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WEEKLY STATE UPDATE

Monday, October 29, 2018

This Week in Raleigh

Since 2015, North Carolina lawmakers have been working on transitioning Medicaid from a fee-for-service structure to managed care. This week North Carolina received federal approval from the Centers for Medicare and Medicaid Services (CMS) on its amended 1115 Demonstration Waiver application.

The shift to privatizing Medicaid means that the state will eventually contract out $6 billion a year to managed care groups. Currently, the state oversees the care of Medicaid patients and cuts checks for their medical bills (from operations to flu shots). Soon, the state will pay managed care companies a rate per-person. Eight managed care companies have already submitted applications and the state is expected to award contracts in February.

So what does that mean for the one in five North Carolinians who rely on Medicaid for their healthcare? For one, they should know that the first patients won't be transitioned over to the new system until November 2019. Among the more exciting changes, North Carolina will be the first state in the nation to use Medicaid dollars on preventative measures in healthcare approaches. Medicaid will be able to address social determinants of health - like homelessness, food insecurity, and adverse childhood experiences. “It really makes us a national leader with this," said NC Health and Human Services Secretary Mandy Cohen. The approved 1115 waiver also means that the state will be able to use federal matching dollars to treat individuals with opioid addictions and those with disabilities and behavioral health needs. In addition, North Carolina will develop a specialized plan to cover children in the foster care system and provide coverage up to age 26.

Obtaining the waiver is a big deal, but most of the hard work is ahead to ensure health outcomes and savings can be obtained", said Senior Appropriations Chairman, Representative Nelson Dollar.

Making Headlines

In NC Legislative Races, Negative — And Misleading — Ads Flourish - WFAE
With less than two weeks before the November 6th election, candidates and independent groups have been bombarding voters with mailers and TV ads. They are increasingly negative – and misleading.

3 months, 3 special sessions. Do they really cost NC an extra $50,000 every day? - News & Observer
Taxpayer money is financing these special sessions. And during the second session, some Democrats expressed their displeasure by sharing the daily cost of their work in Raleigh.

Top 9 Things I'm Watching This November's Election - Longleaf Politics
What to look out for this election season.

Why the governor’s appointment powers should be limited - News & Observer
An opinion piece by a former Governor's appointee.

Healthcare

State Treasurer Dale Folwell is battling hospitals across North Carolina over costs, pushing a new plan that would save money for the largest insurance plan in the state and potentially send ripples throughout the health care industry.

"The State Health Plan for state employees, retirees and teachers has more than 720,000 members, and it spends some $3.3 billion a year. Eighty percent of that comes from taxpayers.

Folwell says there's not nearly enough transparency in the system, and he wants a whole new spending model. Instead of the plan's administrator, Blue Cross Blue Shield of North Carolina, negotiating rates in secret with hospitals, the plan would pay set amounts.

Not only would this save money, he said, it would force closely held data on what insurance plans pay into the open.

The state's rates will be tied to Medicare, the federal health insurance plan for senior citizens. Payments would vary by service, but on average, the plan would pay hospitals and doctors 177 percent of what Medicare pays.

The North Carolina Healthcare Association, which represents hospitals statewide, is against the change, saying Medicare rates are often "well below" actual treatment costs and that Folwell's plan could force hospitals to discontinue some services.

Even when the new rates cover costs, the plan will eat into a margin hospitals need to cover the cost of 24-hour emergency rooms and treating people who can't afford to pay, Healthcare Association spokeswoman Julie Henry said. If rates get locked in, publicly, other insurers may push for something similar, she said.

"Then United (Healthcare) ends up saying, 'Why are we paying more?'" Henry said.

Folwell is essentially trying to upend a model where insured patients subsidize care for the uninsured, a basic element of the U.S. health system.

"That can be a tenet of our health care system," he said Friday, "But it's not going to be a tenet of the State Health Plan."

Nationally, only Montana's state employee plan has moved to this system. If Folwell is successful in North Carolina, others may follow, including private employers, according to Mark Hall, a professor of law and public health at Wake Forest University.

"It's very notable," Hall said. "It really is a bold stand."

The appointed board that oversees the State Health Plan approved Folwell's pitch Monday. It was the culmination of a fight pushed not just over cost, but over the hard-to-follow way health care costs are presented.

Folwell has repeatedly accused Blue Cross and hospitals of keeping key information secret, even from him. Two months ago, after UNC Health Care sent him a contract with vast portions blacked out, he put out a heavily redacted press release to mock the secrecy.

The new pricing is slated to go into effect in January 2020, and the Treasurer's Office predicts it will save $300 million in the first year alone.

Between now and the start date, it will be up to hospitals and physician groups to decide whether to accept offered rates. If they don't, they'll be out-of-network, increasing costs or shutting the door for state employees and retirees in the area.

Cross considers the deals it negotiates with hospitals to be trade secrets. But it also says it provides Folwell with what the state needs to audit the plan, including all claims data.

Folwell said key information is missing: What the company contracted with hospitals to pay.

It's possible this fight will spill over into the General Assembly as the health care industry pressures the State Health Plan not to make this move. Folwell, a former member of the House, said he occasionally hears a bill is coming to, as he puts it, increase plan costs and decrease transparency.

"Guess I just have to wait to see who files it," he said." (Travis Fain, WRAL, 10/26/18)

Moving Forward

The North Carolina General Assembly will reconvene on November 27, 2018 at 12:00 p.m.

Monday, October 29, 2018
10:00 a.m.  - Child Fatality Task Force (1027/1128 LB)
To see archived weekly state updates, please click here.

CONTACT US

Call us at 828-213-1221 or email us at advocacy@msj.org.