The Future of Managed Care in Medicaid and the Fear of the Unknown

The unknown.  No one likes the unknown.  Especially people, like me, who try so desperately to maintain control over our lives. 

But the future of Medicaid in North Carolina is unknown.  We have all heard Governor McCrory talk about expanding managed care to all Medicaid services, not just behavioral health care, but for all medical services.  Here in NC, our experience with managed care organizations (MCOs) has not been all sunshine and roses.  So, when we hear…let’s expand the MCO system to all Medicaid services, I am reminded of the feeling I had this past Saturday as I stood on the side of the Wells Fargo building, 30-stories up, facing background, with a harness and a helmet on, when the rappel guy said, “Ok…now lean back and let go…”

OK….so is anyone wondering how I managed rappelling down the 30-story Wells Fargo building downtown Raleigh this past Saturday in the name of Special Olympics North Carolina?


I do not kid you when I say that I thought that I would enjoy rappelling. I envisioned myself bouncing off the side of the building, laughing, and doing straddle jumps. I envisioned myself getting to the bottom with an adrenaline rush and an immediate need to sign-up for next year’s Over The Edge charity event.

So, what actually happened?  Picture this:

I am standing on the edge of a 30-story building.  I have 20 pounds of equipment attached all around my body.  I am donning a helmet and gloves.  I have never seen any of the equipment that is wrapped around my body.  The pro-rappellers are saying things like “rigger,” “descenders,” and “carabiners.”  They are obviously all hard-core, banging rapellers, which I, most certainly, am not.

In order to get on the ledge of the building, you have to climb up onto the ledge…as in, take your 2 arms and hoist your body up onto the ledge…sit down on your bum with your back to the 30-story view…and, then, completely stand up…. on a ledge… in order to lean back and jump off the building.

If you can envision preparing yourself for a jump off a 30-story building without your heart racing, then you are way cooler than I.

Ever heard the saying, “The first step is the hardest?”  Whoever said that had, obviously, rappelled off the Wells Fargo building.  Just prior to actually going over the edge, not only did my body have to battle the physical issues (shaking, breathing, and sweating), but my brain kicked into high gear.  I wanted to cry.  I cussed at the nice rappellers trying to comfort me.  My brain told me to give up and descend as we are meant to…via elevators.

The rappeller-volunteer said, “Lean back and let go!”

I cussed.  I screamed, “Get me off this building!!” to the nice rappeller-volunteers.  But, eventually (and, definitely, NOT gracefully) I started the descent down the building.  The entire way down, which, by the way, takes at least 15 minutes, I panicked; I hyperventilated; I prayed; I cussed; I tried to not spin; I made a very weak attempt of actually using the lever attached to my rope to make myself go down (No, I do not know the term for the apparatus); my muscles failed me….for 15 minutes.

Why?? Fear of the unknown.  I was in a completely new situation, and one in which I had no control.

Similarly, the unknowns of the future of Medicaid terrify providers, recipients, and advocates alike.  “Just lean back and let go!”

I am currently at the Association for Home and Hospice Care of North Carolina (AHHC) Leadership Convention in Wrightsville Beach.  (Which, BTW, is a great association).  The morning speaker, Scott Carbonara was fantastic.  He spoke about engaging fully in life, work, and family.

During lunch, I ended up sitting next to another attorney (unbeknownst to me at the time of sitting), who works for the National Council on Medicaid.

Another person who wants to talk about Medicaid sitting next to me during lunch? I felt like I drew the lucky straw.

Then she said that she helps implement managed care throughout the country.  She may as well have said that she teaches medical providers to refuse Medicaid and provide horrible services to Medicaid recipients.

You have to understand, if you have read my blogs, my opinion as to MCOs and mental health.

She must’ve read my horror on my face.  She said…”Oh, I know.  Most people do not have positive reactions when I explain my job.”

Me? I felt like I was standing on edge of the ledge with an unknown rappeller telling me to, “Lean back and let go!”  Trust me…

We proceeded to have a rather lengthy conversation.  I explained the effects of the MCOs on Medicaid recipients and behavioral health care providers here in NC. 

I explained to her that some MCOs are denying medically necessary assertive community treatment team services (ACTT) (a highly intense, 24-hour/day service for the most severely mentally ill) even when the recipients meet the continued stay criteria and do not meet discharge criteria.  I explained that the recipients who were undergoing discharge from ACTT were becoming hospitalized, incarcerated, homeless, and sometimes all of the above.

She was horrified.

“Why would the MCOs deny ACTT services if discharge criteria is not met?”  She said.  “It ends up costing more money, with the hospitalizations and incarcerations, than it would cost if the MCO actually authorized the mental health care needed.”  In other words, providing medically necessary services saves money, if you look at the totality of circumstances.

“Where is CMS?”

You win a prize! Ding! Ding! Ding!

I explained that our management of Medicaid services is bifurcated.  The MCOs are only in charge of behavioral health, not the total patient care.  The monetary incentive for the MCOs in NC is to provide the least expensive services to the least amount of Medicaid recipients through the least amount of Medicaid providers.

She said, “Well, the providers can choose to deal with the MCOs, right?”

Not in NC.  As the MCOs are jurisdictional, if the MCO in one county says that you cannot see your patients, another MCO in a different MCO may say otherwise.

She explained that her MCOs work completely differently.  (Here I was on the edge of the Wells Fargo building again).  We are just supposed to trust that other MCOs would act differently?

Then she told me why her MCOs would not act like our current MCOs.

