With Medicaid Overhaul Deal Close, Some Question If It's Needed

Aug 31, 2015

About 1.8 million people in North Carolina receive healthcare through Medicaid. The program provides for those who are low income and is funded by federal and state dollars.

A recent state audit found that the organization overseeing most Medicaid patients has saved taxpayers more than a billion dollars since 2002. Still, state lawmakers have been poised for years to overhaul the system, and it appears now that a deal is close.

In the mid-1980s, too many Medicaid recipients were relying on the emergency room in Wilson County for care. An expensive problem led to a home-grown solution: creating a network of medical providers across the state aimed at easing access to services and keeping costs down.

Today, Community Care of North Carolina (CCNC) oversees that network. It has about 1,000 employees and has served as a national model to Medicaid programs in Connecticut, Colorado, Oregon and Alabama. As policymakers finalize a long-term deal to reconstruct Medicaid in North Carolina, supporters of the current model are not happy.

"I have to say this is political, and there is not a lot of logic in politics," said Dr. Tom Irons who has been practicing medicine for 40 years. He still treats Medicaid patients at a clinic in Greenville, and is a professor of pediatrics at East Carolina University.

"When you see a movement like this for completely reforming Medicaid, you wonder who is going to be making money out of this, and somebody would," he added.

Medicaid is currently a $15 billion annual industry in the state. North Carolina pays for a third of that while the federal government kicks in two thirds. If, or when, an overhaul to Medicaid comes, it's expected to be a hybrid model - and will open the door for private insurance companies to bid on contracts. Industry and political experts estimate those companies will stand to receive 10 percent of the annual revenue, or about $1.5 billion

"There is such potential here to transform Medicaid to improve quality and improve access and reduce costs," said Donnie Lambeth, a former hospital CEO who is now representing Forsyth County as a House Republican.

"So it would be a more open competition, and I think that CCNC understands they've done some really good things. I've agreed they've done a vital role in keeping costs down of Medicaid. At some point, CCNC has to re-engineer and re-invent themselves," he said.

Supporters of the current system say CCNC has adjusted to the times, and the recent audit demonstrates that. However, the audit did little to dampen political momentum. Governor McCrory pledged to change the system upon taking office in early 2013. Lawmakers in the House and Senate have agreed to a revamp, just not on the implementation. Medicaid is pretty complicated and legislators have called it a budgeting nightmare.

"It's also difficult to manage, and to get services to individuals and others," added Republican state Senator Ralph Hise, a leader in the reform effort.

North Carolina is among several states that opted not to expand the program under Obamacare. That move would have extended the program to an additional 600,000 recipients. Hise and others were concerned.

"Even above what the overruns were, it's growth rate has been off the chart for everything else we deal with in state government. We're seeing year after year that the growth in Medicaid spending is exceeding the growth in revenue," he explained.

It's not hard to find someone in the industry who disagrees with that statement.

"Our total Medicaid spending has grown at a rate less than the percentage increase in recipients, meaning what we're spending per recipient is actually less than it was five years ago," said Greg Griggs, the Executive Vice President of the North Carolina Association of Family Physicians.

Griggs says that more than 90 percent of primary care physicians in the state see Medicaid patients. That figure is key to giving patients good access. Medicaid is a very low-profit margin area for family practitioners. Griggs says the current system has worked well and could be tweaked, but has concerns about a total overhaul.

"If we're not very, very careful about how things are implemented I think you could see a reduction in the number of family physicians accepting Medicaid; you also could see as a result of that a drastic result in access," Griggs said.

Griggs and others are concerned that would undo much of the progress that has been made since those days of crowded emergency rooms in Wilson County. When you talk to lawmakers these days, change on the Medicaid front seems imminent, though it will take a while. After a proposal advances through both chambers and on to the governor, it will actually take years before a federal waiver is obtained and an overhaul is rolled out.