On Wednesday, North Carolina Governor Pat McCrory signed into law House Bill 372, which will shift Medicaid to a system in which privately managed care companies take on the task of insuring patients.
Under the legislation, the state will allow three private companies to bid on contracts to offer statewide health insurance plans. The state will also contract up to 10 provider-led entities to provide regional care for Medicaid recipients. Instead of paying per procedure, as has traditionally been done in the fee-for-service model, managed care companies and provider-led entities will manage a set payment per patient.
"Under the current system, we wait until people get sick to provide care and pay for tests, not outcomes. This new system will focus on keeping people healthy and delivering care where it makes the most sense for patients," McCrory said in a press release. "We're going to accomplish this reform by paying providers based on improving patient's health, not how many services patients receive."
Paul Vick, associate vice president for government relations of Duke Medicine, said the impact of the bill on a complex hospital system like Duke’s is still unclear, mostly because it is difficult to tell whether or not the state will receive federal funding for the new plan.
Under the Affordable Care Act, the Centers for Medicare and Medicaid Services must approve a waiver to allow states to differ in their Medicaid expansion plans. He added that if the state does not receive federal funding under the Medicaid waiver, large hospital systems like Duke could be negatively impacted if the disproportionate share hospital funding—federal funding given to hospitals with a disproportionate share of Medicaid patients—is taken away.
“You can plan for what you’re going to do and plan for what you anticipate the impact to be, but until that decision is made, you don’t really know what the impact will be on a system like Duke,” he said.
Vick noted that the next step will be for the state to figure out how it wants to construct the waiver. He added that he will work with members of the Medicaid oversight committee throughout the waiver approval process.
Only five states have been granted a waiver under the Affordable Care Act, though eight have made proposals according to a February Kaiser Family Foundation report.
“We will work with those members of that committee to provide information and to help educate them on how decisions they are making will effect hospital systems like Duke,” he said.
Donald Taylor, a professor in the Sanford School of Public Policy with expertise in health policy, expressed doubt that the state would be able to obtain the waiver under the current plan. The waiver is intended to grant states the flexibility to design programs that would increase the income requirement for Medicaid eligibility, something the North Carolina plan does not do.
“There are many details to be resolved, and a waiver application will be dozens or hundreds of pages long,” he wrote in an email. “I think there is a chance the state will get a waiver if they add Medicaid expansion to the mix. If they do not, I suspect the state will not get the waiver.”
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