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ACO Oversight by CMS Questioned by OIG
No one is free from audits. Even auditors get audited.
When the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) audits auditors, however, the auditors get recommendations for changes, not the million-dollar penalties that healthcare providers receive.
In September 2020, OIG released an audit report of the Accountable Care Organizations (ACOs). There were 472 ACOs in America as of 2017, per the report. To those ACOs that were not audited for this September 2020 OIG report, expect audits to come. The Centers for Medicare & Medicaid Services (CMS) has instructed the Medicare Administrative Contractors (MACs), Comprehensive Error Rate Testing (CERT) auditors, Unified Program Integrity Contractors (UPICs), and Recovery Audit Contractors (RACs) to audit ACOs.
These audits for monetary penalties will be dissimilar from audits by OIG, which wielded recommendations. ACOs are large entities: groups of doctors, hospitals, and other providers that come together to give coordinated high-quality care to Medicare beneficiaries.
In 2017, ACOs served approximately 9 million beneficiaries under the Medicare Shared Savings Program (MSSP). Of all the ACOs, 159 were eligible for shared savings payments, and received approximately $799 million. Of the remaining ACOs, 11 were liable for shared losses, and 302 were neither eligible to receive shared savings payments nor liable for shared losses, because they generally did not reduce healthcare costs (or they chose not to participate).
OIG found weaknesses in the oversight of ACOs, which are required to report data on 31 quality measures through three methods of submission:
- A patient experience-of-care survey (eight measures);
- Claims and administrative data (eight measures); and
- The designated CMS web portal (15 measures).
For the September 2020 OIG Report, 159 ACOs were required to select a CMS-certified vendor of their choice. You can learn more about this by listening to my recent webcast: “SNFs & COVID-19: New Audits Coming Soon.”
These CMS-certified vendors would contact the ACOs’ patients for a survey or poll, kind of like the follow-up surveys that you get after a seminar. Sometimes the students rating the teachers marks the best truth-teller of effectiveness.
The patient survey reported eight points of quality measures to CMS on the ACOs’ behalf. The vendors collected the data through mail and telephone surveys. The auditors would mail a questionnaire, and if that went unanswered, they would place a follow-up telephone call.
Twelve auditors conducted the 2017 audit of the ACOs’ patients. They surveyed approximately 400,000 beneficiaries and reported all patient survey data for those who responded.
Prior to 2019, non-medical home care agencies did not have a role in the Medicare Advantage (MA) landscape. After a variety of policy chances, they now have an opportunity to contract with MA plans through two major pathways.
The OIG report found the following weaknesses in CMS’s supervision of ACOs:
- CMS did not ensure that its contractor provided feedback reports in time to enable survey vendors to include and evaluate quality assurance plans regarding all of the changes implemented to address issues identified.
- CMS did not ensure that its contractor reviewed survey instruments translated into other languages.
OIG recommended that CMS increase supervision to confirm changes and collect client feedback. It is my opinion that ACO audits will increase.
Programming Note: Knicole Emanuel, Esq. is a permanent panelist on Monitor Mondays. Listen to her RAC Report every Monday at 10 a.m. EST.
Medicare ACOs: Too Much Risk, Too Quickly?
As seen on RACMonitor.
More than a third of ACOs might leave if the proposed rule takes effect.
The comment period closed for the Centers for Medicare and Medicaid Services (CMS) Medicare Shared Savings Program (MSSP) proposed rule on Oct. 16. The MSSP has been a controversial program since its inception. The chief concern is that the financial “dis-incentives” will decrease the number of Accountable Care Organizations (ACOs). The proposed rule for MSSP intensifies the financial “dis-incentives,” causing even more concern about the number of ACOs.
What is the Medicare Shared Savings Program? It is a voluntary program that is supposed to encourage groups of doctors, hospitals, and other healthcare providers to come together as ACOs to give coordinated, high-quality care to their Medicare patients. Providers can choose among three distinctive tracks, depending on the amount of risk the providers want to bear. The purpose of the MSSP is to diversify risk – of both loss and gain – between the government and the ACOs. For example, Track 1 ACOs do not assume downside risk (shared losses) if they do not lower growth in Medicare expenditures.
CMS created the MSSP in hopes that doctors, hospitals, and other healthcare providers would want to participate, with the incentive of the chance to make more money, rather than remaining in the traditional Medicare relationship. The program turned out to be more successful than anticipated, with the majority of ACOs opting to become Track 1, or the least risky model (one-sided risk).
CMS’s new proposed rule, however, increases the risk placed on the ACOs. Needless to say, providers aren’t happy, and many ACOs in the program warn that they’ll drop out if CMS finalizes its proposal as is.
