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House | June 10, 2015 | Committee Room | Health, Part 2

Full MP3 Audio File

Ladies and gentlemen if you'll find your sit please. Members at this time we call our committee back to order. I want to thank all the members and everyone else here, and for you indulgence as we try to accommodate the multiplicity of meetings that are going on this afternoon, we do have a quorum I've had one other person to have to speak, I'm going to recognize that speaker first and then we will continue where we left off with our committee discussions. We have Mr. Ken Lewis, President North Carolina Association of Health Plans he's off to speak, Mr. Lewis your recognize for a  period not to exceed three minutes and if you would for the record, state your name and who you represent, and welcome to the Health Committee. My name is Ken Lewis, and I am the Executive Director of the North Carolina Association of Health plans, and I appreciate the opportunity to speak to the committee this afternoon on behalf of my members and our coalition partners. we truly appreciate the opportunity. The commercial managed care companies continue to believe that Medicaid reform enacted by the legislature should include both provider led entity solutions as well as traditional managed care organizations solutions, we believe that the legislature should not pick one as the losers as this proposal appears to do, but seek the best competitor solution for North Carolina. This competitive solution has a proven track record of success with 39 state Medicaid programs to deliver budget predictability and quality care for members for the last 20 years. Our proposed solution for North Carolina which we've shared with leaders of both chambers. It's a model that creates a level plain field for both traditional MCOs as well as provider led entity to serve the Medicaid market. By allowing both MCOs and provider led entities to operate in a competitive environment the state will have a diversified solution which guarantees members choice competition and safeness for delivery of a reform and medical services in North Carolina we truly believe that a balance approach to medication forums is is the best solution for North Carolina and we appreciate the opportunity to use today. Thank you Mr. Mile time to responed before we continue with the committee if not representative Eisten do you recognize to speak last we leave it we recognize. Thank you Mr. Speaker I would rather I didn't say that was as mind open this is an excellent bill and I know I think to know work that is always the case with bill at this stage and I appreciate Chairman working with other stakeholders are looking for consensus bill and I do think now my main concern is that with time line I think five year will allow for capitation will much too ambitious. I hope that you will all learn from the mistakes of the past and we clearly have big mistake if it has to look at representative [xx] said we're still struggling with mental health although since we passed House Bill 916 I think in 2010 which is only 5 years ago 4 years ago we that system has been more stable than ever and continuing to get more stable so I believe that demonstrates that we are actually on the right path with the health system, and that we would have gotten there faster if we had taken more time at the beginning their are too many unexpected we are not the only decision makers if we were the only people making decisions about this I would be a lot more comfortable we have no control over congress or CMS. We can't predict the next, we can only down turn. We don't even know if there is a new Governor and new Secretary if they would be in line with this. So I think that building enough time is really important to allow for the unexpected to happen and don't make a change like this is this big without have the unexpected come. [xx] even just moving from a fever services to a capitated and global budget with a generational shift and culture and people don't make those

kinds of shifts without a lot of, the steps in the process. I would just like to say that I think this proposal offers ample competition may be too much competition. If you just have a 30, 000 base I'm really not sure that, that's enough to support the system and that you can well do with regional, just above the ample competition that in dentistry also in our mental health system as we move from 48 programs down now is it seven or eight LNEs and may be further consolidation in an incremental process which allowed us to make mistakes without being stable forward. So I hope that you'll take a look at the timeline as you move into negotiations with this bill but thank you for your work on it. One of the bill sponsors care to comment? I would just say I agree with much of what Representative Innscor commented on. There is a lot work ahead of us and I know the folks from the back row there had lots of discussions about the timeline, there are many here who would like to see a more aggressive timeline. And we somewhat compromised to try to come with something reasonable. If we could get approval, one of the thoughts in there also we'll do a pallet because there will be blocks along the way and they're some providers who are ready to move forward given a few years and if we are able to negotiate a successful waver then it would be an interesting idea to allow a provide organization to go ahead in proceeding work out some of those bumps. There's a head a couple of others in the key but those members are not present representative Adcock. Thank you Mr. Chairman and well two comments. The first is when that tosson from North Carolina association of public health commented to me after the meeting about her desire to see some language put in the bill about the safety net providers and I think I sent this you representative [xx] just figured out here, she suggest the central community providers who historically have predominantly served low income emergent clients when begin priority for inclusion each pail in network and her desire is to see this work for everyone and so I would just commend that to you. And then the other comment I want to make is I was first of all, I think I've done [xx] on this over many many years it's obvious and I was struck by something representative Lambert said this morning. He said success depends on providers across North Carolina, I would agree with that 100% and thinking about that, this opportunity to modernize Medicaid actually is is an opportunity to ensure that all providers may participate in this new way of looking at delivery, actually the full deployment of healthcare workforce, and I would just ask us that you continue to massage this bill to include appropriate language to ensure that all licence providers they participate in PLE's to as much as possible guarantee access to current time and fashion, because as much as the physician at the stake have worked so hard to do this. They are on a permanent care providers now, and we need to ensure that in order to make sure these folks get appropriate care that we us all of our lives since providers, thank you. Representative Palmer [xx] be recognized. Thank you Mr. Chair. I want to commend the sponsors of the bill [xx] this and so that it looks really impressive. Sometimes the devil, [xx] it is in the detail, and I have a couple of questions, my concern with also the safety net that Representative Adcock spoke of, and making sure that they are at the table and a part of the plan and that there's no economic disenfranchise for rural communities. My first question is, how do we ensure that physicians are going to have appointments and help if they're getting decapitated payment whether to see the patient [xx] Representative Lambert. Yes, as you mentioned, that's the details to work out. it comes about some [xx] to the timeline, and making sure that providers have in place the tools, and the expertise, and the manpower they need to serve

