Is this the end of the managed care organizations (MCOs)?
If the Senate’s proposed committee substitute (PCS) to House Bill 403 (HB 403) passes the answer is yes. The Senate’s PCS to House Bill 403 was just favorably reported out of the Senate Health Care Committee on June 15, 2017. The next step for the bill to advance will be approval by the Senate Rules Committee. Click here to watch its progress.
As my readers are well aware, I am not a proponent for the MCOs. I think the MCOs are run by overpaid executives, who pay themselves too high of bonuses, hire charter flights, throw fancy holiday parties, and send themselves and their families on expensive retreats – to the detriment of Medicaid recipients’ services and Medicaid providers’ reimbursement rates. See blog. And blog.
Over the last couple days, my email has been inundated by people abhorred with HB 403 – urging the Senators to retain the original HB 403, instead of the PCS version. As with all legislation, there are good and bad components. I went back and re-read these emails, and I realized multiple authors sat on an MCO Board. Of course MCO Board members will be against HB 403! Instead of hopping up and down “for” or “against” HB 403, I propose a (somewhat) objective review of the proposed legislation in this blog.
While I do not agree with everything found in HB 403, I certainly believe it is a step in the right direction. The MCOs have not been successful. Medically necessary behavioral health care services have been reduced or terminated, quality health care providers have been terminated from catchment areas, and our tax dollars have been misused.
However, I do have concern about how quickly the MCOs would be dissolved and the new PHPs would be put into effect. There is no real transition period, which could provide safety nets to ensure continuity of services. We all remember when NCTracks was implemented in 2013 and MMIS was removed on the same day. There was no overlap – and the results were catastrophic.
The following bullet points are the main issues found in HB 403, as currently written.
- Effective date – MCOs dissolve immediately (This could be dangerous if not done properly)
Past legislation enacted a transition time to dissolve the MCOs. Session Law 2015-245, as amended by Session Law 2016-121, provided that the MCOs would be dissolved in four years, allowing the State to implement a new system slowly instead of yanking the tablecloth from the table with hopes of the plates, glasses, and silverware not tumbling to the ground.
According to HB 403, “on the date when Medicaid capitated contracts with Prepaid Health Plans (PHPs) begin, as required by S.L. 2015-245, all of the following shall occur:…(2) The LME/MCOs shall be dissolved.”
Session Law 2015-245 states the following timeline: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly
with the LME/MCOs in the same manner as currently utilized.”
HB 403 revises Session Law 2015-245’s timeline by the following: “
LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly with the LME/MCOs in the same manner as currently utilized.”
Instead of a 4-year transition period, the day the PHP contracts are effective, the MCOs no longer exist. Poof!! Maybe Edward Bulwer-Lytton was right when he stated, “The pen is mightier than the sword.”
Again, I am not opposed to dissolving the MCOs for behavioral health care; I just want whatever transition to be reasonable and safe for Medicaid recipients and providers.
With the MCOs erased from existence, what system will be put in place? According to HB 403, PHPs shall manage all behavioral health care now managed by MCOs and all the remaining assets (i.e., all those millions sitting in the savings accounts of the MCOs) will be transferred to DHHS in order to fund the contracts with the PHPs and any liabilities of the MCOs. (And what prevents or does not prevent an MCO simply saying, “Well, now we will act as a PHP?”).
What is a PHP? HB 403 defines PHPs as an entity, which may be a commercial plan or provider-led entity with a PHP license from the Department of Insurance and will operate a capitated contract for the delivery of services. “Services covered by PHP:
- Physical health services
- Prescription drugs
- Long-term care services
- Behavioral health services
The capitated contracts shall not cover:
Behavioral health Dentist services
- The fabrication of eyeglasses…”
It would appear that dentists will also be managed by PHPs. As currently written, HB 403 also sets no less than three and no more than five contracts between DHHS and the PHPs should be implemented.
Don’t we need a Waiver from the Center for Medicare and Medicaid Services (CMS)?
Yes. We need a Waiver. 42 CFR 410.10(e) states that “[t]he Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.” In order to “Waive” this clause, we must get permission from CMS. We had to get permission from CMS when we created the MCO model. The same is true for a new PHP model.
Technically, HB 403 is mandating DHHS to implement a PHP model before we have permission from the federal government. HB 403 does instruct DHHS to submit a demonstration waiver application. Still, there is always concern and hesitancy surrounding implementation of a Medicaid program without the blessing of CMS.
- The provider network (This is awesome)
HB 403 requires that all contracts between PHPs and DHHS have a clause that requires PHPs to not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates.
- PHPs use of money (Also good)
Clearly, the General Assembly drafted HB 403 out of anger toward the MCOs. HB 403 implements more supervision over the new entities. It also disallows use of money on alcohol, first-class airfare, charter flights, holiday parties or similar social gatherings, and retreats, which, we all know these are precisely the activities that State Auditor Beth Wood found occurring, at least, at Cardinal. See Audit Report.
