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Will North Carolina Lead The Way In Cutting Medicaid Costs?


Dr. Kulleni Gebreyes used to work as an emergency room physician. Now she uses data to help health plans understand their communities.

She demonstrates with a quick virtual tour of Charlotte.

"As you move northwest of the city, " Gebreyes says, "you see a reduction in the number of grocery stores that are, let’s say, within walking distance."

The map she's looking at is generated by the consulting firm Deloitte and shows there are more than 200 low-income people at high risk of cardiovascular disease who live more than a mile from a full-service grocery store, urgent care center, hospital or pharmacy. Overall, the data shows there are 1,578 low-income, high-risk Mecklenburg residents who live more than a mile from all these services.

"What we see here is a vicious cycle and a multiplier and exponential effect," Gebreyes says. "Which is, if you are at risk for disease and you are low-income, that means you have less money to spend on your medication and access to care. But you have to drive further to go shopping to get healthy food, and you have to travel further to get access to health care."

And if you don’t have a car, it’s even tougher. Things like access to healthy food, safe housing and transportation are called social drivers of health. As an ER doctor, Gebreyes witnessed their importance.

"Let’s say it’s in the middle of winter and it’s cold outside and they don’t have housing and so you’ve got people coming in with frostbite," she says. "And then you also have medical conditions being exacerbated because they don’t have access to healthy food."

There’s a growing body of scientific evidence that these social determinants of health account for as much as 80% of patients’ well-being. Medical care determines only about 10%. The data is compelling, says Dr. Don Berwick, a former administrator of the Centers for Medicare and Medicaid.

"The amount of research we have about social determinants is really quite awesome," he says.

Berwick advised the Biden campaign that focusing on things like food, stable housing and exposure to violence improves patient health and drives down costs.

"Health care is a repair shop," he says. "It generally fixes things that have gone wrong elsewhere. ... If we could really work ... on the upstream generators of ill-health, then we can reduce costs the right way — which is by keeping people healthier longer."

That idea is already embedded in North Carolina’s Medicaid transformation. On July 1, management of most of the program will be transferred to a handful of managed care companies. They’ll get a set amount for each patient, so they’ll only make money if they can cut costs. The plan anticipates they’ll be able to do that, in part, by addressing the social determinants.

Each patient will be asked a standard list of questions:

“Have you gone without food?”

“Have you spent the night in a car, a tent or a shelter?"

“Have you been hit, slapped or kicked?”

Care managers will then connect vulnerable patients with community organizations that can help. And a new computer tracking system will allow doctors to see whether their patients’ get needed aid.

"So when a physician says you really need healthy food, I’m going to refer you to the food bank down the street," says Dave Richard, the head of North Carolina's Medicaid program. "He knows they’ve gotten a referral and then he knows what happens."

But what’s really attracting national attention is a $650 million, five-year pilot project embedded in transformation. It will test whether some Medicaid funds are better spent on social services than on medical care. Berwick says the experiment is groundbreaking

"I think North Carolina, if it were to follow through as some of the plans indicate, would be a pioneering state," Berwick says. "It would be ... cutting a path for many, many others, and it's pretty exciting."

This spring, the North Carolina Department of Health and Human Services is scheduled to select two to four organizations to lead regional pilots. We don’t yet know which regions they’ll choose — but NCDHHS says it will include both urban and rural areas.

The leads will have a year to build out networks of service providers. Then, when the pilots go live — now scheduled for 2022 — the managed care plans will be able to use $550 million in pilot funds to buy services for about 25,000 to 50,000 vulnerable patients. Those are patients who, the data indicates, are likely to have big medical bills.

That will include homeless adults with multiple chronic medical problems and small children who started life in neonatal intensive care.

"So it’s not only good health," Richard says. "Ultimately if we do this right, and we do it over time, we wind up saving money for the state and we wind up saving money for the health plans."

The state and the federal government have already agreed on a list of prices the plans will pay. For example, $152.44 for violence intervention services, $4.87 for home delivery of a healthy meal and $250 for a home safety inspection.

Health scientists at UNC Chapel Hill will monitor the results in real time. Richard says that will allow North Carolina to go back to the federal government and say "Hey, this is what worked in the pilot. Can we include this in our basic Medicaid package?"

The $650 million project will be jointly funded by the federal and state governments. But if you think budget-conscious legislators worry about spending $500 on utility deposits, think again.

Appropriations Chair, Republican Sen. Ralph Hise, says the General Assembly is all in.

"It’s something we’re very willing to do because there’s a good return on that investment," he says.

Hise says he’s long wanted to address the social drivers of health, and he rattles off one particular priority: investing in prenatal care.

"Starting to reduce your costs in children's health ... and NICU visits and others, which are some of the most expensive things, he says, "as you begin to reduce your costs for covering neonatal care, you will free up additional funds that can be reinvested back into the system."

It's a big experiment, Berwick says, but health systems that don’t tackle problems like food and housing insecurity will never get people really healthy or contain costs.

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Dana Miller Ervin is a reporter at WFAE, examining the U.S. health care system.