this population, we all know that in North Carolina we have a shortage of primary care, and if there's been a concern that I have had during these discussions from day one it's the shortage of primary care, and I've been assured by, particularly, the provider group that this is an issue that they will continue to work on, and one of the things that, I call this a one step in a multi-step process, and one of the issues that we going to have to deal with as a state is license issues, because we don't have enough primary care physicians, we do need to look at ways to increase the pool, and that becomes a discussion with the medical schools around the state. We do need to look at the license issues that might if more flexibility to know practioner's physicians assistants, because we are going to have those care givers to support that cure thing. So I think you're exactly right that that's a caution and is something that I worried about from day one, and that's something we need to continue to focus on with the medical schools and the medical centers to make sure that we are able to meet the needs. Because this would not be successful if we do not change the culture, and we need patients from the current levels of care that they're getting in many areas across state to a lower course setting. And seen this will actually be rewarding those kind of changes and behaviors. We'll get there. I'm convinced providers will gear up and get there. But it is a culture. Follow up representative [xx].  How  will specialists get paid [xx] do you know? I probably don't know the details of how each PLA would work out the arrangements with the specialists and others there will be. My ideas is they'll be options many HMO's I did run an HMO many years ago many HMO even though they were in a capitated system, they will continue to pay a fee for service or at the third levels. So, the State will pay the capital rate in risk adjusted actually be based, to in organization. The more organization will decide how to pay those without to specialist primary care and how they would in syniverse those in there. That's one model. Last question follow up Follows up What would the role of CCEC is, do we know? We actually CCNC that the roles most review were used head a medical home the CCNC organization, for the good that they've done across North Carolina and helping manage the cause. We'll be talking to these PLAs, particularly the larger PLAs the role they can play is simply being the care management organization that's contracted back to the PLA because some in the world side to be realistic, many of these PLEs have not done parts of these, that's why we talk about it being, there's risk in health of these program. That CCNC has the skills and expertise in many areas and relationships with the doctors and the hospitals and they will find the need to our roll in working with those PLEs and particularly larger markets. Representative Dotson you're recognized. Thank you Mr. Chairman and more I guess I'll comment if I can. First thank you representative Lambert and chairman Dollar for your work on this. This is not easy things that we're doing here today. Not a lot down here keeps me up at night because in the big of things, it's not that significant just to be honest on a small scale but one thing that does keep me at night is the future of healthcare in rural areas of this state, and we don't have the luxury of getting this wrong. We don't have a margin for air here, so I'll start by saying I like the timeline because that gives us time to get it right, and we don't have the luxury of getting it wrong, so I think that's a good start. It does all the things that we need a medicaid reform bill to do. It gives us budget predictability, it moves away from paper service which no one in here I don't believe, thinks that that's a bad thing. No one disagrees that we need to move away from paper service. It's a capitated system, and most importantly to me is it still provides the health care that is needed in rural areas like mine, and

it's a financially sustainable model for rural health care providers in areas like mine, I think this is a good start. I appreciate the work that's been done on it, and I look forward to supporting it Thank you. Representative Pendleton you're recognised. Thank you, Mr. Chairman. I've a question of Representative Dollar, and I guess Lambert's, whoever wants to answer it. This appears to not use the health insurance companies that do business in North Carolina. Isn't there a place for them to be able to participate in these? Representative Dollar. As Chairman Lambeth said earlier today, they can certainly be contracted with for back-room services, they can be part of a PLE but not a controlling part of a PLE. Well, comment. Follow up. Comment. You're recognized. I'm a health insurance agent and have done this for a long, long time. I really question, I know what we're trying to do with MCO model, but I really question that we think a bunch of bureaucrats can do this better than a health insurance company list that actually is in it for a profit except Blue Cross or Nonprofit, but I've got a problem with thinking a bunch of bureaucrats can do this. Representative Dollar. I don't think we're talking about bureaucrats we're talking about providers, the same people who are providing the actual service itself. I would argue that you might have more bureaucrats on the other end. We certainly want to maximize the dollars which this bill does actually going to services, and again, this gets back over to what Representative Farmer-Butterfield mentioned a moment ago, we have a medical home model that has been very successful, a lot of folks have looked at it. It is helping us avoid cost now, we want to continue that, that is giving access. We don't really have major access issues for your baseline Medicaid patient is in the state, and every state cannot necessary make that statement so what this does is build on our current system, it builds on the players that we have that are providing the services now and maximizes the dollars used for care, minimize those that you know would go in to administration or profit. Senator [xx] you're recognized. Thank you, Mr. Chairman, I have a couple of questions first and then comment, if that's alright? You're recognized. Just looking at your proposal here the model you have using basically what we've working for a while as ACO's, can you share with me so I could do a little research perhaps? What other states do it in this same manner that you're trying to establish here, where's the model that I can look at that has succeeded with only these types of groups to manage the care. Representative Lambert we were here referring to [xx] [xx] That's something we can get the information laid down off the top of the head. [xx] May I comment Mr. Chair. Representative [xx] Position is to come by my office today and see my [xx] I think [xx] ACO's already exist in North Carolina if you won't think about ACO, this is a hybrid not exactly like the traditional ACO's, I see it emerging. But there are  ACO's around North Carolina already there are systems forming interest companies to take on this risk, that's really what's doing it's shifting the risk to a capitated weight through a provide network, and they all models. As I said earlier, if there was a plan out there that was working in a state that was a good model, we would have gone long time ago and let that in, tried to replicate it. This is all innovative, creative, nobody is doing it exactly the same all across this country. There are just different hybrids and different models, and this is somewhat a unique model for North Carolina although the ACO concept actually exists already in many areas within North Carolina and exists in many areas across this country. Representative Burr.

Thank you and Representative Lambeth I hear what you're saying but the ACOs are existing already in the state, and in different areas, obviously not with the terms of Medicaid right now, but I think the same could be said in terms of MCOs in North Carolina, correct? Representative Lambeth. That's correct, and I would point out too that medicare, which is the federal program, is actually moving in the direction of ACO or provider led and the rules that they're laying out recognizing also that they can't continue at a medicare level to pay the traditional fee for services that will be moving more to a capitated[SP] system, under somewhat a ACO model. So the many provider systems have been preparing this community system across North Carolina, and they all have told me, we're preparing because it's coming. Capitation is coming, provider layer, ACO organisations are rolling out from the federal government, and so we're already working. We need data systems, we need skill set that we don't have today and though they say they're preparing for this change, but to your point there are not a lot of successful models anywhere around the nation. There are MCOs that are also struggling with Medicaid. Having seen the recent news from Florida, and the challenges, and with their MCO model. There's just not a silver bullet to solve this problem and what we're trying to do is take a creative, or rather innovative approach to roll out a plan, being as cautious as we can over a five-year period to try to get if it's right, and I think if we can get it right with an emphasis on preventive, and changing the culture then it could be a model just as CCNC has been a model for other states, maybe a model for the rest of the country, potentially. Representative Buck. I think in terms of the founder model that it's been overall a very big success that it is working down there, if it was going to have some bumps in the road but I believe that it's very successful, and the issue in Florida has been the fact that some of the ACOs have not been able to survive in this type of world, and that's the concern here in North Carolina is that we're as representative [xx] said earlier that we're putting all of our eggs in one basket, and it will potentially risk kicking this can down the road, and making the decision that we need to, by having both ACO, and NCO, and having this hybrid model which seems to be very successful in the states that it's in, one last question I would like to make some comments Mr. Chair, in terms of just looking through the bill. Who will be paying to do that? Is it going to be CCNC or is it going to be these PLEs? Representative Lambert Thank you Mr. Chair. The state will pay a capital rate, and then the PLE's will contract out for services they need, so they would actually contract out North of state for services of CCNC or services for any other provider that they feel necessary to manage the risk, and manage those dollars within that capitated amount. Representative [xx] recognize that the state, and you might recognize Mr. Collins {xx] that was requested in. Thank you Mr. Chair, based on information that was provided by Fiscal Research about a year ago, there are nine states that have approved an ACO for medicaid, Colorado, Utah, Oregon, Arizona Iowa. Iowa, thank you, Illinois, Vermont, Minnesota and New Jersey, most of the states are just beginning to implement the ACS, but their earliest ACO beginning in 2011. Representative Burr you're recognized for your comment. Thank you Mr. Chair, as I state while ago my concern is the same as I have had from other members that we are putting all of our eggs in one basket, and that we potentially risk for the recipients, for the small providers across the state and for the taxpayers, kicking this can down the road the decision that should be made today and I really feel like we've been having this discussion about medicaid reform for several years and this, with the discussions that have gone on the obvious that have been tossed out there, this is sort of taken as a step back from where I felt like we were headed as a State. To try find that model that will work for us that would allow for the providers to participate because I think there's a place for them, but to allow for which is already in the State. I believe it employs over 7000 people North Carolina. So there's room for everyone to come to the table, and that is good for the State. I believe that competition is a good thing. And I hope that that

