Medicaid reform bill passes Senate

Medicaid reform has been a topic for many years.  As the largest budget expenditure after education, Medicaid has caused budget problems for years – and now the legislature is determined to reform the program to give better care and more budget predictability.  Below is the press release that came out this morning from the NC Senate:

In a bipartisan vote, the North Carolina Senate passed final legislation Tuesday to reform and restructure the state’s chronically troubled Medicaid program.
A host of operational and budgetary challenges spanning several administrations has plagued the program. In the past four years alone, the legislature has had to fill shortfalls totaling nearly $2 billion – money that could not be invested in other critical state priorities like education, infrastructure and public safety.
The final Medicaid reform compromise bill adopts policies supported by the House of Representatives, Senate and Gov. Pat McCrory and will achieve better budget predictability and sustainability by moving to a “capitated” system within a few years. This means the state will ultimately pay a flat fee to cover all physical, mental and long-term care services for most Medicaid recipients instead of paying piece-meal for more costly individual services.
Under the new capitated system, the state will enter into contracts with both provider-led health plans (originally supported by the House and administration) and managed care plans (originally supported by the Senate). Medicaid beneficiaries will benefit from competition and have a choice of three statewide plans as well as up to 10 regional plans based on where they live. Under the contracts, costs for enrollees must be at least 2 percent below national Medicaid spending growth.
“The reforms in this bill will not only save taxpayer dollars and achieve greater budget sustainability, but will also provide an additional incentive for delivering the highest quality care and keeping North Carolinians healthy,” said Senate Leader Phil Berger (R-Rockingham.) “I am grateful to my colleagues in the Senate, House and administration for working together to achieve a reform proposal we can all be proud of.”
In addition, the bill:
·         Replaces the state Department of Health and Human Services’ Division of Medical Assistance with a new Division of Health Benefits that will fully manage the state’s Medicaid program. The division will be led by a director appointed by the governor and confirmed by the General Assembly.
·         Exempts the Division of Health Benefits from the State Personnel Act, providing greater flexibility to hire highly-skilled employees, pay them competitive wages and hold them accountable for their job performance.
·         Creates a new Joint Legislative Oversight Committee on Medicaid to monitor budgeting, financing, administrative and operational issues.

Sarah Curry

Sarah Curry is Director of Fiscal Policy Studies at the John Locke Foundation.

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