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N.C. Medicaid Director: Overhaul 'Is Not A Budget Exercise'


Governor Pat McCrory outlined a plan to significantly change North Carolina's Medicaid program last week. A key person responsible for filling in the details is Carol Steckel. She's the director of the state's Medicaid program, and she spoke to WFAE's Michael Tomsic about the reasons for the overhaul and how it's designed to work.

  Carol Steckel's job is to make sure the roughly 1.5 million North Carolinians on Medicaid get the services they need. They're low-income parents, children, seniors and people with disabilities.

Shortly after she became the head of the program in late January, an audit showed it had been horrible at managing costs. Governor Pat McCrory called the program broken and inefficient.   

But Steckel says there is a bright spot. 

"North Carolina Medicaid is well known nationally for its coordinated care networks," she says.

Those networks consist of physicians, hospitals, social service agencies and other organizations. They work together to match Medicaid patients with a primary care doctor who best fits their needs.

Steckel says the problem is those networks only exist for primary care – there's a separate system for mental health services, which leads to stories like this:

"I've had people tell me they've had clients of theirs leave a mental illness counseling session to go to a substance abuse counseling session and then also have to go to their doctor," she says.

North Carolina wants to overhaul its Medicaid program so that all of those services are linked in a few big, coordinated networks.

It's called a managed care model, and here's how it works:

North Carolina would pick three or four massive organizations to manage Medicaid services for everyone. They can be quasi-governmental agencies or private companies. Steckel says the state is still ironing out how it'll select them.

"We've released our framework, and now we're looking to work with the providers in the community and the advocates and the people we serve to put the framework together in a more detailed effort to make sure that we're covering all the necessary services," she says.

The state will basically give them a set amount of money based on how many people they serve for Medicaid, and then those companies are on the hook if they go over budget in providing services.

Here's how Steckel says you prevent those organizations from cutting services people need just to stay under budget and turn a profit:

"The first thing you can do is say to a company we're going to allow you to have 10 percent administrative costs, 15 percent administrative costs, whatever we choose at the state," she says. "The rest of that money we give to you has to be attributed in health care costs. And if you don't spend all that money in providing health care services to the people you have in your pool, you have to return that money in services."

Steckel says North Carolina will also set up ways to measure if patients are getting too few or too many services – patient care will be a key part of the contract. She says the state will take decisive action against the organizations that don't do their jobs, maybe even terminating their contracts. 

She says that possibility is part of the reason to have three or four organizations that cover the state.

"If they're all statewide, if you lose one, while it's traumatic for the patients in that plan because they'll have to make a change, we're not scrambling to find a network for someone," she says. "There would be two other networks in that area."

If all goes to plan, switching to this model would also cut costs, or at least keep them from going up as quickly. She says that's because quality care can be cheaper, especially if you catch problems early.

"Think about it this way: if I have hypertension and I get $500 worth of medicine a year to lower my hypertension versus having a stroke and ending up in a $40,000 a year nursing home," she says.

Steckel says North Carolina certainly needs to control its costs for Medicaid. 

"But what the governor and the secretary have said is this is not a budget exercise," she says. "What we're trying to do is provide a better system of care that provides predictability, reliability and sustainability for the program. And not just for the general assembly and the governor during the budget process, but for the providers themselves."

States can't change their Medicaid programs without federal approval. Steckel says her early conversations with federal officials make her think that won't be a problem. The state legislature would also need to sign off.