What are these proposed changes to the MSSP?
Restricting Track 1 Enrollment
ACOs currently have six years to shift to a risk-bearing model from a shared savings-only model (Track 1). The proposed rule would give existing ACOs one year and new ACOs two years to transfer to a risk-bearing model. This one change could cause mass exodus from the MSSP, as many providers are, by nature, risk-averse.
Morphing to Five-Year Agreement Periods
The proposed rule requires CMS and the ACOs to morph into using five-year agreement periods. I am on the fence regarding this change. It could strengthen ACOs’ incentives to reduce spending by breaking the link between ACOs’ performance in the first two years of each agreement period and their future benchmarks. However, this modification could worsen incentives during the first two years of each agreement period. I would love to hear your opinions.
Slashing Shared Savings Rates
The proposed rule purports to slash shared savings rates for upside-risk models from 50 percent to as low as 25 percent. Under the one-sided model years of the glide path, an ACO’s maximum shared savings rate would be 25 percent, based on quality performance, applicable to first-dollar shared savings after the ACO meets the minimum savings rate. The glide path concludes with a maximum 50 percent sharing rate, based on quality performance, and a maximum level of risk, which qualifies a provider as an Advanced APM for purposes of the Quality Payment Program.
Other proposed changes include the following:
- A bifurcated system for high- and low-revenue ACOs, which functionally would penalize certain ACOs for the size of their patient populations and volume of services.
- A differential system for experienced versus inexperienced ACOs, which would allow experienced ACOs to choose from a more robust menu of participation options.
- Dis-incentives to lower spending: ACOs have had little incentive to lower spending because of the link between the spending reductions they achieve and subsequent benchmarks. One could argue that it is astonishing that the MSSP has produced any savings at all. CMS proposes that the MSSP needs to be re-vamped.
- A modified and more rigorous application review process to screen for good standing among ACOs seeking to renew or re-enter MSSP after termination or expiration of their previous agreement. ACOs in two-sided models would be held accountable for partial-year losses if either the ACO or CMS terminates the agreement during a performance year.
Will there be too much risk too quickly placed on the ACOs? Stay tuned for whether this proposed rule becomes finalized.
Medicare and Medicaid in the News: An Overview
With so much news about Medicare and Medicaid, I decided to do a general update of Medicare and Medicaid in the news. To the best of my ability, I am trying not to put my own “spin” on the stories, but just relay what is happening. Besides, Hurricane Florence is coming, and we have to hunker down. FYI: There is no more water at Costco.
Here is an overview of current “hot topics” for Medicare and Medicaid:
Affordable Care Act
On September 5, 2018, attorneys argued in TX district court whether the Affordable Care Act should be repealed. The Republican attorneys, who want the ACA repealed will argue that the elimination of the tax penalty for failure to have health insurance rendered the entire law unconstitutional because the Supreme Court upheld the ACA in 2012 by saying its requirement to carry insurance was a legitimate use of Congress’ taxing power. We await the Court’s decision.
Patient Dumping
In Maine, two hospitals illegally turned away emergency room patients in mental health crises and sometimes had them arrested for trespassing. The hospitals are Central Maine Medical Center and St. Mary’s Regional Medical Center, and they have promised to address and change these policies. It is likely that the hospitals will be facing penalties. Generally, turning away a patient from an ER is over $100,000 per violation.
Kickbacks
Six San Francisco Bay Area medical professionals have been indicted for an alleged kickback scheme in which three paid and three received kickbacks for healthcare referrals in home health.
Medicaid Work Requirements
In June, Arkansas became the first state to implement a work requirement into its Medicaid program. The guinea pig subjects for the work requirement were Medicaid expansion recipients aged 30-49, without children under the age of 18 in the home, did not have a disability, and who did not meet other exemption criteria. On a monthly basis, recipients must work, volunteer, go to school, search for work, or attend health education classes for a combined total of 80 hours and report the hours to the Arkansas Department of Human Services (DHS) through an online portal. Recipients who do not report hours any three months out of the year lose Medicaid health coverage until the following calendar year. September 5th was the reporting deadline for the third month of the policy, making today the first time that recipients can lose Medicaid coverage as a result of the work requirement. There are 5,426 people who missed the first two reporting deadlines, which is over half of the group of 30-49 year olds subject to the policy beginning in June. If these enrollees do not do not log August hours or an exemption into the portal by September 5th, they will lose Medicaid coverage until January 2019.
