From The Arc NC: Lessons from the Western Highlands Network overruns

From The Arc of North Carolina

Lessons from the Western Highlands Network overruns

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The cost overruns at Western Highlands Network (WHN), the first LME to become an MCO under a new law, are a serious issue. The solution to these overruns that the state and WHN has come up with is clear: further service cuts. Hopefully, these overruns are just a bump in the road and not the light of an oncoming train, indicative of a system-wide underestimation of managed care cost. Most likely it will be somewhere in the middle.

We can only hope that people with disabilities will not be harmed further by these overruns than they already have been by the shift to managed care. The Arc hopes WHN survives these problems and succeeds for the sake of the individuals they are in the business of supporting.

Regardless of the reasons for the problem, the State, meaning both the Administration and the Legislature, should be paying close attention. Though we do not yet know the specifics that led to these overruns, several things should be perfectly clear:

1. We need a real examination of the process. Regardless of why, no MCO should have such significant funding issues six months into operation. Some are understandably questioning the leadership of former CEO Arthor Carder, but it’s hard to believe anyone would question his commitment to the people WHN served, or the commitment of WHN’s staff. The fact that this MCO was allowed to go live without the tools to succeed is not only a mark on WHN, but more importantly a significant mark on the DHHS processes that deemed them ready.
2. We should not only examine the process that led to these overruns, but the 1915(b)(c) waiver model as a whole. It is no secret that The Arc does not believe this model is appropriate for people with IDD. The issues with WHN should cause public officials to question the model as well. As WHN looks for places to cut Medicaid rates, it becomes clear that the system prevents them from even considering state operated facilities [state institutions] for reductions comparable to community services. Managed Care was sold to legislators, and the public, on the assumption of MCOs’ ability to effectively manage all public resources. Clearly, that was not true then, nor is it now. This disconnect makes the state’s difficult transition to a new model of care even more difficult. If the 1915(b)(c) managed care model works for community-based services it should also work for state-managed facilities. This issue is just one of many model design questions that must be questioned.
3. State officials told the WHN Board that they should expect no additional state funds to make up for overruns. This begs the question: is the stated goal of “better access to services” just spin? When rate reductions, utilization reductions, and Medicaid paybacks are the primary tools used to eliminate deficits, it is difficult to take seriously that better access is a real goal. Better service access would more likely be achieved if the state were willing to adjust the capitation rate or infuse some money while WHN becomes better prepared to “manage.”

Though not enough details have been released yet to determine the specifics of the WHN overruns, we do know:

1. The only way “savings” will be achieved through this managed care model is through cuts. That should be clear as we review the differences in what WHN was paid and what they have said they needed to provide services. We know that Medicaid cost must be controlled but an honest discussion of how managed care achieves this is critical if people will have faith in this system.
2. The way “at risk” is used in this model is insulting to families, consumers and the people who provide the supports for them. Public MCO’s are not really “at risk” entities. They have raised no capital to fund their organizations; they receive generous administrative allocations separate from services funds, and have the ability to cut rates and services to consumers if they exceed budgets. Providers of services are the ones really at risk. With subjective decision making, constant rate reductions, no guaranteed “administrative” funds or excise payments to fund a MCO’s “risk” reserves, many providers will likely go out of business. Most importantly, people with disabilities and their families are the most at risk…at risk for another failed effort at reform jeopardizing their ability to live successful lives in the community.