HB 403 also mandates that the Office of State Human Resources revise and update the job descriptions for the area directors and set limitations on salaries. No more “$1.2 million in CEO salaries paid without proper authorization.”
- Provider contracts with the PHPs (No choice is never good)
It appears that HB 403 will not allow providers to choose which PHP to join. DHHS is to create the regions for the PHPs and every county must be assigned to a PHP. Depending on how these PHPs are created, we could be looking at a similar situation that we have now with the MCOs. If the State is going to force you to contract with a PHP to provide Medicaid services, I would want the ability to choose the PHP.
In conclusion, HB 403 will re-shape our entire Medicaid program, if passed. It will abolish the MCO system, apply to almost all Medicaid services (both physical and mental), open the provider network, limit spending on inappropriate items, and assign counties to a PHP.
Boy, what I would give to be a fly on the wall in all the MCO’s boardrooms (during the closed sessions).
Under the Trump Administration, some Republican governors may look to move their Medicaid programs in a more conservative direction. In his latest column for Axios, Drew Altman discusses the arguments about Medicaid “work requirements” and why few people are likely to be affected by them in practice.
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.
By Robert Shaw
Given how long the Medicaid reform discussions have been going on at the legislature, you may be glazed over by now. Give me the memo when they pass something, right? Fair enough, let’s keep it brief. Where do things stand right now?
Last Wednesday, the Senate staked out its position in the ongoing debate between the House and the McCrory administration.
The Senate’s newest proposal is an unusual mix of different systems and new ideas. Not willing to commit to one model for the whole Medicaid program, the latest version of the bill includes something new called Provider Led Entities, or “PLEs.” PLEs are yet the latest in the alphabet soup of different alternatives to straight fee-for-service billing for Medicare/Medicaid. You’ve all heard of HMOs, PPOs, MCOs, and ACOs. PLEs appear to be similar to ACOs, but perhaps for political reasons the Senate bill sponsors saw the need to call the idea something different. See Knicole Emanuel’s blog.
In any event, as the name suggests, such organizations would be provider-led and would be operated through a capitated system for managing the costs of the Medicaid program. The Senate bill would result in up to twelve PLEs being awarded contracts on a regional basis.
PLEs are not the only addition to the Medicaid alphabet soup that the Senate is proposing in its version of HB 372. The Senate has also renewed its interest in taking Medicaid out of the hands of the N.C. Department of Health and Human Services entirely and creating a new state agency, the Department of Medicaid (“DOM”).
(One wonders whether the continual interest in creating a new Department of Medicaid independent of the N.C. Department of Health and Human Services had anything to do with embattled DHHS Secretary Wos stepping down recently.)
The Senate also proposes creating a Joint Legislative Oversight Committee on Medicaid (“LOC on Medicaid”).
But creating the DOM and using new PLEs to handle the provision of Medicaid services is not the whole story. Perhaps unwilling to jump entirely into a new delivery system managed by a wholly new state agency, the Senate bill would keep LME/MCOs for mental health services in place for at least another five years. Private contractor MCOs would also operate alongside the PLEs. The North Carolina Medicaid Choice coalition, a group which represents commercial MCOs in connection with the Medicaid reform process, is pleased.
One very interesting item that the Senate has included in its proposed legislation is the following requirement: “Small providers shall have an equal opportunity to participate in the provider networks established by commercial insurers and PLEs, and commercial insurers and PLEs shall apply economic and quality standards equally regardless of provider size or ownership.” You can thank Senator Joel Ford of Mecklenburg County for having sponsored this amendment to the Senate version of House Bill 372.
By pulling the Medicaid reform proposal out of the budget bill, the matter appears headed for further negotiation between the House and the Senate to see if the two can agree this year, unlike last year.
By legislative standards, that counts as forward progress… Here come the legislative discussion committees to hash it out more between the two chambers. We will keep a close eye on the proposals as they continue to evolve.
By Robert Shaw
The 2015 Legal Blog Contest is here!
For all you that follow this blog, thank you! I hope that you agree that I provide you with valuable and up-to-date information on Medicaid/care regulatory issues. At least, that is my hope in maintaining this blog. And maintaining this blog takes a lot of time outside my normal, hectic legal career and my time as a mom and wife. Don’t get me wrong…I love blogging about these issues because these issues are near and dear to my heart. I am passionate about health care, health care providers, Medicaid and Medicare, and access to quality care.
If you are a follower, then you know that I try to keep my readers current on Medicaid/care fraud, federal and state laws, legal rights for health care providers, bills in the General Assembly germane to health care, extrapolation issues, CMS rulings, managed care matters, reimbursement rates, RAC audits and much, much more!
If you enjoy my blog, I ask a favor. Please consider nominating my blog for the 2015 Best Legal Blog Contest.
If you want to nominate my blog, please click here.
Scroll down until you see this:
Enter your name, email address, my blog address. which is:
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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…
Well, folks, it is official. I am “over the hill.” Yup. My birthday is today, January 7, 1975, and I was born 40 years ago.
