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BREAKING: House and Senate appear close to a Medicaid deal!!
In our last post on Medicaid reform, we updated you on the recent bill passed by the North Carolina Senate relating to the long-standing thorn in the side of the General Assembly, especially regarding the states’ budget – the Medicaid program. The Senate’s version of Medicaid reform is quite different from what we have previously seen and is a hodge-podge of managed care and a new idea: “provider-led entities.”
In a strong sign that this proposal is a compromise between competing sides that could end up getting passed, both House and Senate leaders are speaking positively on the record to news media about the prospects for a deal. Given how public the issue is and how big it is (an expected $14.2 billion in North Carolina in the coming year), that means they expect to get a deal done soon. The fact that the issue is so tied up with the budget that is overdue to be passed is a further headwind to passing a bill.
Right now, the bill is in a conference committee of negotiators from the House and Senate to work out an agreement, given the differences between the two chambers.
One major issue that the committee needs to look at is whether there will be a whole new state agency: the “Department of Medicaid.” The Senate endorsed that idea last week.
Our prediction: The legislators will chart a cautious course and not erect a whole new agency at the same time they are overhauling the system.
With Wos having (coincidentally?) just stepped down as Secretary of the Department of Health and Human Services, perhaps the lack of a lightning rod for criticism of DHHS will let the air out of the proposal to remove Medicaid from DHHS’s hands.
Stay tuned.
By Robert Shaw
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.
Obamacare, Health Care Exchanges, Subsidies, Typos, and Speak-o’s
Have you ever said something that you immediately wished you could put back in your mouth? I know I have! In fact, just recently, I was eating lunch with my husband and one of our closest friends Josh. Josh, his wife, Tracey, my husband Scott and I ride horses together almost every weekend. Our daughters come with us, and it’s a fun family event. So, I should have known that a manger is a tool used in barns to hold the hay for the horses to eat, not just baby Jesus’ bed.
Josh tells me that he is going to pick up a manger. To which I respond, “Josh, why do you need a baby manger?” If words came out of your mouth on a string, I would have grabbed that string and shoved it back into my mouth. Of course, my husband had no end to his ribbing. “Josh, why do they sell baby mangers in Tractor Supply?” And “Baby Jesus was so lucky that someone put a manger in that barn for when he was born.”
At that point, I would have liked to claim that I had a “speak-o.” You know, like a typo, but for speech.
At least this is what Jonathan Gruber has claimed…that he made a speak-o in 2012.
Jonathan Gruber is one of the architects of the Affordable Care Act (ACA). He drafted much of the language included in the ACA. After the ACA was passed, Gruber was interviewed by a number of journalists regarding specific sections of the ACA. One of the sections on which he spoke was the section that allowed for health care premium subsidies for people enrolled in the program who reside in states which created state-run health care exchanges as opposed to states that opted to use the federal exchange. For ease of this blog, I will call this ACA section the “Health Care Premium Subsidies Section.”
As I am sure you are aware if you follow my blog, two appellate court cases came out July 22, 2014, regarding the Health Care Premium Subsidies Section, with polar opposite holdings. In Halbig v. Burwell, the D.C. Circuit Court found that the clear language of the ACA only allows the health care premium subsidies in states that created their own state-run health care exchanges, i.e, residents in NC along with 35 other states would not be eligible for the subsidies. See my blog: “Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges.”
Juxtapose the 4th Circuit Court’s decision in King v. Burwell, which held that “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.”
The two cases were released within hours of each other and came to two entirely different conclusions. Halbig: ACA is clear; King: ACA is ambiguous.
Interesting to note is that D.C. is not a state, and the 4th Circuit clearly embraces five states.
In my Halbig blog, I explain the legal analysis of statutory interpretation. I also explain that based on my reading of the Health Care Premium Subsidies Section, I tend to side with the D.C. courts and opine that the Section is not ambiguous.
If, however, a court finds that the statutory language is ambiguous, the court defers to the agency’s interpretation “so long as it is based on a permissible construction of the statute,” which is clear case law found in the 4th Circuit.
Therefore, once the 4th Circuit determined that the statute is ambiguous, the court made the correct determination to defer to the IRS’ ruling that all states could benefit from the subsidies.
