August 10, 2015

The old saying goes ”Don’t put all your eggs in one basket.”

And the State Senate’s compromise on Medicaid reform follows that good advice. Both the House and Senate want to convert Medicaid from a no budget cap, open ended system, where doctors and hospitals charge taxpayers for each service, into a fixed price program where doctors and hospitals agree to treat patients at a fixed cost. If they go over budget, they absorb the loss.

However, the Senate wants to include managed care companies in the solution while the House wants to give doctors and hospitals less competition, giving them more market power which will keep prices high. Thirty nine states use managed care insurance companies to ride herd over Medicaid so the Senate idea is not out of the mainstream.

In the Senate compromise, conservative reformers agree to accept the House’s so called provider led entities-groups of doctors and hospitals-to run Medicaid in competition with managed care companies. In fact, the Senate allows for 12 provider led entities and only 3 managed care companies. So nobody can say the House isn’t getting a lot of what they want.

It’s important to remember that the provider led entities are modeled after ObamaCare’s ACO’s. The ACO’s have proven themselves to be failures at reducing costs in Medicare here in North Carolina. Why would Medicaid be any different?

That’s why the Senate wants diversification-competition-so all the eggs aren’t in one basket.

In addition, the Senate wants to eliminate Community Care of North Carolina’s monopoly control over Medicaid case management. That saves nearly $200 million which can go into direct payments for doctors so patients have a wider choice of providers willing to accept Medicaid.

The bottom line-the Senate agrees with the House that doctors and hospitals need to be involved in Medicaid reform through provider led entities. However, there needs to be competition, not a closed shop. By using the off the shelf managed care reform, taxpayers will get a break faster than waiting for 5 years for provider led entities to get going.