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Medicaid’s Financial Risks Would Shift To Medical Providers Under NC House Plan

Medicaid illustration: A Caduceus symbol and a dollar sign
Neff Conner

A North Carolina House committee has approved a plan to remake the state’s costly Medicaid program by allowing hospitals and physicians to manage the money spent to care for each patient.

The plan, which would shift much of the financial risk of growing Medicaid costs to provider-led entities, was approved after more than two hours of heated debate in the House of Representatives health committee. The bill is expected to be scheduled for a hearing in the appropriations committee on Thursday morning.

Wednesday afternoon’s debate is the beginning of what will likely be weeks of negotiations between the House and Senate on how to overhaul the state-financed medical program for low-income children and low-income pregnant women. Lawmakers have wanted to reform Medicaid because it represents about $3.5 billion in expenses, or roughly 20 percent of the state’s budget, and has consistently overrun projected costs each year.

Negotiations over Medicaid reform ended in a stalemate last summer. House and Senate leaders agree they would like to change the state’s fee-for-service plan, in which medical providers get paid for each visit and procedure, for a plan in which a group of providers or insurance companies get paid a set amount of money for each patient.

But the House plan, HB372, led by Rep. Nelson Dollar, a Republican from Cary, and Rep. Donny Lambyth, a Republican from Winston-Salem, favors allowing medical providers to control the amount of money for each patient.

And the Senate plan favors allowing commercial insurance companies establish managed care operations. Senate leaders are expected to roll out their proposal as part of their biannual budget plan this month, NC Health News reported.

The plan approved by the House on Wednesday would allow networks of hospitals and health care providers to create organizations known as provider-led entities. The state would pay the entities set fees to manage the care of 90 percent of North Carolina’s 1.8 million Medicaid beneficiaries. Patients eligible for Medicaid and Medicare would not be included. The plan was endorsed by the North Carolina Hospital Association and the North Carolina Medical Society.

During Wednesday’s hearing, Dollar said the plan would achieve the cost predictability lawmakers are seeking.

“And preserve what I think most people want for themselves, which is, ‘I want to be able to talk to my physician and get the treatment that I need without having somebody unduly intervene in that process,’” Dollar said.

But some opponents, including Rep. Gary Pendleton, a Republican from Raleigh, and Rep. Justin Burr, a Republican from Albermale, said the plan would not provide enough competition or financial guarantees.

“If a provider goes under, who’s going to go fill in?” Burr asked. “This bill kicks the can down the road. That's what we're doing today. We're not fixing anything.”

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