The latest Republican attempt at jump-starting the state’s Medicaid transformation initiative cleared its first House committee Monday.

However, the potential of $18 million in monthly penalty payments could prove to be an obstacle to the passage of Senate Bill 808 for several House Democrats.

The state Department of Health and Human Services would be required to make those payments if the initiative isn’t launched by July 1, 2021. The start-up date is being delayed from Jan. 1, 2021, in the bill.

Rep. Josh Dobson, R-McDowell, said Monday the proposed penalties represent that “we have to have a way to make sure that this goes forward. There’s been a commitment (for Medicaid transformation) by this General Assembly since 2015.”

The committee voted 54-30 — with some Democrats in agreement — to recommend the bill to the House Rules and Operations committee.

By contrast, SB808 cleared the Senate by a 43-5 vote June 17.

The previous Medicaid transformation startup funding effort, contained in House Bill 555, was vetoed Aug. 30 by Democratic Gov. Roy Cooper. Cooper made that decision in large part because it did not contain any Medicaid expansion language for potentially 450,000 to 650,000 North Carolinians.

Likewise, SB808 lacks Medicaid expansion language.

SB808 would need at least 72 votes in the House to become veto proof, requiring the support of at least seven House Democrats at full attendance.

The proposed monthly payment of $4 million would go to the four participating statewide prepaid health plans (PHP) selected to provide capitated insurance services — Centene (operating as WellCare of N.C.), AmeriHealth Caritas N.C., Blue Cross Blue Shield of N.C., and UnitedHealth Group.

A prorated amount of $4 million would be provided monthly to any regional PHP, or up to $2 million.

Although Dobson said he “fully expects” that DHHS “will be able to go live” on that date, “I think everyone knows the department has serious concerns with the penalty.”

“We are still having conversations. Hopefully before we get to the floor, we can have something that everyone can agree on as we moved this forward.”

DHHS said in a statement that “managed care is a massive shift for our hospitals, clinics, providers and our more than 2 million beneficiaries.”

“With the department and every part of our health care system responding to a global pandemic, establishing an unmovable date and imposing taxpayer-funded penalties is not appropriate during a pandemic.”

Sen. Ralph Hise, R-McDowell, said during the Senate floor debate that the PHPs “are losing in excess of $5 million a month” for the employees they brought online who are attempting to register individuals to select their plans.

The payment is designed “to compensate” the PHPs for revenue they were projected to earn.

Hise said DHHS would provide the potential penalties from “departmental resources” that could include drawing from a surplus, or adjusting fee-for-services rates.

The House overrode Cooper’s veto of HB555 on Sept. 11 during the same session in which it controversially overrode his veto of the Republican-sponsored state budget bill. Most Democratic members were not on the floor because they said they had been told by Republican House leadership that no votes would be taken during the first session that day.

A Senate veto override vote of HB555 has not been taken.

Medicaid currently serves 2.22 million North Carolinians, or 21% of the state’s population. That number is projected to increase to 2.28 million by mid-2021 and 2.39 million in mid-2023.

About 1.6 million are scheduled to be enrolled in the new managed-care system under a federal waiver approved by the Centers of Medicare and Medicaid Services in October 2018.

Currently, providers are paid on a fee-for-service model administered by DHHS.

By contrast, the proposed PHPs would pay health care providers a set, or capitated, amount per month for each patient’s costs. DHHS will reimburse the plans.

The initiative was supposed to debut initially on Feb. 1, 2020, in the Triad and Triangle, and then statewide on June 1, 2020, before being postponed Nov. 19 by state Health Secretary Dr. Mandy Cohen.

Dobson said Cohen would not have the ability to delay the launch date even if the state continues to experience a major impact from the COVID-19 pandemic or another public health emergency.

“That is the compromise language,” Dobson said.

The bill include programs that will screen patients to determine if they need to be connected to other programs that focus on food security, housing, transportation, employment, and interpersonal safety.

Sen. Joyce Krawiec, R-Forsyth, said the bill “creates a necessary autopilot funding stream for our state’s Medicaid program.”

“As we work to mitigate the impact of a $5 billion budget shortfall, this bill ensures our state’s most vulnerable patients can continue to receive the care they need.”



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Medicaid transformation bill advances in N.C. House, but with opposition – Winston-Salem Journal