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House | July 2, 2014 | Committee Room | Appropriations

Full MP3 Audio File

Good morning. If members will take their seats and guests will take their seats, as well, we'll begin the appropriations meeting. I'd like to start out by introducing our Committee Sergeant at Arms today, we have Young ??, Bob ??, Doug Harris, Warren Hawkins, Bill Morris, Reggie Sills, Marvin Lee, John Brandon, and Mike ??. Our pages with us this morning are Caroline Schreiber, Catherine Schreiber, Michael ??, Alley Parker, Ben Jones, Spencer Zachary, Noah McKay, Clay Harris, and Patrick . . . How do you say your last name, Patrick? Sacky? All right at this we'll move to the only item on the agenda today and that is House Bill 1181 and we have a PCS will be before us. Representative Dollar is recognized to explain the PCS. [SPEAKER CHANGE] Thank you, Mr. Chairman, members of the committee and all of our guests who are with us today. On behalf of the sponsors of House 1181 I am pleased to present to the committee this morning, the North Carolina Medicaid Moderation Act. Across this nation state after state has struggled with managing their medicaid programs. States are challenged to operate a federal health care entitlement program, especially in a fee for service environment. North Carolina has had its challenges in managing our program. But, a new day is dawning in North Carolina. Systems are being modernized, budget have been trued up to address a series of long standing problems, and payments systems across a range of payers are rapidly and significantly changing in the healthcare department. So, leaders are coming together across this nation, and here in North Carolina. From government healthcare advocacy and together we are going to chart a new course, this new course will end the traditional fee for service payment system and establish the right incentives for our healthcare delivery system to pay for value and not simply volume. We want to move to a system the incentivizes better healthcare outcomes for patients. We will not simply pay for quantity, but what we will pay for is quality of outcomes. North Carolina has a unique opportunity to build on the strengths and successes within our current system at the patient level. Our state has tremendous participation from our doctors, from our specialist, and other providers. We have access to quality healthcare for our citizens that many other states, frankly envy. We have a nationally award winning initiative like community care of North Carolina. We have the deep commitment of our hospitals, our family physicians, or dentists, our clinics, specialist, therapist, nurses, and our long term care facilities. We have already reformed our mental health system with our public LM CMOs, who are working to ensure that our behavioral health resources are properly managed with clients and families. Now is the time, members of the committee, to take the next step in reform to establish a doctor and patient driven system of care that will achieve the following, and the following is in your bill, in the PCS. In section one, it is the intent and the goal of the general assembly to provide budget predictability, to slow the rate of cost grow to help bend that health care cost curve, to achieve cost savings through efficient reductions in programmatic costs, create more efficient administrative structures, improve health outcomes for our medicaid population, and require provider accountability for budget and program outcomes.

Speaker: What are the building blocks of this ?? and in section 2 hat are these building blocks and we have gone to be on a five year a glad July ?? to achieve to put these building locks and all the goes with and plays it is complex awoke ?? done right,we will bills upon this primary care dramatically home model that we have in that is all day i and wining national models the planes that begin with limed with assume greater risk will eventually move to capitation by the end of ?? services ones fully implemented the state will maintain the risk of ?? makes the ?? population we will work at e=regions that we have already ?? with community care North Carolina if you look at the top of page 2 ,that was section that not in the bill that part of the house committee that is the rotate health plans and authorize ?? that was crated by season law to serve our medicate populations we want our ?? help pure medical help ?? to world together on those individuals ?? the amendment of the health area but little more about that but little but also ?? the department of health and services will lead this effort section 3 ,section 4 ,they are detail about time frames pursuit ?? that may be required the considerations and mechanism will need to be work on stake holders ?? hand in hand on developing details of the plans ?? will be reported march 1st of 2015 by the department ?? mental assistance of the general assembly there be updates following that with or legislative over side or we move forward we have commitment in section 7 in terms of maintaining appropriate funding in terms of maintaining this decision in the process section deals with ravers and in the pursuit of those and saps as well as needed by the department section 9 in think incredibly important that is general Assembly ?? and provide the funding necessity to provide and implicate transformation required by the act ?? if you look back that what we did in 2011 ?? and we took what have been a model pilot in our state and we expanded in ?? sea weaver ride and created the ?? to mange ?? clients across substance of use RD,DD,mental health ,what is been critical is those ??

