Blog Archives

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.

Massive Medicaid Metamorphosis: Providers Beware! Be Proactive NOT Reactive!

Medicaid is ever-changing. But every 5 years or so, it seems, that a substantial section of Medicaid is completely revamped. Sometimes to the detriment of many uninformed, un-suspecting providers. For providers, it is imperative to stay above the curve…to foresee the changes in Medicaid, to plan for those changes, and to morph your own practice into one that will persevere despite the changes to come.

We are on the brink of a massive Medicaid metamorphosis.

Medicaid modifications have happened in the past. For example, a substantial shift in Medicaid occurred when DHHS switched from HP Enterprises to Computer Science Corporation (CSC) as its billing vendor. When the NCTracks system went live, the new NCTracks system forced office managers to re-learn how to bill for Medicaid. It was a rough start and many office managers spent countless hours inputting information into NCTracks, only to get erroneous denials and high blood pressure.

Another example of a Medicaid modification was the implementation of the managed care organizations (MCOs) which came on the heels of the new CABHA certification requirements. Only a couple of years after the shellshock of CABHA certification and thousands of providers going out of business because they could not meet the demands of the CABHA standards, behavioral health care providers were again put through the wringer with new standards created and maintained by the MCOs.

Think about it…Ten years ago, we never used the acronym MCO.

Enter [stage left]: A NEW ACRONYM!!

PLE

Don’t you love acronyms? My family has this game called Balderdash. It is one of my favorite games. The object of the game is to have the best fabricated answer. For example, if the category is “Acronym,” the “Dasher” will read the acronym, say, “PLE.” All the players draft their fake renditions of what “PLE” really means.

Plato Learning Environment; or
Panel of Legal Experts; or
Perinatal Lethality.

You get the point. In the game, the players vote on which answers they believe are correct (BTW: All of the above are real definitions for the acronym “PLE” (according to Google).)

In the Medicaid/care world, we play alphabet soup constantly. MCO, DD, SAIOP, DHHS, BWX, MID CPT….Throw out a few letters, and, most likely, you will have said some acronym that means something to someone. See my acronym page for a list of those pertinent to us (and it is ever-growing).

The most recent new acronym to the Medicaid arena here in North Carolina that I have seen is PLE, which is the crux of the new, upcoming massive Medicaid metamorphosis.

House Bill 372’s short title is “Medicaid Modernization” and has passed in the House.

On June 25, 2015, the Senate passed the House Bill on its first read!

I waited to blog about HB 327 until the Senate had an initial reaction to it. If you recall, the Senate and House has been on contradictory sides when it comes to Medicaid reform. However, it appears that HB 327 may have some traction.

House Bill 372 defines PLE as “[a]ny of the following:

a. A provider.
b. An entity with the primary purpose of owning or operating one or more providers.
c. A business entity in which providers hold a controlling ownership interest.”

Over the last couple years, the Senate and the House have stood divided over whether Medicaid should be managed by ACOs (House) or MCOs (Senate). It appears from the definition of a PLE, that a PLE could be a much simpler version of an ACO, which has had my vote since day 1. The whole concept of an ACO is a provider-run entity in which the providers make the decisions instead of utilization reviews, which have little to no contact with the patients, and, sometimes little health care experience, especially on the provider side.

From my cursory review of the proposed PLEs, it seems that a PLE would mimic an ACO, except, and, further federal research is needed, without some of the highly-regulated mandates that the federal government requires for MCOs (it will still be highly-regulated).

Is this just a question of semantics?  Is this just a question of changing its name?

“What’s in a name? that which we call a rose, By any other name would smell as sweet.” Romeo and Juliet, Act II, Scene II.

Let’s look again at the definition of a PLE, according to Version 3 of House Bill 372.

a. A provider.
b. An entity with the primary purpose of owning or operating one or more providers.
c. A business entity in which providers hold a controlling ownership interest.”

A provider?

Any provider? Does that provider need to ask to become a PLE or is it automatic? Does being a PLE give enhanced benefits other than being just a provider?

The answer is that all providers are not PLEs and providers will need to undertake significant legal and administrative steps to become a PLE.

“PLEs shall implement full-risk capitated health plans to manage and coordinate the care for enough program aid categories to cover at least ninety percent (90%) of Medicaid recipients to be phased in over five years from the date this act becomes law.”