Yet another approach to statutory interpretation is considering the legislative intent. The courts may attempt to evaluate legislative intent when the statute is ambiguous. In order to discern legislative intent, courts may weigh proposed bills, records of hearing on the bill, amendments to the bill, speeches and floor debate, legislative subcommittee minutes, and/or published statements from the legislative body as to the intent of the statute.
Recently, some journalists have uncovered 2012 interviews with Gruber during which he states that the Health Care Premium Subsidies Section was drafted intentionally to induce the states to create their own health care subsidies and not rely on the federal exchange. How’s that for intent?
The exact language of that part of the 2012 interview is as follows:
Interviewer: “You mentioned the health information [sic] Exchanges for the states, and it is my understanding that if states don’t provide them, then the federal government will provide them for the states.”
Gruber: “I think what’s important to remember politically about this is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get the tax credits… I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it.”
What do you think? You think Gruber is pretty explicit as to legislative intent? Well, at least in 2012….
In 2014, Gruber states, as to his 2012 comment, “I honestly don’t remember why I said that. I was speaking off-the-cuff. It was just a mistake. People make mistakes. Congress made a mistake drafting the law and I made a mistake talking about it.”
According to Gruber, Congress made a typo; Gruber made a speak-o.
“It’s unambiguous that it’s a typo,” Gruber tells reporter Chris Matthews from NBC and MSNBC.
Um…a typo when the statement is spoken? Hence, the new word “speak-o” blowing up Twitter.
If Gruber’s statement was truly a speak-o, it was a re-occurring speak-o. Gruber also made two speeches in which he listed three possible threats to the implementation of Obamacare. In both cases the third “threat” was that states would not set up exchanges and, instead, would rely on the federal government.
I anticipate that Gruber’s 2012 and contrary 2014 statements will be at issue as these cases, Halbig and King, move forward.
As for me, I would like to invoke my own speak-o’s. I can only imagine how I will be received when I appear before a court and say, “Your Honor, I apologize. That was a speak-o.”
Our Medicaid Budget: Are We Just Putting Lipstick on an 800 lbs. Pig?
Too often, I have heard an analogy about the Medicaid budget and a pig wearing lipstick. Normally it goes like this: “Are we just putting lipstick on an 800 lb. pig?”…and the Medicaid budget is the 800 lbs. pig, not the lipstick.
For those of you who do not know, I own a pet pig. She is a micro pig. Not a pot belly pig; those get to be 150 lbs. Oh, no. A micro pig; those stay very small. Our Oink is only 21 pounds.
Here is a picture:
Notice she does not have lipstick on. So when someone says, “Are we just putting lipstick on an 800 lbs. pig?” I think, “Is that so bad?”
I understand that saying to put “lipstick on a pig” is a rhetorical expression. An expression used to demonstrate that making a superficial or cosmetic change is a futile attempt to disguise the true nature of a product. However, Oink and I take offense, because she is so much more beautiful than the Medicaid budget (and much smaller).
Although my Oinky-Oink is only 21 pounds. The expression that I have heard most often involves an 800 lbs. pig. If our Medicaid budget were Oink’s size, the General Assembly would probably be home.
Seriously, here is my question on my “Pigs and Medicaid” blog:
How can we expect the General Assembly to create a “knowable” and “concrete” Medicaid budget when the Department of Health and Human Services (DHHS) cannot provide the General Assembly with accurate data?
Literally, DHHS cannot tell the General Assembly how many people are enrolled in Medicaid. Legislatures are being told to guesstimate. Guesstimate???
Between 2009-2012, North Carolina exceeded its approved Medicaid budget by 5.4 billion. In the last decade, our Medicaid spending has increased by more than 90%.
Not to mention DHHS has difficulty filling and retaining employees. Attrition is prominent. As of June 1, 2014, a quarter of the division’s 332 jobs were vacant; the average unfilled job had been open for 347 days, or nearly a year. In November, DHHS’ chief financial officer sent out a cry for help. The Medicaid office “does not have adequate staff with the necessary experience and skills to properly manage the … program,” Rod Davis wrote to the state budget office.
To compensate for too few employees, DHHS gave a no-bid contract to Alvarez & Marsal to help create a Medicaid budget. We all know how that turned out.
With the help of Alvarez & Marsal, DHHS proposed to tax the then-10 managed-care organizations (MCOs) that manage Medicaid services for mental health, developmentally disabled, and substance abuse. But we needed approval by the feds.
