Category Archives: Medical Care Commission

To Decrease Medicaid Spending (Without Decreasing Medicaid Recipients’ Services), Drastic Administrative Cuts Are Needed

It is indisputable that reigning in Medicaid costs is one of this administration’s top priorities.

And, I agree, reigning in Medicaid costs should be a top priority.  In fiscal year 2011, it is estimated that Medicaid comprised 23.6 percent of total state expenditures (average of all states).  My only concern is reigning in the appropriate Medicaid costs without interfering with Medicaid recipients’ medically necessary services.  A Medicaid budget cut (or reigning in Medicaid spending) should not be painfully felt by the Medicaid recipients by increased denials of services or by their providers being terminated from the Medicaid program without cause.  Instead a Medicaid cut should be felt by the administration. 

The Medicaid budget exists in order to provide medically necessary services to the most needy, not to create jobs at the Department of Health and Human Services (DHHS).

“About $36 million a day we spend on Medicaid, and the numbers grow by the second. It is a non-sustainable system,” Wos said to members of the Medical Care Commission this past Friday.  For the article, please click here.  The Medical Care Commission is a governor-appointed medical advisory group made-up of 16 North Carolinians and charged with the responsibility of recommending Medicaid cost control and budget predictability. (Actually, it is interesting that when you look at the NC DHSR website (click on Medical Care Commission) that the website states that the commission is composed of 17 individuals.  But when you count the individuals, only 16 are listed.  I assume that Gov. McCrory or Sec. Wos is the 17th member, but I am not 100% sure).

While I agree with Sec. Wos that continuing to spend $36 million a day and, perhaps, more in the future, is a non-sustainable system, I also believe that we could decrease Medicaid spending without decreasing services to recipients. 

The Medical Care Commission’s chairperson, Ms. Lucy Hancock Bode “served as the Deputy Secretary of the North Carolina Department of Human Resources from 1982 to 1984. She has been an Independent Trustee of Tamarack Funds Trust and various Portfolios in the fund complex of Tamarack Funds since January 2004. She served as a Director of BioSignia, Inc.”  See BusinessWeek.

The Vice-Chairperson, Joseph D. Crocker, “is Director of the Poor and Needy Division at Kate B. Reynolds Charitable Trust in Winston-Salem, North Carolina, where he has served in such capacity since May 2010. Mr. Crocker served as Assistant Secretary for Community Development at the North Carolina Department of Commerce in Raleigh, North Carolina, from 2009 to 2010.  See Forbes.

Well, goodness, the appointees can be found in BusinessWeek and Forbes!! Who else is on the Medical Care Commission? The grandson of the founder of the Biltmore Estates, 6 MD’s, the ex-CEO of FirstHealth of the Carolinas, the Vice President and Director of the Health Care Program for The Duke Endowment, the President and CEO of Coastal Horizons.  My guess is that not one of the appointees to the Medical Care Commission has ever depended on Medicaid for insurance nor been personally acquainted with those dependent on Medicaid. How will these elite (which I am defining as making a salary well-over poverty level for years and years) help “adopt, recommend or rescind rules for regulation of most health care facilities,” and help “[b]e able to provide the proper care to the proper people at the proper time and at the proper price?”  How does the person making $13.8 million truly understand the troubles and turmoil of someone making $9.00/hour?

I recently read an article about McDonald’s and its low wages it pays to its employees.  The article pointed out that most McDonald’s employees received minimum wage, the median hourly wage is $9.00/hour.  McDonald’s also recommends that its employees file for food stamps and welfare.  Then I read that the CEO of McDonald’s is paid $13.8 million/year.  That’s over $1 million/month!!! That is stupid money!! What in the world does Donald Thompson do with that much money?  When Mr. Thompson encourages his employees to file for food stamps and welfare programs, how can he, making $13.8 million/year, have an inkling as to the daily troubles of an employee making $9.00/hour…how difficult it can be to maneuver government beaurocracy…to even get authorization to receive the food stamps…only to discover that the legislature suspended the distribution of food stamps this week…

(A quick aside, for those of you thinking right now, “What about you, Knicole? You are a partner at a big law firm? How can you protest to know anything about the $9.00/hour employee? Without getting too personal, I have not always been employed at a law firm.)

Had I been in McCrory’s position of appointing the folks onto the Medical Care Commission, I would have wanted at least one appointee to have either been personally dependent on Medicaid, been a case manager exclusively for Medicaid recipients, or, in some way, dealt with Medicaid recipients on a close, personal level.  In other words, I would have wanted at least one appointee to understand the real-life difficulties actually suffered by Medicaid recipients.  If I were a CEO of a company for 20 years, how would I know that medically necessary services are being denied to Medicaid recipients?  How would I know that when a mother calls to make a dental appointment for her child that it can take months to be seen by a dentist if you are on Medicaid? How can the social elite understand the frustrations of Medicaid recipients? They have never been turned down by a doctor because of the insurance they have.

I called a few of the offices of the 6 MDs appointed on the Medical Care Commission and learned that those offices I called accept Medicaid, which relieved me.  But I would be interested in knowing what percentage Medicaid clients each office accepts.  And how closely the MDs work with Medicaid recipients (do the MDs appeal denials for their clients’ services and appear and testify on their behalf in court?)

A funny thing happens when you’ve made a lot of money over a number of years…you forget how important $20 can be to a single mom with rent to pay and a kid with a tooth ache.  I would also assume the same thing happens when you are Governor or Secretary…you forget how debilitating a service denial is and how scary the prospect of an appeal can be.