Accountable Care Organizations
According to a report in late August, accountable care organizations (ACOs) that requires physicians to take on substantial financial risk saved Medicare just over $100 million in the model’s first year, the CMS said in a report released Monday.
Lower Medicare Drug Costs
Back in May, the Trump administration published a “blueprint” for lowering drug costs. Advocacy groups are pushing back, saying that his plan will decrease access to drugs.
Balance Billing
Balance billing is when a patient presents at an emergency room and needs emergency medical services before the patient is able to determine whether the surgeon at the hospital is “in-network” with his insurance…most likely, because the patient is unconscious and no one has time to check for insurance networks. More and more states are passing laws to protect consumers from balance billing. An example of balance billing was Drew Calver, whose health plan paid $56,000 for his 4-day emergency stay at St. David’s Medical Center. Once he was discharged, he received a bill from the hospital for $109,000. The Employee Retirement Income Security Act (ERISA) regulates company plans that practice this. The hospital eventually reduced the bill to $332.
Patient Abandonment
During a fire, staff at two Santa Rosa, California-based nursing homes “abandoned their residents, many of them unable to walk and suffering from memory problems, according to a legal complaint filed by the California Department of Social Services.” The Department of Social Services accused the staff members of being unprepared for the emergency fire.
Makes you wonder what could possibly happen in the fast-approaching hurricane. At least with a hurricane, we have days advance notice. Granted there is no more water in the stores or gasoline at the pumps, but Amazon Prime, one-day service still works…for now.
Step Right Up! CMS Announces New Medicare-Medicaid ACO Model
Come one! Come all! Step right up to be one of the first 6 states to test the new Medicare-Medicaid Affordable Care Act (ACO) pilot program.
Let your elderly population be the guinea pigs for the Center for Medicare and Medicaid Services (CMS). Let your most needy population be the lab rats for CMS.
On December 15, 2016, CMS announced its intent to create Medicare/caid ACOs. Currently, Medicare ACOs exist, and if your physician has opted to participate in a Medicare ACO, then, most likely, you understand Medicare ACOs. Medicare ACOs are basically groups of physicians – of different service types – who voluntarily decide (but only after intense scrutiny by their lawyers of the ACO contract) to collaborate care with the intent of higher quality and lower cost care. For example, if your primary care physician participates in a Medicare ACO and you suffer intestinal issues, your primary care doctor would coordinate with a GI specialist within the Medicare ACO to get you an appointment. Then the GI specialist and your physician would share medical records, including test results and medication management. The thought is that the coordination of care will decrease duplicative tests, ensure appointments are made and kept, and prevent losing medical records or reviewing older, moot records.
Importantly, the Medicare beneficiary retains all benefits of “normal” Medicare and can choose to see any physician who accepts Medicare. The ACO model is a shift from “fee-for-service” to a risk-based, capitated amount in which quality of care is rewarded.
On the federal level, there have not been ACOs specially created for dual-eligible recipients; i.e., those who qualify for both Medicare and Medicaid…until now.
The CMS is requesting states to volunteer to participate in a pilot program instituting Medicare/Medicaid ACOs. CMS is looking for 6 brave states to participate. States may choose from three options for when the first 12-month performance period for the Medicare-Medicaid ACO Model will begin for ACOs in the state: January 1, 2018; January 1, 2019; or January 1, 2020.
Any state is eligible to apply, including the District of Columbia. But if the state wants to participate in the first round of pilot programs, intended to begin 2018, then that state must submit its letter of intent to participate by tomorrow by 11:59pm. See below.
I tried to research which states have applied, but was unsuccessful. If anyone has the information, I would appreciate it if you could forward it to me.
Participating in an ACO, whether it is only Medicare and Medicare/caid, can create a increase in revenue for your practices. Since you bear some risk, you also reap some benefit if you able to control costs. But, the decision to participate in an ACO should not be taken lightly. Federal law yields harsh penalties for violations of Anti-Kickback and Stark laws (which, on a very general level, prohibits referrals among physicians for any benefit). However, there are safe harbor laws and regulations specific to ACOs that allow exceptions. Regardless, do not ever sign a contract to participate in an ACO without an attorney reviewing it.
Food for thought – CMS’ Medicare/caid ACO Model may exist only “here in this [Obama] world. Here may be the last ever to be seen of [healthcare.gov] and their [employee mandates]. Look for it only in [history] books, for it may be no more than a [Obamacare] remembered, a [health care policy] gone with the wind…”
As, tomorrow (January 20, 2017) is the presidential inauguration. The winds may be a’changing…
Look into My Crystal Ball: Who Is Going to Be Audited by the Government in 2017?