What is “full risk?”

“Full risk” is not defined in HB 372, although, I believe that the definition is self-evident.

Capitation payment is defined by reference to 42 CFR 438.2:

“Capitation payment means a payment the State agency makes periodically to a contractor on behalf of each beneficiary enrolled under a contract for the provision of medical services under the State plan. The State agency makes the payment regardless of whether the particular beneficiary receives services during the period covered by the payment.”

Interestingly, this definition for “capitation payment” is found in the same section of the Code of Federal Regulations (CFR) as all the managed care regulations. Part 438 of the CFR applies to managed care.

We have managed care organizations in our state now managing the behavioral health care aspect of Medicaid. Will the same provisions apply to MCOs…to ACOs…to PLEs?

A rose by any other name…

What else does House Bill 372 purport to do?

• Within 12 months, the Department shall request a waiver from CMS to implement the components of this act.
• Within 24 months, the Department will issue an RFP for provider-led entities to bid on contracts required under this act.
• Within 5 years, 90% of all Medicaid services must be provided from a PLE, except those services managed by the MCOs , dental services, pharmaceutical products and dispensing fees. The Department may implement a pilot within 3 years.

As a provider, if you want to continue to serve the Medicaid population, then you may want to insert your company or agency into the creation of the PLEs, whether you sell, merge, acquire, or create a conglomerate.

It is my prediction that those providers who are reactive, instead of proactive, will lose business, consumers, and, potentially, a lot of cash. It is my “predictive recommendation” [as you are aware, we do not have an attorney/client relationship, so no recommendation of mine is tailored for you] that those providers who proactively seek mergers, acquisitions, and/or business agreements with other providers to morph into PLEs will be more successful, both financially and in serving their consumers better.

What you need to know about the future PLEs:

  • Must cover at least 30,000 recipients
  • Must provide all health benefits and administrative services, including physical, long-term services and supports, and other medical services generally considered physical care
  • Must meet solvency requirements
  • Must provide for appeal processes
  • Will cover 100% of the NC counties

The PLEs will, effectively, absorb the Medicaid dollars for recipients across the entire state and provide care for all physical health needs of Medicaid recipients.

In this environment, providers need to be proactive, not reactive!

If House Bill 327 passes into law, our next Medicaid metamorphosis will be monumental!  And the state will issue an RFP for providers within 2 years!

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:

2014 mco

 

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

chart for mcos

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.

Waste in health care

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.””

partisanship

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.

“The Times They Are a-Changin’”: A Look at Possible Ramifications on Medicaid by Senate Bill 744

I think of Bob Dylan’s raspy voice singing:

Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.

In 1933, Franklin D. Roosevelt took the presidency during a time of severe poverty. The Great Depression, which would last until the late 1930s or early 1940s, cast shadows and doubt over the future of America. People were starving. Unemployment and homelessness were at an all-time high.

FDR’s first 100 days in office were monumental. In fact, FDR’s first 100 days in office changed America forever. With bold legislation and a myriad of executive orders, he instituted the New Deal. The New Deal created government jobs for the homeless, banking reform, and emergency relief to states and cities. During those 100 days of lawmaking, Congress granted every major request Roosevelt asked. This is an example of what I call blending of the separation of powers. In a time of great national need, Congress took an expansive view of the president’s constitutional powers and cooperated with him to effect major change.

I am in no way comparing our General Assembly to Congress back in the 1930s nor am I comparing FDR to Gov. McCrory. In fact, there are vast differences. I am only making the point that rarely does the legislative body create such change.

But North Carolina’s current Senate Bill 744 may create this change. For example, if Senate Bill 744 passes the House, the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA) may no longer manage Medicaid. That’s right. A whole new state agency may manage Medicaid.

This past Friday, May 30, 2014, the state Senate passed a $21.2 billion budget, which is known as Senate Bill 744. On May 31, 2014, Senate Bill 744 passed its 3rd reading and will now go on to the House. So far, it has been revised 3 times, so we do not know whether the House will make substantial changes. But, as it stands today, it is shocking. Is it good? Bad? I don’t think we can know whether the changes are good or bad yet, and, quite honestly, I have not had time to digest all of the possible implications of Senate Bill 744. But, regardless, the changes are shocking.