will be taken into consideration. Because there is really a lot of concerns about over 5 years we've seen the growth and medicate program here in state and the last 5 years hundreds of millions, over billion dollars that we put into medicate and where we will be 5 years down the road. If this doesn't work, putting all our eggs in one basket, then we are going to have to start back over and will be another 5 years. And I just don't know we can afford to wait that long, and I think the focus should also be on the whole person, and we are sought of stepping back away from that with what is in this bill a this point and we are not moving forward with a lot of the key points that we discussed in previous year so I won't go on because I know that it's getting late care, but I really have some concerns with this I hope we can find a good compromise and look towards those states and that have been successful that have worked with both ACOs and MCO's and let's try to find out how to produce something that's good for the recipient, but also good for the state, the tax payers and providers. Representative Andrew is recognized. I have a disconcerting tendency to kind of get down the weeds with this and I look at the overview of capitation, and access and things of that nature, but my thing how is it going to work on a day to day basis, usually an a provider led organisation, let's say we got a group the provider that's leading it is a fully lodged doctors practice they are going to be in control of a group of other people joining with them which could be hospitals, which could be other providers and their being a management team, their also being a management team that is going to be redoing how they do what they do and for the life of me I cannot see how this is going to function. If I'm fazzy on how I look at where people are, somebody is going to to be in charge because that doctor is not going to be able to manage, he's going to have to in there still with patients. So, clarify from me, if these people are going to these are leaders of this organization that they can manage all these other people, we're doing it the way they do it, while they do what they do as well as manage organizations, just give me the door-to-door what it's going to look like. Representative Dollar. Thank you. Well let me give you a real life example, Cornerstone. It's a great example of physician-layered organization, they do their management as well as providing a wide array of services and contracting for other services through their patience that they that are under their care, so we do have very successful models of how it works and the other thing is that for the patient, the patient under our system is going to be able to stay with the physician they're with or change if they don't particularly care for that physician who's quarterbacking good care. The hospitals are going to be the same hospitals today delivering here as is is appropriate and what you're doing is you're managing the dollars and you're shifting the risk for the spend from the state for that group of patients to the PLA, now which everybody seems to want to do, the care is going to be provided under any system. The care is going to be provided by the physicians, the specialist, the hospitals, the nurses, those folks are out there providing the care for now representative Ado. How long has Corastone[sp?] been around? Quite a while   Representative Adams Obviously the Corastone[sp?] is one of the sites that I've talked to and they have been around at least 15 to 20 years. They've been in that hot point market and they have expanded well beyond the half point market is while the environment has changed. We can find out there they've been around a while. Representative Adams. Are you using them as the way to do it? I guess my concern still gets back into you wake up Monday morning and you go to work and who's going to running the management end of it and who's going to be running [xx] end of it and this central kind of organisation and even if it's been 15 to

20 years, it's similar to what are claims, so we have a unique opportunity and I think Colorado that may be wanted to want to take that was one that was into the commercials and they and that's where I've got some problems. I think that drawing up a blueprint to tell people you've got to come together, and your got to do it this way and you got to do it the other way is just going to be chaotic and I struggle to think when it may end up looking odd. Representative Dollar. Thank you, Mr. Chairman. It doesn't have to be chaotic at all, it is complex and there are a whole range of isues you can not like maybe this better with but you cannot like the bill that would include everything in it, it would be or maybe you could but you would be weighing the table down. There's quite a lot that has to be worked through and just a myriad of questions that have to be answered and marred of issues that have to be worked up under any arrangement whether in 1115 waiver and that's one of the points that has been made in terms of the time, you have to have the time and the expertise to make sure that we put all of this together to make sure that the department. And that's the reason why we provided sanding to the department to make sure that they can bring in not only their own expertise but bring in contract expertise with specific knowledge in order to over right the rules and regulations of how this will actually operate. And of course, make sure that we've got all of our stakeholders working through those issues as well. So it is quite complex and that is the reason why we believe we need to go ahead and start moving because it's going to take time to do it, make sure that we've got all questions answered and we have everything in place that we need to have in place. Clearly we are more than capable in a state of being able to achieve that and I believe we have the expertise to achieve that Representative Ramnath. I would said that this will not be a function that has just added to the current and existing management team or people that exist, this would be a separate business unit but many of these organisations and that business unit will have the expertise to manage that risk and that business unit. I operated a PPO, a HMO and a hospital that I was wearing multiple hats. But I did not actually day to day run the PPO or day to day run the HMO, we had people that were experts in those areas and would run that interactive of Head Oversight responsibility. Positions of hospitals will not they're going to be involved in the [xx] structure, they going to be involved in the rate setting within their structure, but they [xx] [xx] 10% impact of administrative costs. They will hire the resources and the skills they need to pay the claims to handle those kinds of activities beyond what you might traditionally think as [xx] responsibility of a physician group or hospital Representative [xx] one more follow up and then I'll come back to [xx] if you want more. Just on that note, you say we're adding another level. We're adding new people who aren't there now. How much is that going to cost and will it be offset by the savings of, however how we going to modify this system That is exactly the goal that, the state won't really concern herself with how do they render operations? The state would determine what the rates are, we will set those rates and then they will manage within those rates they have committed to 90% medical [xx] show and 10% towards the ministry cost. They would do that with the infrastructure that we define as far as the rate as we see it, and that will be under our responsibility as legislators to ensure we had over the rates and costs. Representative Bishop [xx] Thank you Mr. Chairman, I have a few questions, and as a newcomer you all have been wrangling with this for a long time, but I want see if I can understand a little better what this PLE led or PLE in these would look like, do I understand correctly, first of all they're going to get a capitated rate to be responsible for of all the Medicaid services to which a member and medicaiders isn't typed. So one PLE will have responsible for that patient covered with the exception of behavioral health which over in the system we've already got going, but everything else will be covered by one PLEs. Is that right?   [xx] Their will be multiple for PLEs, but within a PLE they will receive a capitated rate from

