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House leaders still believe NC Medicaid cost controls best through doctor, hospital networks

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RALEIGH, North Carolina — House Republican leaders are sticking to their previous model for overhauling Medicaid, moving legislation through a committee Wednesday that places the responsibility of cost controls in the hands of doctor and hospital networks.

The measure is nearly identical to the bill that passed the House by a wide margin last year. It remains dramatically different from what the Senate envisions Medicaid reform to be. Attempts to work out a compromise agreement could extend this year's General Assembly work session well into the summer.

Senate Republicans remain convinced that using private managed-care companies and insurers to coordinate patient services is the best way to rein in spending for Medicaid, expected to cost $3.6 billion in state funds this fiscal year. The federal government pitches in another $10 billion for the program, which treats 1.7 million residents.

But the sponsors of the House version still believe the proposed "provider-led entities," which would enter into contracts with the state Department of Health and Human Services, are best and create more incentives to keep Medicaid enrollees healthy.

"This plan will provide greater budget certainty and long-term cost savings, which is one of the goals that we have had for some time," Rep. Nelson Dollar, R-Wake, told the committee that recommended the bill Wednesday evening following a voice vote. "This plan would improve long-term health outcomes for our citizens, and that's really where you control costs."

The bill has the support of the North Carolina Hospital Association, North Carolina Medical Society representing physicians and DHHS under Gov. Pat McCrory. McCrory's administration "has strongly advocated for physician and provider-led reforms that focus on making patients healthier, are fiscally responsible and sustainable, and build on what already works for North Carolina," said Dave Richard, DHHS deputy secretary for Medicaid.

Both House and Senate versions would do away with the current billing model, in which Medicaid reimburses hospitals, doctors and others for the cost of each itemized medical treatment or procedure performed. Instead, a network or managed-care group would receive a fixed amount of money for each patient they treat, and profit or loss would be based on whether they can keep costs in check.

The House version would require that at least 90 percent of Medicaid recipients be enrolled in these fixed-cost health plans within five years. A year later, the provider-led entities must meet performance and quality goals set in their contracts with the state. Financial rewards and penalties would result from meeting or falling short of goals.

Unlike last year, when the House unanimously approved its own plan, a handful of Republicans publicly expressed worry over this year's version and voted against the bill.

Rep. Justin Burr, R-Stanly, said it was risky to allow provider-led networks only, and not bring in more competition from managed-care companies that are experts in financial and health care management. He was skeptical networks would surface in all 100 counties, as the bill requires.

"This bill kicks the can down the road," Burr said. "That's what we're doing today. We're not fixing anything."

But Dollar said a similar, separate model to manage treatment for the mentally ill, substance abusers and people with developmental disabilities has proved successful over time.

"We know we can do this in medical health as well," Dollar said.

The bill's next stop is the budget-writing committee, of which Dollar is senior chairman.

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