Medicaid’s BIG Organizational Change: January 1, 2013

The  State is further distancing itself from Medicaid. The 1915 (b)(c) Medicaid Waiver Program was chosen by the North Carolina Department of Health & Human Services, Division of Medical Assistance as a way to control and more accurately budget for the rising costs of Medicaid funded services. The 1915 (b)(c) Waiver Program was initially implemented at one pilot site in 2005 and evaluated for several years. Two expansion sites were then added in 2012. Full statewide implementation is expected by July 1, 2013.

Starting January 1, 2013, providers in Wake County, along with approximately 33 other counties, will need to register with the Medicaid Managed Care Organizations (“MCO”), not with the Local Management Entities (“LME”). What is an MCO? The State has divided up the counties into 3 sections: eastern, western and central. One MCO will supervise all Medicaid activity within its area. Each fiscal year the State will divvy up the Medicaid funds, give the entire bulk amount to each MCO (called a capitation), then all health care providers will request funding from the MCO. The capitation would be based on a formula that takes into account the historical service costs associated with the different Medicaid eligible groups. When the money is gone, it is gone.

I foresee a number of legal problems with this system. First, if Wake County’s MCO runs out of money, and a severely handicapped child lives in Wake County and is denied Medicaid services, will there be a less-needy child in another MCO district receiving funds over the truly needy child? Shouldn’t the most needy get the Medicaid funds first? Instead of by location? Second, who runs these MCOs? Misappropriation of funds is highly likely with the amount of money involved in Medicaid. Third, once the MCOs are in effect, the health care providers need to apply for authorizations and certifications through the MCOs, not DHHS. I foresee MCOs denying health care providers’ requests based subjective criteria. Fourth, during the time in which the providers must reapply through the MCOs, the providers will not be receiving Medicaid money. Depending on the wait time, small health care providers could easily go defunct. Fifth, the MCOs will be holding the money for both mental health AND developmentally disabled. Again, it will be difficult to choose the needy Medicaid recipient over another. Sixth, there have already been complaints by the families of Medicaid recipients. The complaint stated that the families were not notified that the LMEs had submitted for the registration as an MCO. DHHS has “noted” the complaint.

There have been other complaints about the transition:

Response to the policy change has not been all positive, though. Vicki Smith, Executive Director of Disability Rights NC, stated that there is a “great deal of pressure on DHHS to quickly convert LMEs to Medicaid Waivers so the General Assembly’s cost cutting targets can be met.” 

David Cornwell, Executive Director of NC Mental Hope, stated that “between changes OK’d by House Bill 916 and proposed changes in Chapter 122C, it’s not just a wrecking ball that will be slamming into our state’s system, it’s an army of bulldozers and backhoes and mammoth dump trucks lining up to roll over it. And the same legislators that can’t see further than next year’s budget also don’t care if there’s a blueprint for the final product, only that there is a sketch of what the next phase will look like.” 

In 2009 NAMI, National Alliance on Mental Illness, gave the state of North Carolina a D for its mental health system stating that a grade of D “does not even begin to convey the chaos that now pervades the state’s mental health care system…NAMI warned three years ago [2006] that the state’s reform initiatives were changing too much, too fast, resulting in an increasingly disorganized environment. This prediction was accurate.”


About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on November 8, 2012, in MCO, Medicaid, Medicaid Funds and tagged , , , , , , , , , . Bookmark the permalink. Leave a comment.

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