?? and running. As they have moved along in the last three years, we have passed two additional successive bills in support of their efforts to address issues that we needed to address to help them along that path. The key is the general assembly has stayed the course with those LME-MCOs and, for that reason, I think they are showing success and that they will be showing greater success and greater capability as we move forward. The same is true for our commitment here to Medicaid reform on the medical side. It is important that we make a commitment, we charter direction, we move forward and we stay committed to that direction for the long term in order to ensure the success that we want. One of the things that we’re seeing out there in the private sector, as many of you know, the number one payer for medical costs is Medicare. Medicare is your top payer. The next payer in volume for your private insurance companies, your third level payer in terms of volume, is Medicaid and then the others come down from there. The other payers are moving and, of course, as many of you know, Medicare is already moving in the direction of accountable care organizations, which can be formed under this structure and there are varieties of accountable care organizations. We want to make sure that we’re moving in that, allow ourselves to have reform that moves in that, same direction that moves with the latest technology. It moves in that same direction so that our providers can benefit from being able to, as they build their ACOs--which many are already doing, well underway--and other ACO-like organizations, that they can build those and we can help them with our reform in Medicaid to go along with that. I think it will make it far easier in the long run for payers, for their administration, and save costs to the entire healthcare system. Section 10, I’ll move on. That’s the final section. There was quite a bit of discussion in the health committee with respect to section 10. What we have done here is to establish an integrated care study. Rather than move to implementation at this time, on a pilot level, we will study being able to put together a pilot. We have a range of groups here that we want to be involved in that and, of course, we want that to be coming back to the 2015 general assembly for possible action based on the work that is done in integrated care study. Mr. Chairman, with that well maybe brief or not so brief, explanation of the bill I would be happy to answer any questions. It’s my understanding that Representative Avila has an amendment if you want to take that amendment first. [SPEAKER CHANGES] Yes sir. The amendment should have been passed out already so members should have it so Representative Avila is recognized for her amendment. [SPEAKER CHANGES] Thank you, Mr. Chairman. What we’d like to do is to insert Benchmarks as one of the named stakeholders in the discussion. They represent a broad spectrum of providers and I would like to have them at the table for discussion. [SPEAKER CHANGES] Further discussion or debate on Representative Avila’s amendment? If not, those in favor of Representative Avila’s amendment will say aye, those opposed no. The ayes have it and the amendment is adopted. Representative Brisson. [SPEAKER CHANGES] Thank you, Mr. Chair. Just a comment, a brief comment, on section 10. On behalf of the 86 rural counties in this great state and the County Commissioner’s Association I’d like to say thank you for those changes and for getting that study. [SPEAKER CHANGES] Representative Michaux. [SPEAKER CHANGES] Mr. Chairman, this sounds like a pretty decent bill. Do we have anybody

from the outside that really would like to speak to this bill. I’d like to hear from some of these folks that are going to be involved, if you don’t mind. [SPEAKER CHANGES] Any group interested in addressing the proposed committee substitute at this time step forward. Please state your name and who you’re with, for the record. [SPEAKER CHANGES] Good morning. I’m Chip Baggett with the North Carolina Medical Society. Many of you heard us express general support, but opposition to certain pieces, of this bill in the House Health Committee and I want to tell you today that we really appreciate the deliberation and the changes that have gone into this proposed committee substitute. We are supportive of Medicare reform. That is one of our top priorities. We are supportive of taking care of the whole person in an integrated health care that it’s a top priority for us. We think this bill, as it is written now, addresses our concerns that we brought up last week. We think it gives us a path to move forward in delivering not only great patient outcomes to our patients, but delivering the cost savings and the predictability that you’re looking for, so we are supportive of this bill. [SPEAKER CHANGES] Good morning. Cody Hand with the North Carolina Hospital Association. Just want to thank you for considering this PCS. We, your North Carolina hospitals, support this legislation. We think it’s a good step in the right direction for Medicaid reform. We are, as Representative Dollar said, doing this already with Medicare and we’ve already learned some things with those accountable care organizations. We think that this bill provides a mechanism for us to implement that in Medicaid and I would say that, probably, we would achieve better cost savings because we can do one integrated system instead of having to do multiple, depending on our payer. This does address a nice glide path for us to full-risk. It does address whole person care. I think it’s a very good step in the right direction and I would thank you for that. Thank you. [SPEAKER CHANGES] Thank you. Good morning. I’m Mary Hooper. I’m the executive director of the NC Council of Community Programs. I represent the LME-MCOs in the state. We would also like to extend our thanks to the members of the general assembly for their work on behalf of the citizens of this state. I would also like to note our appreciation, in particular, for the recognition that the LME-MCOs are already capitated, they are managing their Medicaid budgets, and we look very forward to our continued efforts to work with our partners in this room on issues related to integrated care. Thank you. [SPEAKER CHANGES] Representative Insko. [SPEAKER CHANGES] Thank you, Mr. Chairman. I’d like to just pick up on what the last speaker said. I think one of the advantages to this version of the bill is that we have our current physical health program in Medicaid is really provider-driven, we call it. It doesn’t mean that the providers do everything, but the providers are actively engaged in that program and helping us save money through the CCNC networks and the medical home model. The LME-MCOs have experience in capitated care which is what the whole system is going to be going to. We don’t have a system currently that is managed by the payer. Our mental health system is currently managed by the payer. Our physical health program is more managed by the providers and I think, as we study these two issues and learn from the MCOs about how to do the capitated care and learn from the CCNC and our physical health about how to work with provider-managed care, that that’ll be a good integration. Thank you. [SPEAKER CHANGES] Representative Tolson. [SPEAKER CHANGES] Question for Representative Dollar. Was smart card considered as a way of those that want to seek service and also the process of controlling costs? Was that considered at all? [SPEAKER CHANGES] I think that that’s an issue that we need to continue to work on. I know that Representative Burr and I, and I know you, have worked on it for a number of years. That’s something that we’re going to continue to work on. As you know, there’s a couple of different ways of doing that. No, we have not given up on that yet. [SPEAKER CHANGES] Follow-up, just to comment, and I agree. I know that we spent a lot of time trying to develop that and I think it’s a good way to have a check and balance on what you’re doing.

