From The Arc of North Carolina
First LME to become MCO Facing Budget Overruns
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Western Highlands Network (WHN), the Managed Care Organization (MCO) that provides state funded services to people with intellectual and developmental disabilities (I/DD) in several western counties, recently reported that they are running a monthly defecit of $500,000 since they became a managed care organization in January 2012. WHN officials indicate they feel the State’s original capitation (reimbursemnt) rate was insufficient to cover the Medicaid cost of their program.
When questioned by members of the Disability Waiver Advisory Committee on July 24th, State officials responded that the budget deficit had been uncovered in a routine monitoring visit and that they would be attending the upcoming WHN board meeting. They offered no further explanation.
Apparently the State, along with the Mercer consulting firm, reviewed WHN in mid -July to determine what was causing the cost overruns. At this time, we do not have the results of this review, but we will report as we find more details.
The revelation of these cost overruns is concerning on many levels. Most importantly, we are concerned WHN will be forced to make significant cuts to services in an area that already has significant numbers of people with I/DD waiting for services. To correct this deficit, WHN plans to evaluate rates paid to providers and the amount of service provided to consumers. If this problem results in service reductions, it will be further evidence that Managed Care “savings” are really just another name for “cuts.”
If the capitation rate is too low, as WHN claims, and the state adjust it upwards, it will erode the “savings” North Carolina hopes to gain from the implementation of the Managed Care Waiver. Such a development would call into question why we would make such a massive change for little gain.
Another concern is how the state deems a MCO ready to proceed. According to state officials, all pending MCOs pass rigorous tests to assure that they are ready to go “live” as a managed care entity. The State contracts with Mercer to engage in this process, as do state officials charged with implementing the Waiver. If WHN was really ready to go “live” in January, it is hard to believe they could be losing money at such a pace.
The Arc believes the WHN staff and DHHS staff are sincerely attempting to find solutions to this serious problem. We hope that this issue is only temporary and that services will not be disrupted to the people this complicated system is intended to serve. However, we do believe this issue should prompt the DHHS and the General Assembly to truly examine the model and pace of this implementation. In an at risk Managed Care system, the only people truly at risk are the people it is intended to serve.
