Medicaid reform bill signed into law


McCrory signs Medicaid Reform with Sen. Floyd McKissick, Rep. Donny Lambeth, Rep. Marilyn Avila, and Sen. Brent Jackson

RALEIGH – This week Gov. Pat McCrory signed another of his key legislative priorities, the Medicaid reform bill, into law Thursday. The state Senate and House passed the compromise measure in bipartisan votes after weeks of negotiations.

The multi-year reform plan moves toward making the program a privately run system that reimburses medical providers on a per-patient basis, rather than per service. The goal is to increase patient access to cheaper, preventive care and provide a more predictable Medicaid budget.

“Under the current system, we wait until people get sick to provide care and pay for tests – not outcomes. This new system will focus on keeping people healthy and delivering care where it makes the most sense for patients,” McCrory said.

Credit: Washington Hospital Center

The managed care system will eventually be capitated, with providers getting a flat, per-patient fee and managed care companies assuming the risk of cost overruns. Patients will be able to choose from three statewide health plans and ten regional plans. A new group within the N.C. Department of Health and Human Services called the Division of Health Benefits will administer the program and be exempt from the State Personnel Act. The exception is Behavioral Health, which will remain state-run. Lawmakers say the new system will mean budgetary relief for the state and better healthcare for generations to come.

“The healthcare market has changed over the past 20 years, and North Carolina has struggled to keep pace,” said Rep. Donny Lambeth, a former hospital administrator and key negotiator of the final compromise plan.  “Past legislators have wrestled with Medicaid budgets that have grown dramatically over the past decade, and many have taken proactive steps to help contain the program’s growing costs – but now it is essential to restructure to sustain the program.”

According to Fiscal Research division at the N.C. General Assembly, Medicaid provides medical care to about 2 million low-income people with 56 percent of all births in the state being to mothers receiving Medicaid benefits. It consumes more than 17 percent of the state budget, second only to education, and has grown 20 percent in the last three years.  Forecasting the cost of the program has been particularly difficult, with an audit last year showing it has been nearly $2 billion over budget since 2000.

Some opponents of the new compromise plan say that it should have expanded Medicaid to include more people. Others have expressed concern that the system incentivizes private companies to put profit above patients.

“Medicaid reform is challenging, and we understand the difficulty of the decisions legislators faced,” said Robert W. Seligson, CEO of the N. C. Medical Society. “We oppose the General Assembly’s decision to involve corporate managed care in our Medicaid program. Including some of the patient protections we requested such as performance standards based on quality, cost and patient experience is an improvement.”

The reforms will not take place immediately because the federal government will have to approve the plan. The Feds currently pay for two-thirds of Medicaid, with the state paying one-third of the cost. The approval process could take two to three years.