Happy New Year, readers!!! A whole new year means a whole new investigation plan for the government…
The Department of Health and Human Services (HHS) Office of Inspector General (OIG) publishes what is called a “Work Plan” every year, usually around November of each year. 2017 was no different. These Work Plans offer rare insight into the upcoming plans of Medicare investigations, which is important to all health care providers who accept Medicare and Medicaid.
For those of you who do not know, OIG is an agency of the federal government that is charged with protecting the integrity of HHS, basically, investigating Medicare and Medicaid fraud, waste, and abuse.
So let me look into my crystal ball and let you know which health care professionals may be audited by the federal government…
The 2017 Work Plan contains a multitude of new and revised topics related to durable medical equipment (DME), hospitals, nursing homes, hospice, laboratories.
For providers who accept Medicare Parts A and B, the following are areas of interest for 2017:
- Hyperbaric oxygen therapy services: provider reimbursement
- Inpatient psychiatric facilities: outlier payments
- Skilled nursing facilities: reimbursements
- Inpatient rehabilitation hospital patients not suited for intensive therapy
- Skilled nursing facilities: adverse event planning
- Skilled nursing facilities: unreported incidents of abuse and neglect
- Hospice: Medicare compliance
- DME at nursing facilities
- Hospice home care: frequency of on-site nurse visits to assess quality of care and services
- Clinical Diagnostic Laboratories: Medicare payments
- Chronic pain management: Medicare payments
- Ambulance services: Compliance with Medicare
For providers who accept Medicare Parts C and D, the following are areas of interest for 2017:
- Medicare Part C payments for individuals after the date of death
- Denied care in Medicare Advantage
- Compounded topical drugs: questionable billing
- Rebates related to drugs dispensed by 340B pharmacies
For providers who accept Medicaid, the following are areas of interest for 2017:
- States’ MCO Medicaid drug claims
- Personal Care Services: compliance with Medicaid
- Medicaid managed care organizations (MCO): compliance with hold harmless requirement
- Hospice: compliance with Medicaid
- Medicaid overpayment reporting and collections: all providers
- Medicaid-only provider types: states’ risk assignments
- Accountable care
Caveat: The above-referenced areas of interest represent the published list. Do not think that if your service type is not included on the list that you are safe from government audits. If we have learned nothing else over the past years, we do know that the government can audit anyone anytime.
If you are audited, contact an attorney as soon as you receive notice of the audit. Because regardless the outcome of an audit – you have appeal rights!!! And remember, government auditors are more wrong than right (in my experience).
NC MCOs and Consolidation: “When the Music Stops? Nobody Knows!”
Our General Assembly is pushing for the managed care organizations (MCOs) to consolidate and/or morph. Consolidating the MCOs makes fiscal sense for our state, but if I were executive management at an MCO, I would be be anxiously awaiting direction from our General Assembly. A metaphoric 3-4 chair game of”Musical Chairs” is proceeding with 9 (now 8) players. Five to six players will have no chairs when the music stops.
What are MCOs? See blog and blog.
Multiple bills have been proposed.
Senate Bill 703 proposes 3 statewide MCOs. Senate Bill 574 seems to incorporate provider-led capitated health plans, but is unclear as to the exact model. Senate Bill 696 seems to create a symphony of provider-led and nonprovider-led, risk-based entities. Senate Bill 568 contemplates licensed commercial health insurers offering health care plans.
No one really knows how many MCOs will remain in the end…if any. Regardless, what the number of existing MCOs in the future will be, there is little dispute that the number will be fewer than the number of MCOs that exist now.
In an atmosphere where there is supposition that there are too many people or companies and that only a few will remain, competition brews. People/companies are forced to strategize if they want to survive.
Think about the childhood game, “Musical Chairs.” You start with a large group of people, but with one less chair than the number of people. The music plays and the players meander around at a relatively slow pace, around and around, until the music stops. And what happens when the music stops? The people scramble for a chair. The person left standing is “out” and must sit on the sideline.
We have 9, soon to be 8, MCOs in NC right now. And the music is playing. But which MCOs will be left standing when the music stops?
Here is a map of our current MCOs:
As of July 1, CoastalCare and East Carolina Behavioral Healthcare (ECBH) will be merged. We will be down to 8 MCOs. Which means that the light blue on the bottom right hand side of the map will merge with the bright yellow on top right hand side of the map.
Mecklenburg county, which houses most of the Charlotte area, was not always light purple. It recently merged with Cardinal Innovations.
Partners (light yellow) and Smokey Mountain (dark blue) had serious discussions of a merger until, recently, when both walked away from negotiations of merger.
