate version was derailed by the House even after Hise agreed to take out that language, as well as take out his request to expand the number of statewide commercial insurers to five and reduce the number of PLEs to four.
Rep. Donnie Lambeth, R-Forsyth, a leading health care expert in the legislature, said in June 2017 that the demands of just a few senators to attempt to change agreements made during the Medicaid reform process (of 2016) was not acceptable to House leaders.”
At that point, it appeared HB403 had been shelved in a concurrence committee, perhaps for good.
Then it unexpectedly appeared on the House floor Thursday night.
The key
It was a classic example of never saying never about legislative action until the session is officially over for the year and there are no plans for calling for special sessions.
The key to the bill emerging from the concurrence committee was the respect that Dr. Mandy Cohen, the state’s health secretary in the Cooper administration, had earned from key legislative leaders in her November decision to terminate Topping and dissolve the Cardinal board.
Lambeth said Cohen’s involvement in the HB403 negotiations begin in earnest in January.
“The secretary is committed to Medicaid managed care, and her national experience (as a former CMS executive) and contacts brought some level of expertise and credibility to these discussions,” Lambeth said.
“She convinced us that a stronger commitment to the behavioral health program and network was critical in the early years to move Medicaid reform forward.”
Lambeth said that “the issues we faced with Cardinal over the last year were key to making some changes to support a stronger network plan while we are implementing the prepaid plans around the physical conditions of care.”
Lambeth said that with the concerted effort to end the short session before the end of the month, “We all agreed we needed to make these changes and finish this up, rather than butt heads looking for a perfect solution and plan. “
Rep. Verla Insko, D-Orange, said the timing was right for the HB403 compromise given the steps already taken toward reform and the resolution of the Cardinal issues by Cohen.
“This bill has more detail regarding how the MCOs will function as the (behavioral health) population with mild or moderate conditions move to the traditional physical health plans, and the MCOs adapt to the tailored plan model and integrate physical health services,” Insko said.
Cardinal said in a statement that all parties “have been moving toward Medicaid transformation for some time.”
“The House conference report was the first step in finalizing legislation to that end. Our focus remains on how our members will be protected and served within this new framework, and we will continue to work with both the department and the General Assembly to ensure that their health and long-term well being is at the center of this transformation.”
Moving forward
Billy West, director of behavioral health provider DayMark Recovery Services, said there are two main positives about the final version of HB403.
“It allows DHHS to move forward with its work that will lead up to the release of a request for proposal” for the PHPs and PLEs.
“It gives the MCOs a more defined future. It’s good that decisions have been made to move the system forward.”
West said he remains concerned that there could be too many plan options for Medicaid recipients, which could “drive up administrative burdens for providers and not allow for a critical mass of eligible members for a larger number of plans.”
“At face value, this still seems like a lot of plan options for a somewhat rural state with no Medicaid expansion. We really do not know what we don’t know about what the actual growing pains will be when this comes to fruition.”
Laurie Coker, president of advocacy group NC CANSO and a former CenterPoint Human Services board member, said she is glad to see HB403 finally advance with an MCO role.
Yet, some of her concerns remain unaddressed.
“What safeguards can the legislature call for that will ensure ease of information and ease of access to services?” Coker asked. “Advocates are concerned about the potential for a chaotic transition to the new structure.”
Coker said the legislature needs to clarify what it wants in terms of service quality for recipients and service providers.
“We spend too many dollars on insufficient mental health care outcomes,” Coker said. “Effective results of care are not a target in this legislation.
“Instead, this bill focuses on the management criteria of Prepaid Health Plans, managing provider networks, containing risk and interagency coordination, all of which are important. But without quality service outcomes, we pay through our historically high hospitalization rates.
“The aim must be not only to restructure, but to provide better value through these sweeping changes,” Coker said. “I urge our General Assembly to take on the issue of system quality before these other changes are implemented.”