the state for the number of enrolled beneficiaries or lives again that kept right being adjusted for [xx] so that it's a fair payment. Follow up. Follow up Representative Bishop But as to any individual lie, one PLE Is going to be responsible for all their Medicaid services except for those [xx]   under the capitated[sp?] except for those of you except for the behavioral health ones right? Correct. Follow up. Follow up. It seems to me then you've got to have a bigness, you can't just have a couple together, lord Jones' dental practise and two or three physician practises and cover everything. Isn't it essentially necessary that this be organized given what criterion you guys are talking about? If this is going to be organized around the incumbent hospital systems isn't that almost inevitable? Representative Lambeth. Remember the size of the PLE has to be at least 30, 000 and they have to meet solvency requirements of the Department of Insurance. So this isn't just just a fly by night, set one up and then go out and enrol few people because they're members of our practise, there has to be a minimum size of 30, 000 and we do think that the scale helps in that regard. Follow up, Representative Bishop. Then to my question, doesn't that mean essentially that it's got to be organized around the existing hospital systems? Representative Lambeth.  I am sure there'll be some hospital systems that employ additions that would be the organizing entity it's design to be organized around the primary care of the physician network Representative Bishop you have another question record or orders, Thank you. I understood and I have heard and said in a couple of times that the reason we want to do it with provide entities only which are governed by providers or physicians of providers that it builds upon our existing success or our existing capabilities. And I understand most of them from questions, that we would not allow insurance company led organizations to do this. But if you set up everything mostly forms ups around the existing hospital systems. Or if there's some other provider networks, I don't really what the provider networks look like but assuming I have got some piece of it when I say it's going to form up on the existing incumbent hospital systems, then what would be wrong with having seven or eight of those the best of way it works for four or five, and then having two or three M. C. O. S come in as well, and set up and attempt to operate. So we can see as is out, who does it beg? I mean I understand that you've got the issue, in other words the fact that we're building on our success doesn't seem to me to preclude allowing this other type of entity to participate and then we see how it works. Why not do both? Representative Lambert Let me see answer a question earlier section page two line 33 there's a section of a majority of each provider led into his governing board should be alternative professors who treat medicaid professors. Essentially that was designed to be a majority of the board over 50% being a physician led component of that, so the hospital will be a major players in this, this is designed to be a physician led because physicians in my opinion will be the one to transform with other caregivers the health care that we need to be transformed. Those multiple models, you can look at all the evidence they're MCOs, exclusive they're MTOs, in hybrids they're ACOs, we felt like at this point in want we were and working with the providers that we were better in a better position because North Carolina has a very strong systems across the state that are already covering most all areas of the state and that many natural or full patterns that already exist that they are in a better position to move this quickly along the path of transformation. One of the ways I look at it is health care about the provider network is going fo focus on the health managing within that captivate rate and the MCOs of Manscore organizations are focussed around the financial part and then they've got to go out and get all the providers' sign that ought to be proud of their network. They don't bring us a network providers, caregivers Representative Bishop. I don't want to try your patience but I've got to cry for others, I had an opportunity to see close when Mecklenburg County was attempting to set up to stand up and manage Care Organization Behavioral Heath side, saw that upclose and what I can't say for having seen it is it was inordinately complex undertaking and that was just for behavioral health, and we're talking about something with far larger scope than

that, and if I also understood what you're saying about physician networks, I don't know what cornerstone is and don't need to know that I did understand glean from the question and answer that it's it apparently operates in the hot point area is not a massive it must not be a massive organization, but we're talking about forming up networks among physicians that eventually going to be organized into an entity and have a board, and get into the underway and operate that's sounds like it multiplies the complexity of standing and manage care operation exponentially, so, don't these MCO or insurance companies they already have manage care operations I understand they got to then attract a network of physicians but they already have a manage care operations in place, don't they? Representative Dollar. Thank you Mr. Chair. It depends on it do you want to pay the premium for that, that an extra 15 or so percent. Once you go, you got to realize, once you to a HMO, to an insurance company, then your network goes away. You loose a lot of ability to control the data, your network is gone. When you make that commitment and go that direction then in many respects you're going to be running blind, Florida was mentioned earlier I think if you look at the articles that have been coming out of there in the last couple of months, they have those HMOs coming back asking for more money. One figure I saw was $295 million and possibly more, and there were speculation there were going to be asking for somewhere double digit increase in their capitations in the upcoming year which is far more than where we've been saying over the last five years so when I think that when you are talking about neck link the problems with neck link frankly I was involved in some of these neck link we gave them some breaks that we didn't require of others, and they were begging basically for special treatment we can do this they made a lot of promises, neck link is not a good example because between neck link, and the county itself and the things that I was told personally in meetings that ended up Iet's say being less than accurate or not being able being fulfilled I mean they did not they didn't survive, and I think their're variety of reasons for that and that was obviously very unfortunate we should basically held their feet to the file like everyone else to start with and may be they would have been successful, but this kind of totally separate issue I would argue Representative Bishop. Thank you. And I'm not trying to debate or [xx] issues, I certainly I'm not saying that was a disagreement with anything you said about that. What I did just observe first hand was the complexity of the task, and the complexity of the task seems to me is evident elsewhere. I mean we had other LME-MCOs that didn't have a smooth sailing as they started up and that, but it does take me I think to the next question which is, I understand there's, you talked about 9:10 ratio, 9% to pay for actual cost of care versus 10% administrative. I've had rather than an 85, 15. I'm not sure whether there's all those numbers come from, but you're really talking about a goal, aren't you? And in the actuality it depends, in fact Representative Lambeth you made reference to somebody who is committed to this, but is there anybody out there who has signed an [xx] who's made some financial commitment, the organization don't even exist at this point but they know [xx] I'm sorry. Are we in a [xx] back stop so if you have these organizations and they're providing Medicaid services and you set up a 9 -10 thing and so out of 10% they got to stand up these managed care operations. They've got to pay the IT related to doing it, they've got, in fact add to that on an ongoing basis, they've got establish, or maintain, or perhaps add to reserves. It seems pretty thin to me, but if they fail, Medicaid services still have to be provided, and the state responsible for providing them. So in that 9-10 idea of making a commitment that early on and then saying that's get worse which is superior to use PLEs because they can do that and MCA won't, might be we'd be fooling ourselves there. Representative Dollar. Well, I don't think so at all. It's a contractual arrangement, you sign the contract for, those