Why should it matter which MCOs are in existence or how many? Theoretically, it shouldn’t. These MCOs are created in order to manage behavioral health care (Medicaid services for those suffering from substance abuse, mental illness, and developmentally disabled), not to make a profit, right? The only issue of importance should be that medically necessary behavioral health care services are rendered to Medicaid recipients in the most efficient and most effective manner.
Yet competing interests come into play.
Think about it…each MCO employs hundreds of people. Each MCO has a CEO, who is not working for free. Generally, unless other arrangements have been negotiated, there can only be one CEO per MCO. When there are 2+ MCOs merging with 2 CEOs and only 1 “chair” for 1 CEO, it can seem like “Musical Chairs.” Multiple people are vying for one “chair.”
The money at issue for behavioral health care in NC is not a small amount. It is likened to a fire hose spouting money. We have a Medicaid budget in NC of approximately 14 billion dollars. To put it in perspective, with $14 billion dollars, you could purchase the LA Lakers 14 times. This is how much money we spend on Medicaid every year. It is really quite staggering when you think about it.
As every North Carolinian learns in the 6th grade, North Carolina is composed of 100 counties. The estimated Medicaid budget of $14 billion is allocated across 100 counties and among approximately 1.9 million Medicaid recipients.
When it was decided to implement the MCOs across the state, about 2012-ish (we actually obtained permission from CMS for the waiver years prior to 2012, but we began with a pilot and did not implement the MCOs statewide until 2012-13), we found ourselves, initially, with eleven MCOs, and now we have 9…soon to be 8.
The newly merged entity of CoastalCare and ECBH (CC+ECBH) will manage state funds and Medicaid dollars for behavioral health services across 24 counties in eastern North Carolina. In other words almost ¼ of the Medicaid budget will be handed to CC+ECBH, leaving approximately ¾ of the Medicaid budget for 7 other MCOs (the budget is determined by number of recipients, so I am assuming, for the purpose of this blog, that more counties mean more people).
The amount of counties controlled by the remaining 7 MCOs are as follows:
Smokey: 23
Partners: 8
Centerpointe: 4
Cardinal: 16
Sandhills: 9
Eastpointe: 12
Alliance: 4
Looking at the chart above, it would appear that Smoky and CC+ECBH will manage almost 1/2 the state’s behavioral health care for Medicaid.
Prior to the 1915 b/c Waiver allowing the MCOs to manage behavioral services for Medicaid recipients in NC, DHHS managed it. (Obviously ValueOptions and other vendors had a part in it, but not with actual management). As the single state agency for Medicaid, DHHS cannot delegate administrative duties to contracted parties without a “Waiver,” or permission for an exception from the federal government, or, more specifically, the Center for Medicare and Medicaid Services (CMS).
Prior to the 1915 b/c Waiver, we did not have 9 companies with hundreds of employees managing behavioral health care for Medicaid recipients. We had DHHS, which employs approximately 18,000 employees. To my knowledge DHHS did not terminate those employees who were in charge of behavioral health care issues in order to compensate the creation of new companies/employees. In other words, say 1000 people at DHHS devoted their time to issues arising our of behavioral health care. Once we had an additional 9 (well, 11, at first), those 1000 employees were not asked to join the MCOs. Maybe some did, but, to my knowledge, there was no suggestion or incentive or requirement to leave DHHS and go to an MCO (to shift the administrative burden).
When we created an additional 9 (well, 11 at first) companies to, essentially, take over behavioral health care…
We created more administrative costs, in order to lift the risk of overspending the Medicaid budget off the state. It is estimated that America wastes $190 billion in excess administrative costs per year.
In theory, consolidating the MCOs would decrease administrative costs by having fewer paid employees, not dissimilar to why MCOs want a closed network. See blog. Again, in theory, having fewer MCOs may create a more consistent statewide manner in managing behavioral health care.
Assume for the purpose of this blog that each MCO employs 100 people (which is a very low number) and each employee is paid $50,000, then the administrative cost associated with delegating behavioral health care to MCOs equals $500,000, counting only employee salaries. Multiple that number by 9 (number of current MCOs) and you get an increased administrative cost of approximately $4.5 million dollars per year, not counting the additional overhead each MCO bears (rent/mortgage, equipment, salary benefits, health care benefits, etc.). Plus you have to include the top management’s salaries, because you know the executives are receiving more than $50,000/year.
What motivated us to implement a MCOs system? With an MCO system, the General Assembly is able to allocate funds for Medicaid and place the risk of going over the budget on the MCOs, not the state. This is a completely understandable and reasonable objective. It is without question that the Medicaid budget is swelling to the point of unsustainability.
