Medicaid Reform: Status Update


The Medicaid reform debate is lively and ongoing nationwide. In North Carolina, Medicaid covers about 1.9 million people and represents about $3.5 billion in expenses or approximately 20% of the state’s budget.

The state House recently passed a Bill that features a provider-led format for addressing risk. The approved reform would occur over five years and approaches healthcare through a “whole person” strategy of coordinating physical, behavioral, dental, pharmacy and long-term health services. The reform has a role for provider-led entities, accountable-care organizers, and for-profit insurers. The current system is based on a fee-for-service format. Under the bill passed by the House, the provider-led entities, such as health care systems, hospitals, and physician groups, would take the risk of Medicaid enrollees’ use of service through a capitated, or fixed-fee per individual, payment format. The system is not based on the quantity of services provided. Instead, hospitals and physicians will manage the money spent to care for each patient focused on quality and value. The North Carolina Hospital Association and North Carolina Medical Society endorsed the plan passed by the House. The state Senate, however, is promoting a drastic program overhaul that predominantly features for-profit insurers and managed care organizations. The Senate’s plan that will be unveiled later this month favors management by commercial insurance companies to ward against the risk of a provider-led organization going under.

Looking forward, the state Senate will review the bill and begin negotiations with the House regarding Medicaid reform with a particular emphasis on care provided to low-income children and low-income pregnant women.