In her MCO world, the MCOs manage ALL Medicaid services. If a recipient suffers high blood pressure, diabetes, and schizophrenia, the MCO handles all the recipients’ medical issues.  That MCO is in charge of the totality of the recipient’s care.  If the MCO denies ACTT services and the recipient is hospitalized, then the MCO has the burden of paying for that more expensive ER visit.  If the MCO denies ACTT services and the recipient is incarcerated without the proper care and medication, then that MCO has the burden of paying for all crisis care for the recipient that may occur from not receiving necessary services.  It costs less to provide proper care rather than let the recipient decompress and pay higher emergency costs. 


She wanted to get a representative of one her MCOs to listen to my horror stories.  She tried to convince me that the MCOs she has worked with would approve all necessary services.  It’s just cheaper in the long run.

But, to me, there is fear of the unknown.

What if the MCOs she has worked with do NOT authorize services like she is describing??

How do we know that a new system would be better? I mean, we’ve all seen how great the new billing system NCTracks is…New is not always better.  Change is unknown, and the unknown is scary.

I guess we all have to ask ourselves: Is the current NC MCO system bad enough to warrant a change to the unknown?

When you are standing on top the 30-story building, and are told to “Lean back and let go…”

Do you?

Or do you take the elevators?

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on October 7, 2013, in ACTT Services, Behavioral health, CMS, Division of Medical Assistance, Health Care Providers and Services, Home Health Services, Hospice, Hospitals, MCO, Medicaid, Medicaid Advocate, Medicaid Recipients, Medicaid Reform, Mental Health, Mental Health Problems, Mental Illness, NC, NC DHHS, NCTracks, North Carolina and tagged , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 10 Comments.

  1. palladiumsubbie

    When needed services that are covered are denied, who is doing the denial? Wouldn’t it require a physician to make the determination that they aren’t needed? If it’s not a physician, wouldn’t it amount to practicing medicine without a license?

    • Good point, Dennis. Interesting. I guess a doctor well-versed in ethics would need to answer that question.

      • I’ve done a little more thinking about this, and it occurs to me this is a really bad idea whether or not it is a physician making the decision. My direct insurance background is property and casualty (I’m a P&C agent, though my licenses are slowly expiring), and I can see huge liability implications for these denials.

        As a hypothetical, I propose the patient John Doe (who exists nowhere but in my mind):

        John Doe is a patient for ABC Care, a duly licensed mental health provider in the state of NC. They are contracted with the state as well as with the appropriate MCO to treat Medicaid patients. A physician at ABC Care determines a course of care. This care is both covered under the Medicaid policy and coverage guidelines, and is deemed medically necessary by the physician in question. The MCO denies this and authorizes a far less costly course of care that is less intensive and is deemed by the physician to be insufficient for the patient’s needs.

        The patient undergoes the care in question and has an event that includes property damage to a business, an arrest, jail, and acute inpatient care for 30 days.

        If it could be shown that the other course of care would have prevented this, I would think several parties involved in this would have liability claims against the MCO in question. The insurer for the business could subrogate for losses it had to cover, the business could seek damages for the uninsured losses it had, and the organization paying for the inpatient care could sue if they went unreimbursed for said expenses. I suspect others I’ve not considered would also have liability claims as well.

        The above would be rough in and of itself, and it does not include the damages to the patient, since their life could be forever hurt by the arrest, incarceration, and time spent in the hospital.

        Heaven knows what could be done if a third party were injured as a result of the lack of treatment. It seems to me this might be a way to compel the MCOs to a more honest practice of business, as I imagine that a suit requesting specific performance for each patient would be impractical.

      • Dennis, Wow. Interesting scenario. Only catch I see is that (a) it appears no one cares if Medicaid recipients receive proper mental health treatment; and (b) the recipients (because of thei mental health issues) do not have access to lawyers to sue on their behalf.

  2. David Jernigan

    I think I speak for all your dedicated readers when I say how relieved we are that you made it down all 30 stories unscathed (physically, at least).

  3. Wow. You are something! What energy.

    I let go. Of Medicaid. No ropes or levers necessary.

    Thanks for continuing your informative and entertaining blog, Knickole.


    Linda Francis MD 910-763-5533


  4. Very interesting. They are in a silo effect like some of the healthcare systems in VA who own physician groups, managed care, and hospitals. Each area is paid on their net cost. The system could spend a significant amount of money on medications which would significantly reduce hospital admits thereby saving even more money, Also, the physicians who are being paid on quality outcomes could actually have the tools to reach those quality outcomes goals by providing newer medications which are more effective with less side effects but do cost more than generics. The managed care pharmacy group, hospitals and physician groups should work synergistically striving for a common goal. Everyone would win including their patients.

  5. On a prima facie level, I don’t have a problem with MCOs handling Medicaid services. I have a big problem with your description of it in NC.

    On a minimum level, the way I would envision it would be several MCOs competing for business on a statewide level, and each provider would be contracted with the state, not with the MCO. Each client would then choose which MCO provided the best service, and the MCO would be slapped down (and hard) if necessary services were denied to a patient.

    I think the best way to provide Medicaid services would be what you described AR is doing. Give the patients traditional insurance that provides coverage for the same services provided by Medicaid, pick up the difference between the deductible and the copay, and run with it. The majority of risk is borne by the traditional carrier, the payments to the providers are higher, costs to the state for the provision and administration of care is lower, and the patients have a much wider range of provider options available for their health care needs.

    The only question that really comes to mind is whether or not the premiums and state administrative costs will remain lower than the cost to administer Medicaid and provide the necessary services. If it remains lower, it seems to be an overall winning plan for the patients, providers, and taxpayers.

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