Representative Farmer Butterfield. [SPEAKER CHANGES]Thank you Mr. Chairman. I wanted to echo some of the things I have already have been said by representative Brisson and representative Insko and say that I am truly proud and glad to be a part of a committee in helping human services who looked at all the stake holders had to say and consider all the inflict came out some good legislation so I really appreciate that. [SPEAKER CHANGES]Representative Bumgardner [SPEAKER CHANGES]I have a question for the bill sponsor. [SPEAKER CHANGES]Yes Sir. [SPEAKER CHANGES]Representative Dollar on page two your bill says that it has a number 3 appear line for mechanisms to encourage personal accountability and under that number four says strong performance measures and matrix the whole providers accountable. Are we going to see what those are before we vote on this? [SPEAKER CHANGES]Well those need to be developed. Those are very complex constructs at certainly, I am not qualified to deal into may be there might be a couple of people in the room who can deal into those but those need to be developed, they need to be developed with the stake holders they need to make sense they need to be able to measure what it is that we want to measure and I guess the short answer to your question is those will be brought back by general assembly. [SPEAKER CHANGES]Representative Dollar. [SPEAKER CHANGES]Thank you Mr. Chairman. The bill sponsor appreciate the work thou done on this I am not expert in this area as many of you probably can test I do have a lot of constituents very concerned to Medicare Medicaid issues but ?? the days in here and just my concern reading of this the ?? is a safe assumption that this is no impact on the budget just we are doing for 14 15 is pre pretty safe assumption. [SPEAKER CHANGES]That's correct. [SPEAKER CHANGES]Representative Bryan. [SPEAKER CHANGES]Thank you Mr chairman I' ll echo the sentiments that everyone seems like great great work thou guys have done I do have a question about the, on the first page the coming up with the plans by 20-20 in it talks about moving to fully capitated may be we don't have any answer to this but I guess I just would be interested in getting thoughts on how quickly we are actually moving to fully captivators that are completely part of this process may be where are we with. [SPEAKER CHANGES]It will be part of the process as those provider with organizations has all the parameters or put together as the matrix or put together for measuring in the while it Weill take time in order for those to come up there some who will be ready to to come forward and be prepared to take significant risk fairly quickly there is others that will take some time to be able to get there in order to be appropriately capitalized in the light and we do have some provider examples people talk about ?? there are others that provider lead physician lead ACOs there are already hospital lead ACOs there are developed and are developing around the state now and couple of variance of those in some different hospitals systems there are already under why the transformation much of the transformation is already under way. In the health care system and we have a unique opportunity to be party of that and help drive and lead that in our state and I would simply say just no one other know, the secretary, secretary Vash Dr ?? of DMA as well as the governor will be down that the Wilmington health ACO today as a matter of fact. So these are the things that are out there moving forward. Representative Mitchell.