Of the most shocking changes (should SB 744 get passed), consider the following:

1. DHHS must immediately cease all efforts to transition Medicaid to the affordable care organizations (ACOs) system that DHHS had touted would be in effect by July 2015;

2. DHHS’s DMA will no longer manage Medicaid. Instead, a new state entity will be formed to manage Medicaid. (A kind of…”scratch it all and start over” method);

3. All funds previously appropriated to DMA will be transferred to the Office of State Budget and Management (OSBM) and will be used for Medicaid reform and may not be used for any other purpose such as funding any shortfalls in the Medicaid program.

4. Categorical coverage for recipients of the optional state supplemental program State County Special Assistance is eliminated.

5. Coverage for the medically needy is eliminated, except those categories that the State is prohibited from eliminating by the “maintenance of effort” requirement of the Patient Protection and Affordable Care Act. Effective October 1, 2019, coverage for all medically needy categories is eliminated.

6. It is the intent of the General Assembly to reduce optional coverage for certain aged, blind, and disabled persons effective July 1, 2015, while meeting the State’s obligation under the Americans with Disabilities Act and the United States Supreme Court decision in Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999).

7. Repeal the shared savings program and just reduce the reimbursement rates by 3%.

8. DHHS shall implement a Medicaid assessment program for local management entities/managed care organizations (LME/MCOs) at a rate of three and one-half percent (3.5%).

9. For additional notices as to State Plan Amendments (SPAs), DHHS must post the proposed SPAs on its website at least 10 days prior to submitting the SPAs to the federal Center for Medicare and Medicaid Services (CMS).

10. Reimbursement rate changes become effective when CMS approves the reimbursement rate changes.

11. The Department of Health and Human Services shall not enter into any contract involving the program integrity functions listed in subsection (a) of this section of SB 774 that would have a termination date after September 1, 2015.

12. The Medicaid PROVIDER will have the burden of proof in contested case actions against the Department.

13. The Department shall withhold payment to any Medicaid provider for whom the DMA, or its vendor, has identified an overpayment in a written notice to the provider. Withholding shall begin on the 75th day after the day the notice of overpayment is mailed and shall continue during the pendency of any appeal until the overpayment becomes a final overpayment (can we say injunction?).

Senate Bill 744 purports to make immense modifications to our Medicaid system. I wonder what Gov. McCrory and Secretary Wos think about Senate Bill 744. If SB 744 passes, McCrory and Wos can no longer continue down the ACO path. Does the General Assembly even have the authority to bind their hands from creating ACOs? It seems so.

As for the “new state agency” that will manage Medicaid, maybe the General Assembly is right and we do need to scratch out the current Medicaid management and start over…I doubt anyone would disagree that DHHS has had some “oops” moments in the past year or so. But (a) is this the way to start all over; and (b) does the General Assembly have the legal power to remove the management of Medicaid from Secretary Wos?

Going to the reduction of optional services for the “medically needy,” what services are considered optional? Here is a list of optional services, as defined by the Center of Medicare and Medicaid Services (CMS):

• Case Management
• Mental Health
• Podiatry
• Intermediate Care Facilities (ICF-MR)
• Personal Care Services
• Prosthetics
• Respiratory Therapy
• Hospice
• Adult Dentures
• Prescription Drugs
• Community Alternative Programs (CAP)
• Private Duty Nursing
• Chiropractor
• Home Infusion Therapy
• Physical Therapy/Speech Therapy
• Transportation

I cannot comment on all the changes proposed by Senate Bill 744; I simply have not had enough time to review them in detail, because there are so many changes. I do not purport to know whether these modifications are ultimately for the good or for the bad.

All I know is that we better start swimming or we will sink like a stone, because the times they are a-changin’.

Knicole Emanuel to Appear on UNC-TV Tonight! Tune In at 7:30pm!

Heather Burgiss, a UNC-TV journalist, created a 3-part television series called, “Mental Health Services in NC.” Part 1 will air tonight on UNC-TC at 7:30, and I will be discussing the important topic of the current status of our mental health system in NC.  So tune in to watch!!!!

The three-part series is intended to educate North Carolinians on the current state of mental health in NC, as well as discuss the upcoming Medicaid reform consisting of the Accountable Care Organizations (ACOs) for physical health services.