ratios, Suppose they fail? Well, if they fail you have other PLEs that will come in and will take take over that population, you assign it to other folks. Certainly, particularly with respect to providers, what group is going to be [xx] you make sure that they are successful, because why in the world would any provider group provide an entity everyone will be able ever to lose the ability to service because they all provide us those those patients, the incentive is really quite different under this model and I think it's the incentive in such a way you get more quality, it won't be just about the money. You get the quality because it will be pushed from financial and to achieve those goals and of course actually quality metrics are a part of this in developing those that, provided [xx] entities as much as any group are going to have, every incentive in the world to make sure that they are doing it right, and certainly the size organizations that we're talking about are now people who are just going fall off the tunnel track and get in to this business. They're simply not going to do that. Chairman I appreciate your patience and patience of the sponsors. Thank you Representative Brisson. Representative Blackwell you're recognized. My questions have gone since I first held up my hand, but I am not going to ask them all, I'm going to kind of limit myself to four short questions and it's up to Representative Dollar and Lambeth how long their answers are, but I want to first ask if I make a question to staff, with reference to the states that you identified earlier, do any of the states, I can't remember how many you said whether they're nine, do any of those states limit their ACOs to provider led entities only? Miss I'm pulling the information back up, I don't know they're slightly different, the organization they're similar to the PLEs but I don't know statutorily, if they're, how they're defined. But it is,   Representative Blackwell. But it is correct that the bill before us limits it to provider led entities only. That is correct. OK. A second question if I may to Representative Lambeth, based on some comment and maybe Representative Dollar doesn't matter. With reference to the idea of moving towards capitation and not fee for service, and Representative Dollar I think was getting into some of this moment or two ago with Representative Bishop. What I'm interested in is, what about what you all are proposing, will make it any less likely that PLEs will be back before the that you're saying we can't make it on the capitated rates you've given us, give us more money, or that they come back in the short session and say we've got to have more money to bail us out because otherwise we're going to go out of business and I know I said it was going to be a short question but let me add this. Let me have the start. I think Representative Dollar indicated earlier, or maybe Representative Lambert that we were going to gave other people who would come in and take over the provision of services to locate population for somebody who wants our business, but I don't see that in bill, where does it say how the overlap will be guaranteed and how patients will be guaranteed there's somebody to go to for their area if the provider-layered-entity goes out of business? Representative Lambert I would suggest that we are already being asked to pay hospitals and positions more. We hear routinely that they're not being paid enough to cover their cost, they'll obvious routinely asking for more reimbursement under the current system and the current system that is rewarding valium and a different type of behavior. So, I actually suggest [xx] getting that question today. Mr. Speaker? I agree and my question was how does this make it any better and I taking you're saying, well, we'll have the same problem going forward. It will be a bidding process that

be a contract in place, if the PLE work together and remember, they've got to meet service and requirements and deposits for departments where they are, then the PLEs and the markets would be allowed to come in and take those, covered lives and move those into their plan. Again there are a lot of details to work out, we've given a lot of authority to the public here to work out lots of those details and that's why it does take some time to get that worked out to define that and then to move to a waiver and then to move to a [**] two years period in here after the waiver before we actually begin to send out [xx] Representative Blackwell the chair will come to you [xx] to representative [xx] for inquiry of the chair. Well actually want to make a comment, may be I'll need to do that later, but. Let me put you in the queue, you're actually the next one up so I'll will recognize representative Dollar this time. Thank you. Just to explore your scenario there representative Blackwell what you've seen on the MCO side, Kentucky is just one example and Kentucky, Santine[sp] couldn't make it work on the money, they ask for more money, obviously they couldn't come to and agreement. So what happens same thing pores out and it creates and suddenly created some real challenges for the State of Kentucky Medicate program. One of the positives that we have with this program one of the key selling points is that the provider entities have nowhere to go, they are not going to pull out of the State, they're going to be here. And let me give you an example going back to the LME-MCOs, the LME-MCOs, we control that capitation, they don't have that much bargaining power with the State, they have some negotiating that's done with the state, but they can't go anywhere, they can't pull out, they can't run off to South Carolina, or say, "Hey,  we are going to get out of this line of business and go somewhere else. " You really want to be able to keep your hands as much on how this program moves and develops going forward as you can, if you really want to make sure that you're handling things from a cost perspective, I do. Mr. Chairman, if you would indulge me for just a moment, I do want to read just a couple of quick figures, I'll just one set of them. If you look at the underlying claims spend in North Carolina, it's actually been flat in 2010, when you count in the a RR money, and you add that in so that you've got a truer actual appropriations spend, you have a $3.65 billion that's state money, that's the state piece. In 2011 it was 3.558 billion, in 2012 it was 3.334 billion, it had gone down. It came back up to 3.591 billion in 2013, and then in 2014 the last year that's been closed out it was $43.67 billion. I think for a particular, for a state our size, that level of performance that would last five years which can be accredited to a number of both the [xx] can we say we have which is been advantageous the work of community care and the primary care home model, as well as specific actions with the general assembly with respect to rates and service definitions and the like, and other initiatives on top of that from the department and elsewhere, so we've got a tremendous underlying it's what's confused things spend other staff that was around that which I wont bore you with right now, but we need to build on what is working underlying. Underpinning our system right now with respect to claims, so we have a unique opportunity, and I think Colorado that maybe wanted to want to take that was one that was into the commercials and they changed over, and they've had some real strong success since they moved out of the commercial realm, and moved more into the medical home model and what I guess be the A. C. L. Model. Representative Blackwell add in [xx]   Yes, if I may, I'm not going to do I can talk to Roselyn Bowell later about those right now or maybe they come in some another time. Representative Lamberth, I