However, are we trading “control/supervision” for “knowability?” Are we also trading “risk” for “higher administrative costs,” which, in turn, equals less Medicaid dollars for providers and Medicaid recipients? Every dollar paid to an MCO employee is a dollar not going to a health care provider to reimburse for services.
For these reasons, the government’s push for consolidation of the MCOs is astute. Fewer MCOs = less administrative costs. Fewer MCOs = easier supervision by DHHS.
Less administrative costs = more Medicaid dollars going to providers…to serve our most needy. Because, at the end of the day, the most important issue when it comes to Medicaid is providing quality care for recipients.
It is no matter which entity controls/manages behavioral health care for Medicaid, because regardless the entity, that entity should be managing our tax dollars in the most efficient way that provides the best quality to services to those in need.
“Around and around we go, when we stop? Nobody knows…” But we do know this…when the music stops, there will be scrambling!
New NC Senate Bill Proposes 4-6 MCOs!! And the Creation of ARPLOs!!
Senate Bill 568 was filed today!!! It is a bill that you should follow!
SB 568 reads: “It is the intent of the General Assembly to transform the State’s health care purchasing methods from a traditional fee-for-service system into a value-based system that provides budget predictability for the taxpayers of this State while ensuring quality care to those in need.”
It proposes, among other things, a consolidation of the 9 current managed care organizations (MCO) here in North Carolina to “not more than 6” and “no less than 4” MCOs.
It further establishes another acronym: ARPLOs.
“At-Risk Provider-Led Organizations (ARPLOs). ARPLOs are capitated health plans administered by North Carolina’s provider-led Accountable Care Organizations that will manage and coordinate the care for the Patient Population, outside of the PCMHs, pending waiver approval where appropriate for this transformation by the Center for Medicare & Medicaid Services.”
Remember, the House has pushed for ACOs and the Senate has pushed for MCOs. See blog.
Is the Senate bending toward the House??????
More to come…
Medicaid Reform in a House Divided and MCO, ACO…Who Cares?
We are living in the most polarized society in recent American history. A recent study shows that the feeling of political partisanship has more than doubled over the past 2 decades. So since 1995, politically, America has parted the Red Sea with voters increasingly ebbing away from the middle.
Even more interesting is that, according to the same 2014 study, political animosity is at an all-time, recent high. I say “recent” because I cannot fathom a more polarized society than the society in the 1850s-1860s leading up to the Civil War. So, when I say “recent,” I mean post-invention of the telephone.
According to the Pew Research Center, “[i]n each party, the share with a highly negative view of the opposing party has more than doubled since 1994. Most of these intense partisans believe the opposing party’s policies “are so misguided that they threaten the nation’s well-being.””
If BOTH parties express this identical sentiment, someone is wrong.
So, now, here, in this extremely polarized society, our NC General Assembly is tackling one of our most important and most divisive issues…Medicaid Reform.
But, you say, “Knicole, our General Assembly is an overwhelming Republican majority. Our Governor is Republican. How can this vast and deep political polarization prevent NC from creating a new, better, non-broken Medicaid system?”
In NC, even the Republicans are polarized, at least as to the issue of Medicaid reform. The two differing opinions as to Medicaid reform can be found in our separate houses: the Senate and the House of Representatives (House). As for our executive branch, Governor McCrory sides with the House.
The houses are divided by acronyms: ACOs (House) versus MCOs (Senate).
The House plan for Medicaid reform involves accountable care organizations (ACOs). The ACO plan includes physicians, hospitals and other health care providers collaborating to serve Medicaid recipients and assuming the monetary risks. For example, one ACO may be liable for 6000 Medicaid recipients. The ACO would be given X dollars per Medicaid recipient to cover the person’s overall health care. Say the ACO, via its health professionals, conducts a preventative breast exam on a woman and discovers a lump. The ACO would pay to remove the lump and, hopefully, the woman is ok. If the ACO fails to practice preventative medicine and the woman is diagnosed with breast cancer, then the ACO must finance the more expensive surgery and chemotherapy required. The ACO’s incentive would be to provide the best, proactive health care because, regardless, the ACO will be liable for that individual’s care. With ACOs, there is a financial incentive to keep people healthy and the profit is shared with the state.
The Senate plan for Medicaid reform involves managed care organizations (MCOs). Unlike ACOs, MCOs will not be comprised of health care providers. The MCOs will be large companies that will be charged with managing Medicaid by contracting with a network of providers. Many Medicaid services require prior authorization, which would be in the hands of the utilization review team employed by the MCO. Similar to the ACO, the MCO would be given an amount of money based on the number of Medicaid recipients within its network. The profit for the MCO is the money remaining at the end of the fiscal quarter that was not spent on services for Medicaid recipients.