Mr. Chairman, it seems as though we’ve sort of reached the consensus somewhere along the line in trying to get something done with the program that has caused us a great deal of consternation over the years. And I just hope that everybody in this body can be on board to accept the program, will look into it and will give it some meaning and some depth. We need it desperately. At the time I was in the situation that Representative Dollar’s in, we were looking at 4 to 500 million dollars a year in cost overruns. We were at least able to identify during that period of time those cost overruns that we had. Mr. Chairman, I don’t like beating a dead horse to death anyway. If you are amenable to it, I would like to make a motion on this bill. [SPEAKER CHANGES] Further discussion or debate? [SPEAKER CHANGES] I move Mr. Chairman, that House, that the proposed Committee Substitute for House Bill 1181 be given a favorable report. You need a serial referral on it? [SPEAKER CHANGES] No sir, it’s, we’re going to, I’ve got two more questions Representative Michaux, ?? and I’ll come right back to your motion if that’s okay. Representative Riddell. [SPEAKER CHANGES] Thank you, Mr. Chairman. Representative Dollar, one of my concerns as we’ve talked about Medicaid reform has been for the smaller practices. And what do you see happening to them with this framework that’s put in place? Will they still be able to remain independent and provide Medicaid services or will they have to be swallowed into something larger? [SPEAKER CHANGES] I think the smaller ones may still be able to be independent. That is not prohibited in here. Although what I really think will happen, frankly, is that a number of those smaller ones and I know who you’re talking about, will probably want to be part of an ACO that they control, that they control part of, and that they partner with. And I think what you’re going to see in the healthcare arena is on partnerships springing up all over the place. And we’ve already seen a good deal of that already. We heard of another strategic partnership this week between a couple of medical centers. We’re seeing that almost on a monthly basis and I think you’ll see more of that, and this will actually have an opportunity for some of the smaller practices who want to be part of that and help control their own destiny in that as well. [SPEAKER CHANGES] Representative Floyd. [SPEAKER CHANGES] Representative Dollar, this is a follow up, but in a different perspective. On page 3, section 10, is there any way to consider, I don’t know how to word it, the minority provider participation meaning a lot of minority doctors provide these kinds of services and can they be included as part of that study? [SPEAKER CHANGES] Well they are already included. I mean many of the individuals that I know and that I’ve met, and I can rattle off some names for you but my mind is kind of going blank on that, but are involved in all of these organizations. [SPEAKER CHANGES] Representative McNeill. [SPEAKER CHANGES] Thank you. I want to commend you all for the hard work you’ve all done on this and it looks like a very good plan. But I have just one more question on the first page where it says the plan begins with limited risk and I know this is a fluid situation but could you elaborate on that limited risk? What exactly does that mean? [SPEAKER CHANGES] Limited risk, there are a number of ways to put that together but that’s limited risk between the state and the providers. Right now, the state basically has all of the risk in medical. So it’s shifting the risk to the providers. The providers are actually going to take on what you see there in that subsection B, providers will be taking on the full risk. That’s capitation. And so we know that in order to do that we need to have, there’ll have to be a glide path developed. Some people will be able to go on a fairly quick ramp up on that. Others may take some amount of time. We want to be able to provide for that window of time to assume greater risk in a very logical way as we move it to the providers. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Is that going to be done like on a percentage?

Base, is it, percentage base, does it start out with a certain percentage and then it grows over the years, or how, what’s that going to look like? [SPEAKER CHANGES] That would be a logical way to do it, and that we’ve seen models that do it in that way. That’s correct. [SPEAKER CHANGES] Representative Cunningham. [SPEAKER CHANGES] Thank you, Mr. Chair. My question is, how many other states have already moved to this model? And do we have some kind of way to look at a comparison analysis as we move forward with our model? [SPEAKER CHANGES] Well, some states are doing other things. I wouldn’t be able to give you all of the details of what each state is doing these days, but we’ve seen reforms for example up in Oregon. There are other states that are looking at varieties of reforms, based on where their states currently are. Because a number of states are in different situations. We have I think a very unique opportunity that we have is extensive a medical home model already in place, as anyone. I think on the ?? health side with the expansion of the 1915B&C waiver, I think we’re maybe the only state that has moved in that direction. And other states are looking at us, seeing what we are doing in that regard. In terms of ACOs, the ACOs are, you’re seeing those in Medicare moving forward all over the country. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Thank you. Representative Dollar, thank you. I appreciate the legislation as well as the model that CCNC has brought to North Carolina and are very, very glad to see that they are still intact, and we will be moving forward with the ACO model. Thank you. [SPEAKER CHANGES] Further discussion or debate on the bill. If not, Representative Michaux moves to give an unfavorable report to the House Bill, to House Bill 1181, the second edition and a favorable report to the Committee Substitute for House Bill 1181 as amended. I believe that’s what I heard you say a while ago, Representative Michaux. So at this time, you’ve heard the motion. Those in favor will say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Those opposed will say no. The ayes have it and the bill’s passed. At this time, the committee stands adjourned. [SPEAKER CHANGES] Thank you members of the committee.