think in responding questions from Representative Abeler in explaining how the new management of these new PLEs would work, we're saying they might hire the expertise because maybe they didn't have it. If we're going to expect them to hire the expertise to come in to do it, how would we refuse to allow entities that already have the expertise to participate in the process on the same basis as the PLEs. Representative Lamberth. I don't know. The MCAs would not hire expertise to bring it to North Carolina, I'm not sure how they would struck so theirs. So, I don't know exactly how to answer that question. Well its the benefit of being provided alert, that is the key it's being provided with. One last question. Representative [xx].   [xx] Dollar made the comment if I understood correctly that one reason for voting was that it would be 15% more if they got involved and I didn't quite understand it would just hypothetically if we allowed MCO's to come in that we're not provided [xx] and compete with PLE lead entities when they all had the same capitation rate but how would they get an extra 15% that the PLE's couldn't get Representative Dollar What I'm trying to say is that the state is not going to pick up that cost whether you peg it at 12% or 14 and a half or 15, the state's not going to pick up that cost. That cost has to come out of, so if you basically have a $10 billion total Medicaid budget just around the numbers that billion and a half has to come out of if it'll all be HMO's has to come out of the money that's there. We don't appropriate more and that money is going to come out of though concern, I'll be generous at this moment, the concern is that money is going to come out of either denied services or potentially lower rates and in the utilization, one of the things that were concerned about is making sure that the physician you get back to the doctor and the patient. We don't want an HMO between the doctor and the patient. We really want to have a system, that through the extent possible we are achieving those goals that every body wants with the capitation in the budget predictability and trying to control cost and having new set of incentives and preserve what I think most people want for themselves, which is I don't want to be able to talk to my physician and get the treatment that I need without having somebody unduly being intervene in that process. We're trying to preserve that which is a real strength in our system follow up Mr. I will come back to you Rep. Blackwell. The bill says as I'm reading in section six, that anybody who is a successful bidder must agree to define the measures for risk adjusted help outcomes care, patients satisfaction on costs. If that is done, then how does an MCO if it was allowed to participate along with the PLEs, how would it deny care, and dissatisfy its patients? if we going to have this defined measures then it's got to [xx]. Rep. [xx] We certainly have plenty of examples that are out there. Will be happy to get some for you. Ladies and gentlemen the Chair has several members in the queue. I just want you to understand that we recognize as a major piece of legislation, the chair intends to have full discussion, Rep. Inscor you're recognized. Thank you Mr. Chair actually I think that it's really a good discussion. It is really important for us to go on as long as we have questions. I'm learning things, I've been here 19 years and I'm learning things and so, this is what we need to be doing, so thanks. I would say that we have the strength in this state if we were a failing state, then we might want to look at somebody who can come up with a quick fix, but we have many strengths. Other states around the country are actually copying our strengths, and we probably 25 years ago the first state in the nation to begin working with medical

home model, and now it's widely accepted across the nation. So one of our goals is to build on the strengths we have, why would we not want to do that? If we were to go outside Medicaid Commissionaires Care, we would be dismantling our own infrastructure. We are the PREs are our existing infrastructure, we're using our existing infrastructure in biulding on it. This thing have a budget, and manage care company come in, that goes away, there are infrastructure of organized medical model homes right now. Our community care network would go along, so I think not losing our existing infrastructure is one of the things that's important to me. I believe that one role would be in [xx] are able to lower their rates and outcome resulted in lowering their rates and eliminating optional services is that they lease their providers, their primary care providers, They intend to then employ primary care providers that are young that don't stay in the system, they don't come in to work with Medicaid patients, they stay in the system long enough to build reputation and they also refuse to take patients, I hope another state with this happens. So you don't have your regular provider group that's providing long term care to the same population. So I think we have a lot of strengths in our system here and I support building on what we have. I know that we will have bumps in the road and I think that we've been through, we currently, one of the advantages of the bumps in the road we've had is that we currently have experience in the state with entities that had actually managed in their capitative system. The health system it's capitated we have people who across the state who are managing under a capitated system so this experience in the state with how to do that. So I feel a lot more comfortable building on this system we have than going to an entirely new system.  Representative Martin you're recognized. Thank you Mr. Chair for any question or comment if I may. This question really came out of discussion with representative Bishop about if it's a capitated ray and looking at I think he's concerned that you have to have a big system because you'll have to be able to cover in order to sign up for these, and I'm not sure that that is because you could signed up as a provider led entity and then still within your capitated rate, could you have not have fever service providers like could there so be providers who provide Medicaid services that aren't signed up in the network and they have a secret service but their fee would then go to the provider led entity could you just clarify that.  Rep. Lamberth[sp?] I don't know that we know exactly how the PLE was set up there funding mechanism out to each of the different areas. They'll have contract for hospice care, they'll have to contract for all the different providers, and I've seen it done more for different ways where in some cases they paid them a negotiated fee, in some case they sub-capitated down to those providers so those providers were also capitated so I don't think today we know exactly how the PLE will allocate that capitated rate for the care that's going to be provided under that. Does that help? Rep. Martin yes just to follow up on that but those organizations or the evident did got out so it wouldn't be just a hospital system that could do everything, and it could contract with someone else to do something, and I commented if only [xx] disclosure. You know my husband is an orthopedic surgeon and I have my masters, and undergraduate degree in business administration that makes us some interesting conversations in different skill sets, so I have close respect for my husband and what he does for his patients and I do think that the doctor-patient relationship is critically important and that the ability of maintaining that in our State is important because we are going to have a very short supply. And I do hope that they will bring in the right skill set, because it is

a different skill set to manage these things. And I do appreciate the concern and conversations around, that there may be room for both options, and I will support this as we move forward, but I do think there's still room for considering how they combine and there might be different models for how they combine. Thank you. Representative Brawley, Representative Brawley [xx], Representative Pendleton. Yes, Mr. Chairman. I came back into this meeting, claiming on making the motion to approve this and I have total confidence in the hospital ACOs CCNC and other type organization but there's no way I that I would vote for this today the more I see of it, it just scares me that we're thinking about doing this let me tell you some reasons why. I asked you all some few minutes I don't want a bureaucracy having all this control you said bureaucracy won't the position led programs will. On page four up in the top the general assembly delegates full authority to DHHS the department showing following contract I have no confidence in DHHS they can't even tell us how much money they owe why would I want to give them more money this would be insane lets get back to having a little constitution on this why not put it out to be, and pick one insurance company that has done this in other states, and let's have a little competition let's just see for you to say they're going to be 15% higher the bottom line is wherever the bid is, is whatever the bid is. It's very easy to analyze. Insurance companies have case workers they do well in this programs they manage people outcomes we need competition I wish I didn't have to compete but I have to switch my clutch from united 1 year to [xx] next year the signal the next year I have to compete why shouldn't the state compete insurance companies will give you all the data you want, they have for the last 10 years whether you want to see how you're doing or put employee claims in a year they will do but I could not vote for this either way Representative Dollar  let me just come in couple of things, first of all the department of Health and Human human services DMA in state of North Carolina is going to continue to operate this program, I do believe that the department has made along with the general assembly because I have worked on this personally every lawyer has 5, 6 years [xx] tremendous strides we've had all kind of problems, some of which were generated by the general assembly, some of which were generated by past administration, some of which were bad luck if you want to call it that or bad management, but we've come so far in the state and I believe that should be recognized on a cash basis we ended in the black last year on the cash basis we landed I'm going to work in the PS this year that is the first time we have done that and we are now close to decade any way we've made tremendious progress in dealing with and we've had to spend a good deal of money doing it but we've made tremendous progress in taking things that are all budgeted putting them in our own budget, changing management they have gone to tremendous management change they have gone to tremendous reorganisation over the department they have certainly made a tremendous strides and no matter what system it is, it's still going to be overseeing by health and human services, so I would I will certainly make that observation to [xx] if someone who has studied these issues for many, many, many years, and they've delved into the weeds  and can never delve into the weeds enough and certainly Chairman Lamberth who's worked directly in this area run an HMO he's been on all sides of the question although I don't think he's standing a heart surgery, but other than that his work these issues directly, and then financially responsible person for quite a bit we are highly confident that we can put this together, we put systems together before that were unique in North Carolina, and we know this can be done we know we're in a position to take advantage of our situation and we certainly ask for everyone's support.  Representative Lamberth I just would like to address a little