What is better? Does better mean the most cost-savings? Does better mean the best quality of care for Medicaid recipients?
In order to determine whether the MCO-model or ACO-model is better and what exactly “better” means, you have to follow the money. For both models, you have to ask, “If the actual medical services provided cost double the anticipated amount, who bears the burden?” And, conversely, “If the actual medical services provided cost half the anticipated amount, who pockets the profit?”
There are numerous ways for an insurer to be paid. At one end of the spectrum, you have capitation; while at the other end of the spectrum you have a more typical financial relationship in which the insurer simply pays the health care provider its reasonable and usual amount.
Capitation is how we currently have our MCOs set up for behavioral health care in North Carolina. As we currently use capitation for our MCOs, I would assume that the Senate-model MCOs would also be capitated. Capitation places the risk on the MCO because the MCO receives a fixed amount regardless of actual cost. However, there is concern (or should be) that the MCOs will provide patients less care than needed in order to pocket a profit.
On the other hand, ACOs typically do not rely on full capitation. The ACOs may share the risk, and, therefore, the profit, with the state.
Another HUGE difference between ACOs and MCOs is that, with MCOs, the insurer in effect dictates what a health care provider is allowed to do. For example, say a dentist believes that a person is in need of dentures. Maybe 4-5 teeth have already fallen out and the remaining teeth are suffering more mild rot. The dentist requests prior authorization from the MCO to extract teeth, create a mold of the mouth, and order dentures to be custom-created. The MCO denies the requests saying, for example, not enough teeth have fallen out or not enough rot is present in the remaining teeth. The dentist’s hands are tied to the decision of the MCO, unless the patient can fork over the cost of care that the MCO refuses to authorize. And, BTW, the person who denied the request may have graduated from college with a BA in History . . . or in any event something else other than a field of medical or dental care
An ACO, on the other hand, is run by physicians, hospitals, and other health care providers. Theoretically, the decisions to authorize services would be made by those same people who swore the Hippocratic Oath.
With regard to healing the sick, I will devise and order for them the best diet, according to my judgment and means; and I will take care that they suffer no hurt or damage.
(I doubt a History major ever swore to heal the sick).
There has also been contemplation as to whether the General Assembly should remove the responsibility of managing Medicaid from the Department of Health and Human Services (DHHS) completely. Obviously, this suggestion is extreme and would require a Waiver from the federal government to transfer the “single state agency” requirement from DHHS to another entity.
Regardless of what decisions are made…whether the GA requires a private Medicaid panel to usurp Medicaid responsibilities from DHHS….whether NC adopts an MCO-model or an ACO-model for Medicaid reform….as it currently stands, our houses are divided. No bills pass a divided legislature.
The Senate and House both indicate that Medicaid reform is a forefront issue during this long session, but, so far, there has been no indication of a Great Compromise.
Medicaid Mishaps Cause Tempers to Flare
Here is an interesting article…
Article from Carolina Journal Online by Dan Way:
RALEIGH — With $2 billion in cost overruns the past four years, Medicaid continues to be North Carolina’s most volatile political conundrum, and now unanswered questions about its spending and growth threaten to delay passage of 2014-15 state budget adjustments before next Monday’s deadline.
Things got nasty in a Senate Appropriations Committee meeting last week, and one is left to wonder whether Gov. Pat McCrory and the state Department of Health and Human Services squandered political capital by snubbing budget writers struggling with alarming lapses in vital Medicaid data.
Medicaid “is the linchpin” to writing the 2014-15 budget, said an irritated Sen. Bob Rucho, R-Mecklenburg. “Would someone explain to me why we don’t have [Office of State Budget and Management] or staff people from DHHS here to help us get to an answer so that we can move this budget forward?”
If not a prairie fire, the meeting at least exposed the slow burn of senators handcuffed by a dearth of crucial budget numbers from DHHS. Capital press corps reporters instinctively asked one of their most oft-repeated questions: Is DHHS Secretary Aldona Wos to blame for yet another major Medicaid predicament?
Due to significant backlogs, DHHS cannot provide accurate Medicaid enrollment numbers, valid claims data, and categories into which new enrollees are entered. Without precise, up-to-date information for this fiscal year, drafting an accurate budget for 2014-15 is impossible.
That’s a tough corner to be backed into for McCrory and Wos, who have made Medicaid budget predictability a holy grail.
The exasperation of Sen. Tom Apodaca, R-Henderson, typified the level of lawmaker frustration.
