Senate offers newest Medicaid proposal, could open $13 billion system up to privatization

By: - July 16, 2014 11:52 am

The state Senate pushed its most recent proposal in committee today to move North Carolina’s complicated and massive Medicaid program to a new structure outside of the state’s health agency.

MedicaidThe Senate’s Medicaid plan  would also open up the state’s $13 billion health care program for poor children, the disabled and elderly to privatization by managed care companies, by phasing out the current fee-for-service payment system in preference of paying for a set price-per-patient (called capitation).

Today’s Senate proposal (introduced Wednesday as a committee substitute for House Bill 1181) comes closer to what House members have wanted, but still has some significant differences.

Provider and doctors’ groups voiced criticism of the Senate proposal (click here to view a summary), saying that opening up the $13 billion government health care program to privatization could lead to out-of-state companies siphoning off profits at the expense of patient care.

“The Senate’s new proposal to upend North Carolina’s Medicaid program would harm our state’s most vulnerable patients,” said Robert Seligson, the director of N.C. Medical Society, in a statement released Wednesday. “The Senate preference for corporate managed care disregards the hard, productive work over the past year to craft a consensus Medicaid reform plan that provides more financial certainty for the state without compromising patient care.”

The new Senate proposal would shift the Medicaid program out from under the N.C. Department of Health and Human Services to a new Department of Medical Benefits headed by seven board members appointed by the governor and legislature.

The state’s Medicaid system, an entitlement program funded with a mix of federal and state dollars, serves 1.7 million of the state’s most vulnerable residents — low-income children and their parents, the blind, disabled and seniors. Along with education, management of the massive program has been a major sticking point in negotiations in the Republican-led legislature for the state’s 2014-15 $20 billion-plus budget (which began on July 1).

The Senate made an initial budget offer this summer that would kick more than 10,000 thousand elderly, blind or disabled people off of Medicaid coverage in favor of a larger pay increase for public school teachers, while House members kept the Medicaid rolls largely intact and proposed a smaller teacher pay increase.

The most recent Senate budget proposal would still but cut about 5,000 people living in assisted living, group and nursing homes from Medicaid coverage, according to this report from N.C. Health News.

A large portion of the state’s Medicaid system is currently managed through Community Care of North Carolina, a nationally-recognized system that seeks to

reduce Medicaid costs by offering financial incentives to providers that track and manage patient care.

DHHS Sec. Aldona Wos
DHHS Sec. Aldona Wos

Both Republican-led Houses have wanted better budget predictability from Medicaid, with the system under DHHS facing cost overrun over the last few years.

The Medicaid system has had major problems with high vacancies and management under McCrory’s Health and Human Services Secretary Aldona Wos, a wealthy Greensboro physician and significant Republican fundraiser who began running the department for $1 a year in January 2013.

The (Raleigh) News &Observer reported today that recently released email communications show that Wos micromanaged former Medicaid director Carol Steckel, who was hired in early 2013 with much fanfare but left the state position within a few months.


From the N&O:

On Aug. 26, 2013, Steckel wrote a memo canceling all meetings and speeches if Wos’ top aides – chief of staff Mark Payne or senior adviser Joe Hauck – were not present. A vice president at the company owned by Wos’ husband, Hauck was working under a no-bid $310,000 annual contract. Neither Payne nor Hauck list any Medicaid experience on their resumes.

Steckel asked Hauck and Payne for instructions on how to proceed.

“I would appreciate the instructions as soon as possible because we are holding all requests” for speeches and meetings, Steckel wrote. “To be courteous to the people calling I’d like to be able to have (my assistant) follow the Secretary’s instructions so we do not have another case where I am saying something inappropriate.”

In a later email, Steckel wrote that she was perplexed by the secretary’s actions.

“I am at a loss as to what I haven’t done, what I should have done that we weren’t doing and how we could have been any further along than we are,” Steckel wrote to Hauck and and Payne. “I need to know what it is that she is seeking. What is the ‘product’? ”

The former Medicaid budget director Rick Brennan, who left the agency in May, told the N&O that Wos ran Steckel out of the department and wouldn’t allow Steckel, the Medicaid director, to speak in internal meetings.

“If Carol tried answering a question, she was told to shut up,” Brennan told the N&O. “Yet anyone else at the meeting could answer questions.”

Click here to read the entire N&O article.

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Sarah Ovaska-Few

Sarah Ovaska-Few, former Investigative Reporter for N.C. Policy Watch for five years, conducted investigations and watchdog reports into issues of statewide importance. Ovaska-Few was also staff writer and reporter for six years with the News & Observer in Raleigh, where she reported on governmental, legal, political and criminal justice issues.