a bit of that competition and we've had a lot of discussion about the level of enrolled beneficiaries it's how we got to the 30, 000 thinking that we'll never get the way it's done unless we demonstrate that there're lots of choices out there for Medicaid beneficiary to sign up with. So, it is critical that we have a number of PLEs all across State. I lived in this world for many years, and I can tell you, and it may not quite come across, but these are very very competitive systems. There will be competition across the State for these patients. If you watched the news on [xx] fights, that's a measure of how much competition exists and how fierce sometimes this competition gets in North Carolina. I'm convinced that the providers can lead this transformation, I'm convinced that they will be ample numbers of PLEs and there will be competition among those because they're going to want these patients, they're going to come out to demonstrate that they can transform healthcare, and guess what? There would be reward system if they change the culture, they will be rewarded if they get the patients out of the emergency room, if they get those patients out of the in patients setting over to house space care which is a lower cost, and on and on and on, they will transform and they have to do it, regardless of what we do it in North Carolina, they have to do it for medicare, because this is the way medicare is going they are moving towards an ACO model they are moving towards risked based contracts with providers and so they are gearing they are investing in systems they are going to have to do this regardless of whether we do anything with a provider lead organisation [xx] you are recognized  thank you Mr. Chair following up a little bit on some of the comments were just made things have improved somewhat with Medicaid program in the States, but Medicaid has been a sinking for the last few years struggling, and we plugged the holes. How did we plug the holes? Billions of dollars, going in to continue to plug the holes, and it is floating right now, but It's leaning a little bit and it's not going to be fully afloat till we address the issues. I mean you can improve it, but we haven't fixed it. And, I think we've actually got to fix it, this bill doesn't do that, this bill kicks the can down the road. That's what we're doing today, we're not fixing anything. I don't understand how you can look at what's here and feel comfortable with it. You're talking about covering all 100 counties, their's no way to guarantee that my rural areas are covered. You may not have a problem in some of the urban areas with the large population, but how do you guarantee that every inch of this state is covered? You don't. Their's nothing in here, there's no details anywhere about that other than saying you'll cover all 100 counties and if a provider does that who's going to go fill in? You're going to have another hospital from another region come over to that region? The hospital there, you're going to put them for actually at risk and what happens with them? I just don't see how this works and to follow up on a couple of questions, more of I was trying to look because I know a staff mentioned what the nine or 11 ACOs were that in other states I can't find it is point but maybe my view could tell me or staff could or the states for 11 states whichever it was that are moving forward some type of ACO? Are they capitated or are they different models completely from what we're looking at here?   Miss [xx]  to speak do we have an answer for that?  Representative Bert, I understand is they are fully capitated Okay Representative Bert Can someone tell me and maybe show me in terms of the PLEs will they have, maybe I'm missing, but will they have sought of the same requirements having financial results in those accounts as what you would expect out of a private MCO? Representative Ramnath. There is a section in here on financial solvency meeting DL rack requirements that can't immediately go through it. Page three, line 25, section six is 2C. Representative Dollar.

Thank you. Care to comment. Yeah. Representative [xx] you are recognized. Thank you Mr. Chair. I had one question but only representative Martin would explain the difference in skills that's between she and her husband both something to mind and that is on page two item 10 where it talks about which provided a lot of entities, governing board is comprised of physicians, what would that governing board do. I apologize, [xx] question please. Section 10 on page two talks about but the governing board complies to his decisions to treat his patients, what would that governing board do? Representative Dollar representative. Chairman Ramnath may want to respond, the governing board will govern the PO up, so we'll manage the resources that they have managed the service and the program so they have, do the analysis that needs to be done with respect to the care that the individual patients are receiving. Work on the wellness measures of those patient the compliance measures of those patients obviously keep up with them should the need for them to go in to the hospital for some reason, whether it's a chronic disease, or whether it's  cancer, or whether it's an auto accident or just fell on the backyard and broke your collarbone they will be working to manage to make sure that whatever post hospital treatment or follow up, or therapy is required and if the all the connections are made between which is one of the keys right now the connections are made between care that they might receive, and let's say in a hospital setting, or in a clinic setting and outpatient setting, to be an outpatient scenario and all of those things, for example if you're dealing with a health care issue here and a health care issue there, you may be dealing with several different health care issues that all of the information close back and it's a part of the medical home the information that [xx] is quarterbacking your overall health care has access to that and is working on and certainly they'd be whole host of areas there's all kinds of things and a lot of things that are actually being done now as many of you are aware there are a lot of new federal fairly stringent standards about hospital readmissions and that has certainly motivated, and not that the hospitals weren't motivated before, but it is redoubled efforts and it's led to some additional innovations in being able to say, okay, we've got to make sure that those patients are having their needs met in their conditions monitored and treated and followed up on so that they stay out so the PLE is going to be working on all of those things and obviously doing the very basic things that you would do back room in terms of all your financial operations. Representative [xx] with this [xx] also be have the responsibility for the financial side of the operation in terms of making and budget issues that nature and you have people qualified in those areas because positions might not be good business people or finance people. So in terms of that make up, what scope do you see there in that board, particularly? Representative Dollar Absolute yes, I'm sure. Yes. The final question I have, and this is something that came to mind today when a comment was made over the way it's been set up for this capitation is actuary determined and I'm not going back to the comment about who made it now, but we're hearing this, 'you don't pay us enough, you're paying us for 2007/2009', rights? stand a most possibly when we actually look at what it's going to cost to do this. We are going to get shocked a little bit in terms of the fact that we might be have been really pressing down

