NCGA Draft Agenda for 8/14

JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON

HEALTH AND HUMAN SERVICES

(DRAFT) AGENDA

August 14, 2012
10:00 A.M. ; Room 643, Legislative Office Building
Representative Justin Burr, Co-Chair, Presiding

Introductions and Comments 10:00 – 10:15

2012 Session Overview (Budget and Substantive Laws) 10:15 - 11:00

• NCGA Staff
• DHHS Response - Al Delia, Acting Secretary and Jim Slate, Director, DHHS Budget and Analysis

Update on BC Waiver Implementation 11:00 – 12:30

• Mercer Report on Western Highlands – Michael Prinski, Principal, Mercer Government Services Consulting
• Western Highlands Response – Charlie Schoenheit
• DHHS - Status Update - Michael Watson, Director DMA and Steve Owen, Chief Business Operating Officer, DMA

Lunch 12:30

Institutes of Mental Disease, US DOJ Complaint and PCS: Status Update 1:30 - 2:10

• USDOJ – Emery Milliken, General Counsel, DHHS
• IMD – Tara Larson, Chief Clinical Operating Officer, DMA
• PCS – Tara Larson, Chief Clinical Operating Officer, DMA

Evaluation of Medicaid 2:10 – 2:40

• Division of Medical Assistance – RFP for Medicaid Evaluation
• Michael Watson, Director DMA
• State Auditor’s Office Audit of Medicaid – To Be Determined

Update on Consolidation of Leased Space for DHHS Administrative Offices 2:40 – 3:00

• Terry Hatcher, Director, Division of Property and Construction

Adjourn.

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

From The Arc of North Carolina

Lessons from the Western Highlands Network overruns

[ view original posting ]

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.

First LME to become MCO Facing Budget Overruns

From The Arc of North Carolina

First LME to become MCO Facing Budget Overruns

[ view original article ]

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.

N&O: LME Money Woes

Money woes snag mental-health center

Published Wed, Jul 18, 2012 09:38 PM
By Lynn Bonner - lbonner@newsobserver.com
The News and Observer

[ original article ]

The state’s latest plan for community mental health services has gotten off to a bad start with the first local mental health office to become a managed-care agency falling into a $3 million financial hole in its first six months of operation.

Western Highlands Network, which covers eight counties including Buncombe and Rutherford, is working with the state Department of Health and Human Services on a plan to correct the money problems that started the first day it became a managed-care agency in January.

The changes may involve reducing some mental health treatments the office believes are excessive, telling service providers to return money for services that were not approved, and enforcing rules for providers filing payment claims.

The experiences in the west are significant because, under a new state law, all government-paid mental health services in the state will be handled the way they are in Western Highlands. Advocates for people with disabilities are skeptical that the new system will work, and they worry consumers will be the losers.

Last year, the legislature passed a law that requires all local mental health offices to convert to managed-care agencies by January 2013, copying a system started in the state in 2005 by Piedmont Behavioral Health, a local mental health office now called PBH.

As managed-care agencies, the local mental health offices’ relationships with the state, mentally ill people in their coverage areas, and providers will change significantly. Each local office will be given a set amount of Medicaid and state money to treat patients. If they spend too much, they have to cover the costs. Local offices that save money can spend it on more Medicaid mental-health services.

Though the local offices take on financial risks, they also have more control. Under managed care, they will say which providers will treat patients in the region and what kinds of treatment – and how much government-paid mental-health treatment patients receive.

Choice and uniformity

This is the biggest change to mental-health services in the state in more than a decade. In 2001, the state told local offices to stop offering treatment in favor of having patients seek out private providers. The intent was to give patients more choice and foster uniformity across the state.

That 2001 reform was an expensive failure. Patients were left waiting for beds in state psychiatric hospitals while the state spent millions on low-level services for people who didn’t need treatment. A legislative report from 2009 said the state spent up to $635.3 million too much for community mental-health services between April 2006 and February 2009.

Legislators talked for years about giving more local offices more power and passed a law last year requiring it. Western Highlands was the first regional office to convert. Two more offices have followed. All 11 local offices will be managed-care agencies by January 2013. The office covering Durham and Wake counties will be in the last group converting.

The local offices do extensive prep work before they convert and a consulting firm assesses their readiness to switch.

Outdated figures


Western Highlands has been losing money all year. One of the problems, said CEO Arthur D. Carder, is that the lump-sum payment the office received to care for patients was based on outdated information from 2009 that did not take into account increased costs in 2010 and 2011.

Al Delia, the state Department of Health and Human Services acting secretary, said the office has been closely monitoring Western Highlands and is talking about taking another look at whether the $9.7 million a month the office receives to pay for patient treatment is enough.

Delia was in the western counties Wednesday, meeting with members of the office’s governing board.
“There’s going to be some adjustment in culture and attitudes and mindset in leadership of all these organizations in making these transitions,” Delia said.

Skeptics question whether managed care is the best system for all consumers.

“I think we’ve rushed to judgment on this,” said Dave Richard, executive director of The Arc of North Carolina. Parents of children with developmental disabilities and the agencies that provide services to the disabled have been among the most vocal skeptics of managed care, questioning conversion to a system they say isn’t designed to meet their needs.

“If you’re going to give up the system where people had a lot of choice to one where choice is limited and is controlled by one entity, you’d hope to see better outcomes,” Richard said. “We haven’t seen that with folks with developmental disabilities.”

Lawsuit under way

State officials and legislators have looked to PBH as an example for years, but not everyone is a fan.
Disability Rights North Carolina, an advocacy group, is suing PBH in federal court over allegations that it did not give residents proper notice of changes in their services or let them know how they could appeal.

Western Highland’s problems show that the office wasn’t ready to become a managed-care agency, said Vicki Smith, Disability Rights’ executive director.

“It would almost be too simple to say this was predictable,” she said.

Legislators are convinced that managed care is the path to follow for mental-health care. The legislature is committed to a new system where government does more than just pay the bills, said Rep. Nelson Dollar, a Cary Republican.

“We want to manage the care and the individuals receiving the care, and manage the costs and how we’re allocating scarce taxpayer resources,” he said.

Legislators have been working with DHHS since winter on Western Highland’s financial problems, Dollar said. A new law that adds members with experience in managed-care finances, insurance and health care administration to local governing boards is meant to strengthen oversight of Western Highlands and other managed-care operations.

“We’re going to be working with the department to straighten out issues like the ones that are being encountered in Western Highlands and making sure what lessons are learned there are being incorporated in the conversions in other areas of the state,” he said.