P.S. It is intimidating how UNC-TV interviews you, so forgive any bad grammar, etc. 🙂  During the interview, they cut off all the lights and shine a bright light on you.  It creates a strange environment in which you can hear the person asking you questions, but you cannot see him or her.  Plus, the light is super hot.

But, we will see, Heather was very nice in dealing with my novice handling of the interview.

And, BTW, when you see the scene during which I am walking down the hall of my law firm, I had a strange sensation to start doing the MC Hammer.  But I did not succumb.

As NC Morphs to ACOs, the Brains (The Mental Side of Medicaid) Remain With MCOs: Perfect for the Headless Horseman

ACOs could be the answer to Medicaid budget problems. At least for physical services for the neck down. The brain, for now, will continue with the MCOs.

I understand that Medicaid services for physical needs will be within the parameters of the ACOs and that MH/DD/SA will remain with MCOs. But it seems that we are cutting the head off the body. This system would be perfect for the Headless Horseman; I assume the Headless Horseman did not suffer from any mental afflictions being that he had no head.

The shift to the ACO system is an attempt to revamp the fee-for-service payment method and dissuade physicians from ordering more procedures and services than are actually necessary.

According to a new Harvard study, as many as 42 percent of U.S. Medicare patients were subjected to procedures providing little if any medical benefit, costing the government program up to $8.5 billion in wasteful spending.

What could be the cause of this needless spending? You could argue that plaintiffs’ lawyers are at fault because of creating a fear of medical malpractice lawsuits. Doctors become so concerned about being the subject of a medical malpractice lawsuit that the physician is over-inclusive as to tests/procedures rather than risk being accused of medical malpractice by failing to test. This is commonly referred to as practicing “defensive medicine.”

But you could also argue that the entire fee-for-service payment method currently used by physicians gives a financial incentive to providers to recommend more services, more testing, more procedures. For example, ordering a test a patient doesn’t really need, in an effort simply to have the results show up in her records, would be considered practicing defensive medicine.

It is without question that defensive medicine is better for physicians, and very understandable. If I were a physician, knowing as much as I do about health care law, I would definitely practice defensive medicine. And purchase the Cadillac of the liability insurances, one that covers 100% of attorneys’ fees for my choice of attorney. Those plaintiff lawyers would scare me, too!

But defensive medicine is not the best approach for the Medicaid budget. One possible way to eliminate defensive medicine practices is to implement the accountable care organizations (ACOs). While ACOs do not completely do away with a fee-for-service payment system, they creates incentives to be more efficient by offering bonuses when physicians keep costs down. Providers get paid more for keeping patients out of the hospitals.

North Carolina is implementing the ACO model for physical health care (not for MH/DD/SA).

North Carolina Department of the Health and Human Services (DHHS) has announced that the NC Medicaid system will be changed over to the ACO model by July 2015, although some question whether the deadline is a bit unrealistic.

However, in NC, there are already ACOs, whose experience can give us an idea of what the NC Medicaid system’s ACO experience will resemble. Here is a list of active ACOs in NC (according to one website):

Physicians HealthCare Collaborative
AnewCare Collaborative
Cornerstone Health Care, PA
Meridian Holdings, Inc.
Triad Healthcare Network, LLC
Coastal Carolina Quality Care, Inc.
Accountable Care Coalition of Caldwell County, LLC
Accountable Care Coalition of Eastern North Carolina

Another article cites that in NC we have 14 ACOs currently active.

Our ACOs in NC service MediCARE patients, not MediCAID.

I am not aware of a single other state in USA that has implemented ACOs to Medicaid, which seems odd, considering the number of ACOs across the nation for Medicare and the touted success of ACOs in Medicare. Could NC possibly be the leader in ACOs for Medicaid? There is no question that, when we implement the ACOs, all eyes will be on NC to determine the success or failure of the program.

The ACOs will not, however, manage behavioral health. We will continue with the MCOs behavioral health care. So the ACOs will be in charge of everything the neck down. But is the ACO system going to replicate the MCO system? (As everyone knows who has read my blogs, I am not a fan of the MCO system).

ACO…MCO….What’s the difference?

Hopefully, and I believe it is correct to say, the ACOs will be vastly different from their counterpart, the MCO (in a good way).

Chart2

In essence, I have high hopes for the ACOs. I believe that the brain (MH/DD/SA) should have been included with the rest of the body, but, maybe, in time it will be.