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North Carolina’s Senate Proposes Plan to Overhaul the State’s Medicaid System

Dan Brian   |  May 1, 2016   |  

The North Carolina State Senate recently proposed a bill which would overhaul the state’s struggling Medicaid system. The Senate’s yearly budget meetings turned into an intervention aimed at correcting the Medicaid system’s massively overinflated budget.

North Carolina’s current Medicaid budget is at $14 billion dollars, up from $8 billion dollars ten years ago. In the past several years, the state overpaid hospitals by $400 million dollars for in-patient care, and by $150 million dollars for outpatient care. The state has wasted $600 million dollars on ineffective and overbilled community support services, and the state’s Department of Health and Human Services admits that it has no idea how many people are currently enrolled in the Medicaid system. The state lacks adequate computer systems to track Medicaid patients, which has led to an inaccurate estimate of the services needed and has resulted in the program going over budget for four years in a row.

After attempting to pass a budget inflated by estimates about how much money Medicaid might need, lawmakers decided to plan a complete renovation of the system. The state’s Senate has proposed a new Medicaid plan which would allow privately-run Medicaid providers to bill the state at a fixed monthly rate, avoiding budget overages. If the Medicaid providers go over their budget, the provider, rather than the taxpayer, would foot the bill for the overages. In addition, the Senate has proposed creating a new state entity which would manage Medicaid.

This proposal is very similar to the plan that Governor McCrory proposed while running for office. Recently, the governor has been supporting a plan similar to what the state’s House of Representatives is proposing.

The House’s plan calls for Medicaid to stay as-is until at least 2020. Before 2020, the state’s Department of Health and Human Services would create Accountable Care Organizations that will manage the Medicaid system. If the ACOs fail to manage the Medicaid funds and go over budget, however, those costs would still be passed on to the tax payers.

The Senate’s plan has the advantage of creating changes much faster than the House’s plan. With Medicaid spending more than doubling in the past decade, many proponents of the Senate plan believe that the state’s taxpayers cannot afford to wait until 2020 to make changes.

On Thursday, the Senate’s Rules and Operations Committee met to finalize and approve the proposed plan. It will now go to the full state Senate for a vote.

It remains to be seen what changes will eventually be made to the Medicaid system. Lawmakers must balance the needs of the low-income families who rely on Medicaid for health care coverage with the state’s need to stem the fraud and corruption that is overburdening taxpayers. With any luck, the Senate, House, and Governor can come together to create a plan to make North Carolina’s Medicaid system an asset, rather than a drain, on the state.

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