It was DHHS’ hope that the extra funds would be the catalyst for a federal match twice that size. Once we got the federal match, DHHS would refund the taxed dollars to the MCOs and use the federal money to pay for programs. Maybe I’m wrong, but the idea sounds like a “bait and switch.” Analogously, I have a client pay me $50,000 on January 31, 2015, the end of our fiscal year, only to refund it February 1, 2015. I would get credit for collecting the $50,000 in fiscal year 2014, but it was not a real collection. It was fake.
And the feds knew it. The answer was, “No.”
Sen. Bob Rucho, R-Mecklenburg, said the information presented Wednesday should have been made available months ago, and he noted that it’s still not detailed enough for a forecast.
“When will we get the numbers that we need to have so that we can have a good budget number?” asked Rucho. And his question is not an anomaly. He is not alone.
“I’ve asked them every time I’ve had the opportunity, and I’m astounded that a $13 billion organization does not have budget numbers,” said Sen. Tommy Tucker (R-Waxhaw), one of the more outspoken members of the Joint Legislative Oversight Committee on Health and Human Services.
Medicaid Chief Financial Officer Rod Davis told Senator Ralph Hise that his department has an idea of how much they’ve paid to providers, but that they can’t forecast what’s to come.
“Would it be like saying we know what checks we wrote, we just don’t know what we’ve paid for,” Hise asked.
Going back to my question:
How can we expect the General Assembly to create a “knowable” and “concrete” Medicaid budget when the Department of Health and Human Services (DHHS) cannot provide the General Assembly with accurate data?
Are we putting too much pressure on the General Assembly and not on DHHS?
The General Assembly is responsible for creating a Medicaid budget. But how can we hold the General Assembly to create an accurate Medicaid budget if the “single state agency,” DHHS, charged with managing Medicaid cannot provide the General Assembly with accurate data???
Here is my political soapbox: We have a Republican General Assembly and we have a Republican governor. Shouldn’t the General Assembly and the governor be on the same side???? Perhaps it’s more than politics. Perhaps it’s more than a donkey and an elephant.
Otherwise with a Republican General Assembly and a Republican Governor, there should be no tension between the “balance of the powers.” Yet there is.
Let’s put lipstick on a pig:
By the way, whoever created the saying “Are we just putting lipstick on an 800 lbs. pig?” obviously did not own a pig. Because Oink did NOT enjoy getting lipstick on her snout. In fact, she squealed like a pig.
General Assembly in Full Swing: What Medicaid Bills Are On the Agenda??
It’s that time of year again. The legislators are back in town. Moral Mondays resume. And all eyes are on the General Assembly. But, this is the short session, and the General Statutes limit the powers of legislative law-making in the short session.
For those of you who do not know how our General Assembly (GA) works and the difference between the short and long sessions, let me explain:
In odd-numbered years, the GA meets in January and continues until it adjourns. There is no requirement as to the length of the long session, but it is normally about 6 months. In the long session, everything is fair game. New laws or changes to the existing laws can be proposed in long sessions for all of the subjects on which the GA legislates.
The short session reconvenes every even-numbered year and typically lasts 6 weeks. Last year the long session adjourned July 26, 2013, and the GA reconvened May 14, 2014.
There are limits as to what measures may be considered in the short session. In fact, at the end of the long session, the GA passed Resolution 2013-23, which states exactly what topics/bills may be considered in the short session.
So…the question is: What Medicaid bills may be considered during this short session?
H0674
H0867
H0320
Now there are of course, exceptions. For example, any bill that directly and primarily affects the State Budget can be introduced. Obviously, a Medicaid bill could, arguably, directly and primarily affect the budget.
The bills I enumerated above, however, are the bills that are allowed to be considered in the short session because they constitute a crossover bill, that is, these bills were passed one house and were received in the other during last year’s long session and are considered “still alive” for consideration during the current short session.
So what do these Medicaid bills propose?
House Bill 674 could be a game changer for Medicaid providers. The bill, which passed the House last year with a vote of 116-0, would direct the Program Evaluation Division to study the contested case process in regards to Medicaid providers. There are 3 key components in this study according to the bill:
1. The Division must review the procedures for a contested case hearing under NCGS 150B and determine whether there is a way to streamline the process and decrease backlog.
