NC Medicaid Gets What It Pays For…

by Richard Edwards

Last week, I attended a meeting of the Medical Care Advisory Committee, a federally-mandated group whose purpose is to advise the state on services it covers through Medicaid and Medicare.

This group–made up of physicians and healthcare professionals from across NC–has an unenviable task: making suggestions on where to cut some $350 million worth of Medicaid spending in North Carolina. But as Dr. Gray (Division Chief for DMA) pointed out, it was not the MCAC’s job to decide cuts, only to advise.

I’m sure that was a load off their shoulders, but it’s still obviously a task the group takes seriously, and not an easy one. DHHS Secretary Lanier Cansler explained at the outset that some $118 million of the total projected cuts could not be achieved because they were either duplicated elsewhere in legislation (and so, counted twice), or because they were tied to federally-mandated services (which can’t be cut).

As the DMA presentation points out, however (warning, pdf), NC isn’t exactly under-spending, but we are under-performing. Data from the Kaiser Foundation indicates that NC is actually on the high end in terms of per member spending, and in terms of spending on optional services. Despite this, NC ranks on the low end where health outcomes are concerned, according to another national study.

The group talked at length about why this is, and, what it suggests about where our spending priorities need to be. The final portion of the meeting was set aside for public comment. DMA is, I think, to be commended for this, because they certainly do not make their task–or the task of the committee–any easier by hearing from the public who will be negatively impacted by their decisions. But those stories–moving though they were–kept bringing me back to the original question…

If we’re spending more than average on services, but we’re getting less than average on health outcomes–what are we spending our money on? Certainly, we have an opportunity to learn from other states who are spending less and getting more (or spending the same and getting more), but I think it also points to a central issue in human services in general, and particularly in behavioral health. We are paying for the wrong thing.

Check out this article, by Robert Kaplan and Michael Porter, about how we establish cost for services in healthcare. Their focus is primarily medical, but it’s worth a read for social sectors, too. In the article, the authors point to poorly-measured outcomes as one of the main drivers of escalating healthcare costs in this country. Essentially, we have a system that perversely pays for services instead of outcomes. There is no incentive, the authors explain, to heal people quickly and effectively, because that’s not what we’re paid for…sound familiar?

This might seem horribly cynical, but ask yourself this question–if you, dear reader, as a human services provider, were paid based only upon the positive impact you helped create, as opposed to the amount of time you spend with people, how would you behave differently as an organizational leader?

I believe we’re still several years away from this, but when the day comes that Medicaid and other payer sources pay for outcomes instead of processes, my angle is that we will have a groundswell of evidence-based practices, instead of top-down (and unfunded) mandates; we will have a much more community-based system, instead of so much institutional bias; and we will be much more social capital-oriented, instead of paid support-driven.  And tumultuous as the transition will be, that will be a good day for all people.

But that’s just my angle. What are your thoughts?



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