North Carolina is about to undertake the greatest revolution in health care since the 1965 advent of Medicaid and Medicare. And yes, that includes Obamacare. North Carolina soon will 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 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 as much as a 12 percent profit.
Some problems may arise, but 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 10 regional contracts will be awarded, with proposals to be turned in to DHHS by October 12. These contracts are estimated to amount to approximately $6 billion annually, the largest ever issued by state government. The requests for proposal will be reviewed and, hopefully, contracts will be awarded in February, 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 occur, it is important that great preparation be made. 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 has been a top administrator for the Center for Medicaid and Medicare Services in Washington and knows Medicaid and 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 on reform; he is knowledgeable and effective.
Kudos also need to be shared with the dedicated team at DHHS who have 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.
Tom Campbell is former assistant N.C. state treasurer and creator/host of “NC SPIN,” a weekly statewide television discussion of North Carolina issues that airs at 7:30 p.m. Fridays and 12:30 p.m. Sundays on the UNC-TV main channel and at 10 p.m. Fridays, 4 p.m. Saturdays and 10 a.m. Sundays on the UNC North Carolina Channel. Contact him at www.ncspin.com.