McCrory follows new path on Medicaid

Published 12:00 am Friday, February 28, 2014

RALEIGH — A month ago, I wrote that Gov. Pat McCrory and his top health official, Health and Human Services Secretary Aldona Wos, might finally be setting the stage for a political and policy victory.
This week, the stage was indeed set. Now we get to see whether the McCrory administration can finish the deal.
That view of what occurred this week regarding the multi-billion dollar Medicaid program may not be universally shared.
For months, McCrory, Wos and other state health care officials had been discussing handing over all or portions of Medicaid to manage care entities, essentially insurers, who would bid on the state’s business on a per-patient cost basis.

Theoretically, the bidding process, and the desire of the insurers to make money, would save money and bring more cost certainty to the Medicaid program.
That result hasn’t always occurred in other states that have turned to managed care models for Medicaid. Sometimes those insurers have cherry-picked the healthy Medicaid populations; other times they have left when their contracts didn’t generate expected profits.
What would have happened in North Carolina is only conjecture.
That’s because the McCrory administration ultimately listened to hospitals, doctors and other medical providers who see managed care as a bad idea.
Their pocketbooks play a role in their disapproval. But they also argue that managed care would mean putting Medicaid patients in the middle of fights between insurers and doctors, with patient care ultimately suffering.
What McCrory and Wos embraced instead is a system that utilizes something called accountable care organizations to try to control costs.
The ACOs are networks of health care providers, who act together to try to create seamless care for patients but in a fee-for-service system as currently exists.
Doctors and others in the network receive financial incentives or penalties based on their ability to keep patients healthy and out of high-cost treatments.

Critics of the ACOs say they encourage more consolidation of health care providers. That criticism ignores the consolidation that is already occurring. Big regional hospitals and their networks have been dominating the health care market regardless of any Medicaid changes.
Policymakers who try to stem that tide are probably fighting a losing battle.
By pursing the ACO path, McCrory can achieve a victory while creating at least some of the cost savings and certainty that he hopes for.
That the chief budget writer in the state House, Wake County Republican Rep. Nelson Dollar, appears to embrace the idea may signal that part of the political battle — getting the House to go along — can be won.
The Senate may be a different matter.
But politics, no matter who is charge, typically comes down to compromise. This development has the feel of compromise that may benefit taxpayers and Medicaid patients.
And the alternative may be the current system that eats away growing chunks of the state budget.
Scott Mooneyham writes about state government issues for Capitol Press Association.