McCrory’s plan to run NC Medicaid like a business means some health care providers may go out of business

On July 1, NC Medicaid moved the way it pays doctors and hospitals to care for Medicaid patients to a new system. Over the last three weeks, many health care practices have experienced major problems with not getting paid. I have heard of medical practices who haven’t been paid for a month of claims, who have had to take out $400,000 short term loans to keep operating and who, at this point, are literally about to go out of business. Clearly Governor Pat McCrory and his Department of Health and Human Services Secretary Aldona Wos are failing the first test of their plans to make big changes in our Medicaid system.

North Carolina’s Medicaid program – health and elder care coverage for low income people – has been tops on Governor McCrory’s list for changing what he has repeatedly called a “broken system” ever since he came into office. This is the same Medicaid system that US Sen. Richard Burr presented a national award to earlier this year for NC’s outstanding Medicaid “quality and efficiency” while posting the lowest cost growth in the nation.

Nevertheless McCrory used the “broken system” excuse to turn down billions of dollars in federal money available to expand Medicaid to adults in low-income working families under the Affordable Care Act. McCrory and other leaders also trumpeted again and again the fact that the General Assembly and outgoing Democratic Governor Perdue last year had not projected the Medicaid budget accurately enough and so had to make up the difference with additional money. Blaming the previous administration for perceived current problems became an article of faith. However, after a few months in office, that narrative began to lose steam for Governor McCrory. A closer look at NC Medicaid over the last few years shows low cost growth and budget increases that, given the recession and NC’s growing population, should have been entirely predictable. And once you’ve been in office a while its hard to blame the previous occupants for everything.

Despite all the rhetoric about a “broken system” and the supposed failure of the Perdue administration, an area where McCrory and DHHS Secretary Aldona Wos were apparently not going to take a chance was NC Medicaid’s transition to a new computer system for paying health claims to doctors and hospitals across the state. The change to the new system was started before McCrory’s election, but not to take place until this July – six months after he was in office.

Significantly, this change is the first big one in Medicaid where the Governor can’t conveniently blame his Democratic predecessor, Governor Perdue, for any actual or perceived failures. McCrory has had six months to get the computer system right, change it, or put the changeover on hold until he can fix it. He created a new “Chief Information Officer” position to oversee the change for the Department of Health and Human Services and promptly hired Joseph Cooper, a private sector technology executive from the Charlotte and Raleigh banking world, at $175,000 a year starting salary. McCrory and Wos then commissioned what they said was an “independent” IT consultant, Susan Young, who issued a February report on the progress in the system. The resulting press release from the McCrory administration trumpeted “Replacement Medicaid Computer System on Track, Outside Consultant Tells DHHS.” Not mentioned was that Susan Young had already been working with Medicaid for a while and been identified the month before in other media reports as the Medicaid project’s “risk management adviser.” Nevertheless, Chief Information Officer Cooper was soon quoted in the media saying, “We are prepared” for the transition and DHHS was reported as saying that outside consultants and reviewers have given the system a green light for several months. Finally, Cooper and Wos wrote op-eds for papers boasting that, “When it goes live, our NCTracks [Medicaid payment system] will be a national leader.”

The result, according to the informal reports and discussions I have been privy to with providers is a real mess. While no one expected a major transition of this size to go completely smoothly, the idea that medical practices are having to take out nearly half million dollar loans just to keep operating is ridiculous. I am hearing more and more stories every day of major problems affecting the ability of practices to stay in business. The News & Observer story over the weekend on this should have more people talking, if only for the email uncovered by reporter Lynn Bonner: 56 to 60 percent of calls for help to DHHS from providers are abandoned, where providers get sick of waiting for so long they simply hang up. That’s perhaps the best indicator of a system in disarray when the agency can’t even talk to the providers having the problems.

Even if the McCrory administration takes responsibility for this disaster, their actions don’t bode well for their stated larger goal: Take NC’s award winning Medicaid program completely private with changes to the system that will dwarf the transition in how medical claims are paid. Our lowest-income and most vulnerable North Carolinians deserve better.