Instead of moping around, I have decided to embrace my 40s. For starters, let’s take a look at where we were 40 years ago. Obviously, personally, I was in utero. But what about the country? What about health care?
Not surprisingly, even 40 years ago, politicians were discussing the same issues with health care as we are now. Some things never change…or do they???
In my “40 years in review” blog, I want to discuss why we, as a nation, are still arguing about the same health care issues that we were arguing about 40 years ago. And, perhaps, the reason why we have been in a 40-year-old stalemate in health care reform.
Today, we have a diverged nation when it comes to health care. Democrats want to expand public health insurance (i.e., Medicaid) and tend to favor a higher degree of government oversight of health care to ensure that health care is available to all people. Republicans, on the other hand, believe that the financial burden of the Affordable Care Act (ACA) on the federal and state level is unsustainable, and people will receive less than adequate health care. Republicans tend to favor privatization of Medicaid, while liberals oppose such ideas.
Health care reform has been a hot topic for over 40 years…with some interesting differences…
Going back to 1975…
Gerald Ford, a Republican, was our nation’s president, and we were in a nationwide recession.
Under Ford, the American Medical Society (AMA) proposed a new plan for health care, an employer mandate proposal.
According to a 1975 Chicago Tribune journalist, the AMA’s new proposal pushed for a broader government role in health care. See below.
“The new [ ] plan would cover both employees and the unemployed, along with poor people and those considered uninsurable because of medical or mental problems. It would require employers to subsidize health care for employees and their families and pay at least 65 % of each premium. It would also require the government to provide partially subsidized health insurance, financed from general revenues, for the poor and the unemployed. It calls for medical insurance benefits covering 365 days of hospital care during any one year, 100 days of nursing home care, and home health, mental, and dental service for children aged 2 and up. All but the poorest beneficiaries would share premium costs and would pay 20 per cent for the services provided, but no individual would pay more than $1,500 a year and no family more than $2,000 a year for health care.”
Chicago Tribune, “The A.M.A.’s subsidy plan” April 19, 1975 (emphasis added) (no author was cited).
Interestingly, in that same newspaper from April 19, 1975, advertisements show towels for $1.89, pants for teenagers for $4.99, a swivel rocker for $88, and a BBQ grill for $12.88. My how times have changed!
Those prices also indicate how much buying power was involved with the AMA’s proposal, and what it meant to suggest that an individual might have to pay up to $1,500 a year, and a family up to $2,000 a year, for health care – a lot of money back then!
In 1976, Pres. Ford proposed adding catastrophic coverage to Medicare, offset by increased cost sharing. These are examples of Pres. Ford (a Republican) creating more government involvement in health care and expanding health care to everyone.
After Pres. Ford, came Pres. Jimmy Carter from 1977-1981, a Democrat.
Pres. Carter campaigned on the notion of “universal health care for everyone;” however, once in office he decided instead to rein in costs, and not expand coverage. In the prior decade (1960), the consumer price index had increased by 79.7%, while hospital costs had risen 237%. President Carter proposed an across-the-board cap on hospital charges that would limit annual increases to 1.5 times any rise in the consumer price index.
Pres. Carter was also quoted from public speeches saying, “We must clean up the disgraceful Medicaid scandals.”
Pres. Carter’s stance on “universal” health care was: “that such a program would be financed through both the employer and the payroll taxes, as well as general revenue taxes. Patients would still be free to choose their own physician, but the federal government would set doctor’s fees and establish controls to monitor the cost and quality of health care.”
In May 1979, Senator Ted Kennedy, a Democrat, proposed a new universal national health insurance bill—offering a choice of competing federally-regulated private health insurance plans with no cost sharing financed by income-based premiums via an employer mandate and individual mandate, replacement of Medicaid by government payment of premiums to private insurers, and enhancement of Medicare by adding prescription drug coverage and eliminating premiums and cost sharing.
These are examples of Democrats, Pres. Carter, by not expanding health care coverage and reining in costs, and Sen. Kennedy, by proposing privatization of Medicaid, acting in a more conservative nature, or, as a conservative nature would be perceived today.
So when did the parties flip-flop? Why did the parties flip-flop? And the most important question…if we have been struggling with the exact same issues on health care for over 40 years, why has our health care system not been fixed? There has certainly been enough time, ideas, and proposed bills.
While I do not profess to know the answer, my personal opinion is the severe and debilitating polarizations of the two main political parties have rendered this country into a 40-year-old stalemate when it comes to health care reform and are the reason why the solution has not been adopted and put into practice.
Maybe back in 1979, when Senator Kennedy proposed replacing Medicaid with private insurance, Republicans refused to agree, simply because a Democrat proposed the legislation.
Today when Republican candidates campaign on privatizing Medicaid and the Democrats vehemently oppose such action, maybe the opposition is not to the idea, but to the party making the proposal.
Just a thought…
And here’s to the next 40!!!