2. The Division must consider alternative methods of review other than the contested cases.
3. The Division must review NCGS 108C-12 to determine whether any amendments to the law would improve the cost-effectiveness and efficiency of the Medicaid appeal process. (NCGS 108C-12 is the statute that allows providers to appeal adverse decisions to the Office of Administrative Hearings (OAH)).
Whew. The Program Evaluation Division would have its work cut out for it if the bill passes!
House Bill 674 was received by the Senate on May 5, 2013, and it passed its first reading.
House Bill 867 is named “An Act to Allow for the Movement of Certain Medicaid Recipients,” and it purports to allow those recipients with an 1915(c) Innovations Waiver slot to move about the State and for the slots to be recognized uniformly across the State. This way a person with an Innovations Waiver would not need to re-apply in another county if he or she moves there. However, for those served by the managed care organizations (MCOs), residency is determined by the county in which the recipient currently resides.
Then we come to House Bill 320. See my blog,”HB320: The Good News and the Bad News for NC Medicaid Providers.”
House Bill 320 mainly speaks to Medicaid recipient appeals, but imbedded within the language is one tiny proposed change to NCGS 108C-1. Just an itty, bitty change.
NCGS 108C-1 provides the scope of 108C (which applies to providers) and currently reads, “This Chapter applies to providers enrolled in Medicaid or Health Choice.”
If House Bill 320 passes, NCGS 108C-1 will read, “This Chapter applies to providers enrolled in Medicaid or Health Choice. Except as expressly provided by law, this Chapter does not apply to LME/MCOs, enrollees, applicants, providers of emergency services, or network providers subject to Chapter 108D of the General Statutes.”
What????
If House Bill 320 passes, what, may I ask, will be a Medicaid provider’s appeal options if NCGS 108C does not apply to MCOs? And would not the new scope of NCGS 108C-1 violate the State Plan, which explicitly gives OAH the jurisdiction over any contracted entity of the Department of Health and Human Services (DHHS)? See my blogs on MCOs: “NC MCOs: The Judge, Jury and Executioner,” and “A Dose of Truth: If an MCO Decides Not to Contract With You, YOU DO HAVE RIGHTS!”
I also wonder, if House Bill 320 passes, what effect this revision to NCGS 108C-1 will have. Arguably, it could have no effect because of the above-mentioned language in the State Plan, the 4th Circuit Court of Appeals case that determined that MCOs are agents of the state, and the fact that the Department is defined in 108C-2 to include any of its legally authorized agents, contractors, or vendors.
On the other hand, in every single lawsuit that I would bring on behalf of a provider against an MCO, I would have another legal obstacle to overcome. The MCO’s attorney would invariably make the argument that OAH does not have jurisdiction over the MCO because the scope of 108C has been changed to exclude the MCOs. They have been arguing already that OAH lacks jurisdiction over the MCOs since NCGS 108D was passed, but to no avail.
Needless to say, the MCO lobbyists will be pushing hard for H 320 to pass. H 320 passed its 3rd reading on May 15, 2013, by a vote of 114-0, and the Senate received it on May 16, 2013.
HB 320: The Good News and the Bad News for NC Medicaid Providers
If you have been following my blog, then you know that I have been vehemently opposing House Bill 320. Well, the bad news is that HB 320 passed its 2nd reading today. The good news is that HB 320 has morphed from a MCO-sovereign Bill into a more reasonable Bill.
Prior to the strike outs, HB 320 allowed
- 108D-10: The MCOs to conduct closed networks (i.e., disallowing providers into the networks);
- 108D-11: The MCOs to select the providers allowed in the network;
- 108D-13: The MCOs to conduct unannounced on-site visits, post-payment reviews and any other allowable function of Program Integrity;
- 108D-15: The MCOs to suspend payments to providers (under certain circumstances);
- 108D-16: The MCOs to require a provider to undergo prepayment review (i.e., suspension of Medicaid reimbursements for a period of time without an appealable right);
- 108D-18: The jurisdiction for grievances against an MCO to be superior court, not OAH.
After the strike out, everything listed above is deleted. Click here for the legislative history of HB 320.
Now, remember, this HB 320 is not law. It is a proposal. But the current revision with all the above-referenced deletions could mean a big win for health care providers.
In this case, I think the good news outweighs the bad. But we shall see if the current revision remains….