on rates and in order for us to put a place or an operation in place but it's going to be a little bit more than we planned. Representative Dollar. Thank you Mr. Chairman. I'm Sorry for over a quarter, well over a quarter close to 30% of the Medicaid budget today we capitate and determine rates and determine capitations, So we have the experience of doing that in this State in behavioral health which is a very far flung and complex population, probably is far flinging  complex as any population you can absolutely imagine and we have been able to do that very successfully and actually achieve savings, real saving with that program as well as increase services in a number of areas. So, these are not goals that we have not been able to meet right here in the state of North Carolina. We're already with a very substantial portion of our Medicaid budget. We have a population that is far more complex than even the in the medical population which is obviously will make larger. Representative Dobson is in the key for a motion in the appropriate time. Representative Blackwell you are recognized. Quick question, on the sixth position that are, say a majority must comprise the governing board, could all those physicians be employed by the same hospital company of operation association facility. Representative Lamberth, Representative Dollar. You're going to have to work out the the details of that, that it would be representative of. Well, It would be representative of the provider organizations that would come together, the providers that would come together to create the P. L. E., and gentleman Lamberth's may have a better answer. If a hospital [xx] PLE, and if it's got a lot of positions on practices, I don't read anything in here that would allow the hospital to designate six positions whose practices it earns to serve as a majority of 10 member board or government board of whatever, but I now just wanted maybe there could be change by this point that could happen? Representative Lambeth? It's probably conceivable that could happen, as you know many hospital systems that have evolved employ lots of doctors nowadays and that's really the predominant model is hospital, system, and then doctors employed by the system, and I do think the environment will continue and move in that direction, so it is conceivable if a large kick and urban system creates a PLE, many of those positions will be employed within their own system let me just tell  representative Dollar.  I'm sorry Mr. Chair, as a practical matter to get your population, and to build your population because you will be dealing with independent practices and other practices and other specialties in that can also come in to be part of someone medicaid medical services Representative Bishop your recognized.  Thank you Mr Chairman, mention was made on the need of the requirement of capital and I know that big insurance companies that operate MCA things are capitalized by the capital market, what is envisioned in terms of this new PLE's. How will they form capital and will they out of that 10% that you are envisioning, will that also be required to build their cost of capital Representative Daley. They'll have to pull together their capital again and that may, I'll give you another example of that with our LME MCO's we have several that basically came into it with a zero capital to start out with. The State did not provide that capital, they built that so we have experience and obviously in this case the folks are going to bring capital to the table. Hospitals will bring capital to the table. Folks there's money that will be brought to the table and if a PLE forming says here, wait a minute, we can put together the population we can put together the appropriate array of services around that

population that population appropriately, but we need somebody to help us with capital on the risk then again, they can contract for that. They can bring in an insurance company to work with them on that end of it Mr. Chairman, may I follow up? Representative Bishop, if I can ask. Thank you sir. So, hospitals are hurt specifically but if hospitals for example, Representative Dobson makes a point about the hospital in rural areas are hard pressed as it is, do they have capital available to build capital or are you saying that you anticipate they'll be uncapitalized which then doesn't that mean what I said earlier which is that the states, they've got to be backed up if they don't make results, they don't have capital to bear the laws. So there's no such thing as capital, I mean that idea of capitation it is, if somebody is responsible provide the care for a specific payment, but if they, that depends on being able to absorb or make profits, if they don't have capital that's absolutely impossible, is it not? Representative Dollar. Well, clearly if someone can not put together sufficient capital they will not be able to have a PLE, they will have to be able to pull together the appropriate capital, they will have to be able to meet the solvency requirements that are in the legislation and essentially, think about it like this. In some respects, you've got, maybe the difference is this, you have to have capital, you have to be able to manage risk. So, whether you are HMO or whether you are PLE, you have to be able to operate. But one of the main differences that we have here and I think one of the keys is, is that who do you want making your health care decisions, do you want to see if I was making and those decisions? Or do you want physicians? And we believe physicians are in a better position to make healthcare choices and decisions for our population.  Representative Bishop?  I'll just follow up with this just one comment, it seems to me that I understand, I really do understand that this behind the idea that we're going to have a exclusively provider [xx] we don't want to have our providers under the thumb of a big name insurance company but the more you come out of different ways, the same phenomenon has got to [xx] take place just to the pint about capital, one of your answers, Weldon, there is nothing to keep the provider led organization from teaming up with an insurance company or so they can bring capital to the table, well if that's the case, they guy whose got the capital is going to require a contractual arrangement under which they get a sufficient say or they're sure they're going to get money, and so you may think you have, you may normally have providers wading the organization, but I think you're going to deal with the economic reality that you've got to be able to compensate capital and draw capital, and they get to sort of take terms to agree or at least they've got to be in negotiating terms, so I think we might of reaching for an oasis in the desert that [xx] when we get there. Representative Dollar.  Well I would just say again we've done this before we've got track record, and we know that we can do this again, and we've done it in behavioral health where it was far harder, and we believe we can do this in medical health as well, and that the safeguards are there and under the insurance regulations, the entities have to be solvent or they cannot operate, and clearly the deferment would not contract with any entity that is not fully solvent, and able to get us right there. Chair recognize that we have Mr. Dave Richards whose assistance secretary for the department of Health and Human Service [xx] Richard would you like to speak to the committee? [xx] [xx] speaker Sir, recognize appropriate not to exceed three minutes. If you would as per custom identify yourself and your title Just to start, Mr. Chairman and members of committee my name is David Richard and I'm the Deputy Secretary for Medicaid. First of all we want to thank the committee members, the chairs for the work that you have done on this, and this conversation I think it helps as all to hear the debate that you are going through, from the department we have consistently supported a provider led effort to reform Medicaid deploy

this to right way to build the upon we have done in mistake together to continue that process we plead that this bill is a consistent with the department's calls the aims that we have all worked upon we the stakeholders, the providers everyone across the State and we will be supportive going forward, we say is that we appreciate the questions about the operations side of this and what I will tell you is that we at the department continue to approve the quality of our staff and ability to manage this programs as Representative Dollar say we have done that we our behavior house system again we look forward to continue to work with you as we go forward with the effort, thank you   [xx] If you would state a podium please I believe chairman [xx] would like to press the [xx] [xx] Thanks sir. I just want to make sure I heard you correctly, you said that the department is being consistent in their position you mean the department's been consistent in the position since they changed their mind in 2013 right? It was about one of this that we said we would do is that after we had this conversation literally around what Medicaid reform would do is that we said we would spent a lot of time with our stakeholders across the state including people who are beneficiaries of the system, people who are providers and the other folks that are part of these and as we did that, working with everybody, this is why the position of the department is going  to be consistent and [xx]. Okay, thank you sir. Further discussion to the debate, if not representative Dorthy[sp?], you're recognized for the motion Thank you Mr. Chairman, it has been a good discussion, a healthy debate and I appreciate your indulgence because this matters and I appreciate the work of this committee. I do move for a favorable report, for the proposed committee substitute for House Bill 372, unfavorable to the original, with a serial of referable appropriations Representative Dobson moves for favorable report for the proposed committee's, for the Health committee's substitute to House bill 372 refer to appropriations and favorable to the original bill. All those in favor will signify by saying aye. Aye.  All opposed NO. No In opinion of the chair, the I's have it, the I's do have. Ladies and gentlemen the business of this committee to be completed, your stand is earned thank you for Thank you Mr. Chairman and members of the committee.