“If push comes to shove,” he said, “we can always issue subpoenas and have the numbers come to us. So let’s not take that off the table.”
The irritability in Senate Appropriations was bipartisan.
“Will we ever know what we need to know?” Sen. Angela Bryant, D-Nash, asked incredulously. “Do we have to be completely at the mercy of executive branch agencies on an issue like this that is so critical to what we do?”
Senate leader Phil Berger, R-Rockingham, explained, in measured but heart-attack serious tones, why there is an elevated sense of urgency, and why he had wanted someone from the budget office at the Appropriations Committee meeting to explain Medicaid numbers that have swung from wildly varying to unaccounted for.
“Our feeling is we need to reach some understanding on the Medicaid number before we can realistically start talking about most of the other things,” including teacher pay raises and pay hikes for state workers, Berger said.
And then there was this jaw-dropping exchange between Sen. Joel Ford, D-Mecklenburg, and Susan Jacobs of the legislative Fiscal Research Division.
“Based upon the uncertainty and the lack of data, how can we say for certain that people are not being overpaid or underpaid?” Ford asked.
“We probably can’t say that,” responded Jacobs. She also dropped a bombshell that it could be “probably late next year” before all necessary numbers are completely and accurately obtained.
“To me that is a very disturbing scenario where we are taking taxpayer money with good intentions, but with no verification that we’re doing the right thing because of a broken system,” Ford said.
Whether he realized it, Ford’s characterization of Medicaid as a broken system oozed irony.
In one of their first official acts upon assuming office in January 2013, McCrory and Health and Human Services Secretary Aldona Wos lambasted the state’s Medicaid program as a chaotic, broken system. Eighteen months later and holding Swiss-cheese Medicaid reports, state senators are grumbling that the agency’s disarray persists.
Pressed by reporters, Berger stopped short of saying he has lost confidence in Wos’ leadership.
“I’ll leave it to others as to why they’re not able to provide that information,” he said, but he insisted this budgeting fiasco shows the need to remove Medicaid from Wos’ control and make it a standalone agency.
The Senate budget calls for $88 million more in Medicaid spending in 2014-15 than the House version. Berger said the Senate used higher, worst-case-scenario numbers.
Berger and his counterparts rightly expressed no appetite for once again using rosy projections only to find out halfway through the budget year that there is a whopping shortfall.
To make matters worse, Senate Majority Leader Harry Brown, R-Onslow, said Fiscal Research staff isn’t even confident the worst-case numbers are sufficiently high. “I think that’s important to make sure everyone understands it.”
Sen. Louis Pate, R-Wayne, co-chairman of the Senate Health and Human Services Appropriations Subcommittee, agreed with frustrated Fiscal Research staff that much of the problem with missing data stems from NC Tracks, the new but deeply flawed Medicaid billing system.
But he was quick to note that Republicans inherited the woefully underperforming computer system that was in development for years under Democratic administrations.
“I don’t know if they made up-to-date adjustments as they went along, and we don’t know if it was tested properly before it went live,” Pate said. Others, including State Auditor Beth Wood, warned last year that the nearly half-billion-dollar system was not ready to launch.
Wos lost control and never regained the upper hand in messaging after she defiantly promised she was going to drag the long-beleaguered NC Tracks over the July 1 finish line, and declared it sound when she did.
The bravado and exuberant can-do proclamations might have seemed politically appropriate for a new administration seeking to position itself as an intrepid change agent.
But Wos would have been wise to have tempered her rookie remarks with caveats about the huge challenges left behind by previous Democratic administrations, downplayed expectations, and more candidly acknowledged what IT skeptics already knew — the system was going to encounter plenty of rollout problems that would require a long time to correct.
Pate was among those declaring that the current Medicaid budgeting calamity further demonstrates the “critical necessity for reorganization” of the agency. But restructuring has been hampered by the unsteadiness of tectonic policy shifts.
Pate is among senators who continue to oppose the latest reform plan favored by McCrory and Wos, and now in bill form in the House. He said the proposal only tinkers around the edges of budget predictability and restraint.
This latest iteration is an accountable care model comprising networks of doctors and hospitals. It was rolled out after the administration’s stunning U-turn from months of championing full-risk managed care, and scoring a coup in recruiting Carol Steckel, a highly sought, nationally renowned expert on Medicaid managed care.
Steckel, former head of the National Association of State Medicaid Directors, left her $210,000-a-year job in North Carolina last September after only eight months working for Wos.
Whether there was a back-story to the swift departure of a highly heralded Medicaid reformer, much like what this year’s Medicaid numbers are, remains a guessing game.