Going back to reigning in Medicaid costs:

Is there a way to decrease spending on Medicaid without compromising medical services.  Is there even a way to decrease Medicaid spending while providing better medical services to Medicaid recipients…? Could it be possible?? I believe so.

How many times have you heard the administration state that the Medicaid system is broken and the money spent on Medicaid is non-sustainable? And what about the Performance Audit conducted by the Office of the State Auditor?  The January 2013 Performance Audit revealed that almost 1/2 of the Medicaid administrative expenditures in the 2012 fiscal  year went to private contractors…such as the managed care organizations (MCOs), Public Consulting Group (PCG), and the Carolinas Center for Medical Excellence (CCME).  Another huge expenditure is the administrative costs for the Department of Health and Human Services (DHHS)…think about it…DHHS employs approximately 70,000 people at an average salary of $42,000.  Add up the costs associated with private contractors and the administrative costs of DHHS, and the sad truth is that not even a quarter of the Medicaid budget goes to paying Medicaid recipients’ actual services.

Remember my blog: “How Dare They! That Money Could Have Been Used on a Medicaid Recipient!”

Remember the January 2013 Performance Audit of DHHS

Another contributing factor to the high amount of North Carolina’s administrative spending is insufficient monitoring of administrative services that are contracted out by DMA. Private contractor payments represent about $120 million (46.7%) of DMA’s $257 million in administration expenditures for SFY 2012. It is always important for a state government to even more critical when almost half of the administrative expense is made up of contract payments. Although contract payments represent a high percentage of its administrative budget, DMA was not able to provide a listing of contracts and the related expenditures in each SFY under review for this audit. DMA’s inability to provide this information is indicative of its inadequate oversight of contractual expenditures. The initial list DMA provided only included amounts expended to date per contract. However, we were able to eventually obtain contracted service expenditures for FY12 and compile this information.”

Inadequate oversight of contractors…Hmmmm…

In order to decrease Medicaid spending, how about a little thing I like to call: ACCOUNTABILITY!?

As in, if DHHS contracts with an entity that spends too much Medicaid money on “extras,” then DHHS must instruct the entity to cease the “extra” spending.  This is our tax money, remember!! For example, everyone knows that attorneys are not cheap, right? At hearings, the MCOs usually have in-house counsel  or retain the county attorney.  But two MCOs, Cardinal and MeckLINK (yes, MeckLINK, despite MeckLINK’s solvency issues) have hired an expensive and prestigious law firm.  There is no question that the law firm has experienced, excellent attorneys.  But who is paying for the expensive attorneys’ fees? Medicaid dollars? You? Me? I thought about these questions when, at a recent hearing three attorneys appeared on behalf of the MCO.  Let’s see…$450/hour + $350/hour + $275/hour = $1075/hour?  And who is paying?  (Obviously, I made these numbers up, but I dare say they are close estimates).

By the same token, DHHS needs to monitor its own expenses.  I can only imagine how difficult it is to monitor 70,000 employees.  At any given time, thousands may be on Facebook, cell phones, or surfing the web.  I am not suggesting that Sec. Wos turn DHHS into a sweat shop, by any means.  No, I am merely suggesting that a way to decrease money spent on Medicaid is to conduct a self-audit and determine that if 3 people are doing the job that 1 person could do, only employ the one person.  Just like, DHHS would be accountable if PCG used Medicaid dollars to pay for in-office massages for employees.  Medicaid dollars should be spent on Medicaid recipients.  DHHS should be accountable for superfluous spending.

With all these newly- contracted entities working for DHHS (and getting paid by DHHS), where is the savings in Medicaid spending?? To my knowledge, there has not been a huge slash in jobs at DHHS…the salaries and administrative costs at DHHS have not decreased drastically…no, instead, we’ve hired MORE companies and we are paying MORE salaries!! How will hiring more contractors decrease Medicaid costs if we are not decreasing our administration overseeing Medicaid?  We all know that no one wants to be the administration who cut government jobs, but if you truly want to decrease administrative costs, you have to decrease the cost of the administration, especially if you are hiring companies to do what the administration used to do.

Going to McDonald’s low wages and ridiculously, high-paid CEO, obviously, McDonald’s is a private company and is entitled to pay its CEO $13.8 million/year and its employees an hourly median wage of $9.00/hour.  McDonald’s only has to answer to its shareholders.

DHHS, on the other hand, is not a private company.  DHHS is funded by tax dollars and is accountable to every taxpaying citizen of North Carolina.

Want to decrease Medicaid spending while providing the medically necessary services to our most needy?  Cut the administrative costs…eliminate unnecessary staff (no matter how unpopular the idea is)…actively monitor the expenses of all contracted entities…provide the medically necessary services to Medicaid recipients (thereby decreasing the need for the more expensive ER visits and incarcerations)…

Cease all unnecessary administrative costs!  Be accountable!  Self-audit! Closely monitor all contracted entities’ expenditures!!

And, remember, hiring a third-party company costs money…real money…tax payer’s money!  If the hiring of the company is not offset by a reduction in spending elsewhere, the result is increased overall spending.  It isn’t hard, people…this is Logic 101.  So when DHHS hired PCG or CCME or HMS, the administration should have decreased Medicaid spending elsewhere just to break even (as in, just to continue our high Medicaid spending).  To decrease spending along with hiring third-party contractors, we have to severely and drastically decrease Medicaid spending.  In order to avoid reducing Medicaid recipients’ services, a decrease in Medicaid spending calls for the drastic action of slashing administrative costs.

It isn’t fun, but it is necessary.