Messages from Reps. Insko and Dollar on the NC Medicaid budget controversy

Original Message Rep. Verla Insko (D-Orange Co.) replied to from Rep. Nelson Dollar (R-Wake Co.)

From: Rep. Nelson Dollar
Sent: Wednesday, December 07, 2011 11:33 PM
To: Martha Brock; lauriecoker; Rep. Verla Insko
Cc: Mary Annecelli; Emma Thorne; Bonnie Jo Schell; Chris Fitzsimon
Subject: RE: Collaborative letter for LOC and for local legislators

There have been no additional cuts or reductions to the Medicaid budget. Reports and speculation flying around this week are incorrect.

Rep. Nelson Dollar
N.C. House District 36
Legislative Office Building, Suite 307B1
Raleigh, NC 27601


In a message dated 12/8/2011
Rep. writes:

Rep. Dollar is correct in that the issue now is not new cuts but about a shortfall in reaching the cuts required by the budget we passed in June.

The Secretary reported in November that the Department had implemented procedures to make other factors. At that time, the Dept was roughly $140 million short of cutting the required $356 million from this year’s Medicaid budget. The Sec reported that to meet the required cut, he would have to cut provider rates by as much as 18% or eliminate most of the optional services.

The Sec also mentioned in a letter to House and Senate leadership that it is unlikely CMS would approve additional rate cuts over the 2% already taken on top of a freeze on inflationary increases because CMS is concerned about reducing access to services. If any additional cuts are made, it will almost surely have to be in optional services that include prescription drugs, adult mental health, state run and private sector DD centers, nursing homes, in home care, dental services, hospice, non physician providers, ambulance services and many more.

Part of the problem is saving $140 million in as few as 3 months.
Using mental health as an example, we spend about $96 million/year on adult mental health or about $8 m/month. If the Sec. applied today for a state plan amendment to eliminate adult MH services as an optional service, it might be approved by CMS by March of next year. That would allow a savings of 3 months of services or $24 million against the needed $140 million – even though the cut for the following fiscal year would be the entire $96 million.

To reach $140, we would have to eliminate several optional programs asap; in the 2012-13 budget, those cuts would be for a full year and much greater than the $140 needed and we would have destroyed essential services and sent many people into a higher level of care – in-home patients into institutional care – violating the 1999 US Supreme Court Olmstead decision.

The State constitution requires us to have a balanced budget; this year’s budget requires the Sec to balance the Medicaid budget from funds appropriated for Medicaid so we have few choices.

We have had shortfalls before in the Medicaid budget but we used to have a Medicaid Trust Fund to fill holes - or in 2009, the GA authorized the use of some trust fund money to fill a $200 million hole. My own preference for the current shortfall is for the NCGA to appropriate new funds or authorize the use of funds already appropriated.


Response from Executive Director of NC CANSO to Rep. Dollar

Representative Dollar:

Thank you for replying to "all". I respectfully ask that you consider two issues regarding the budget that I'd like to address:

First issue: Information- As language is important to legislators, it is certainly important to constituents.

I have understood all week that there were no further cuts. However, until it is clear that there has been no reneging on statements made in various committee meetings recently (that there would be funds coming from other sources after all and that no one would lose services), we as advocates must continue to do our work.

So please confirm that there has been no change from what you stated at the last LOC meeting when the Secretary addressed the concern about the budget gap and its impact on medicaid services.

As you likely know, this current DHHS leadership has worked harder than any other we have had since I started advocacy about ten years ago. Creating CABHAs, while many of us question this will improve service outcomes, was certainly a money-managing step. Our medicaid utilization has been out of control, and local citizen advocates have seen and understood how this has happened all along. So it was time for DHHS to take some action. Advocates will continue working on issues of quality and outcomes in the lives of service recipients.

And then the biggest step, going state-wide with the waiver, will definitely help. In fact, I went out on a limb when few advocates would support the move to waivers and presented to the Mental Health Committee last spring, as invited by Representative Barnhart. We CERTAINLY need the funds in place (the DHHS budget gap filled) in order to move toward a waiver-based system. LMEs will be, for the first time, motivated to ensure that those who are medicaid eligible have medicaid.

In some of our communities, my own LME catchment area included, the LME refused to admit we were under-enrolling eligible people, denying we were using IPRS dollars on people who were actually medicaid eligible. But providers and state administrative staff have known the truth about this. This meant there were months in CenterPoint's history when it ran out of IPRS dollars for indigents in serious need! The board, the county commissioners, and DHHS looked the other way during those times (pre-Cansler).

I am a fiscal conservative compared with many of my peers who are human services advocates. But the level of funds appropriated to health and human services is not enough for us to stabilize our system and develop the accountability measures that obviously have needed to be in place at the state AND LOCAL levels.

If we aimed to do this with waivers, then we better have funds enough not just for administrative staff salaries and benefits, etc., but we better have the funds which taxpayers assume are actually buying good and adequate services so people can be well--that is Medicaid. There can be no justification for or condoning of taxpayer dollars purchasing chair massages and raises for LME staff during this terrible economic time.

2nd Issue: Reducing the numbers of LME/MCOs.

The only clear way we can yet gain financial efficiencies and (in my opinion) get better performance and accountability would be by cutting down the number of LMEs. We could move to state-wide waivers and get the outcomes we need with about six LME/MCOs. That is almost half of how many we are now planning to fund. And some of the LMEs selected to be MCOs do not have a management style that is conducive to community-engaged, transparent and responsive planning, but are habituated to insular operation.

Staff at DMH tell me that this kind of leadership will not succeed if it does not change, as if the functions would be given to another LME/MCO. This is not a very convincing statement given the political environment in North Carolina. As in other states, administrations find it less difficult to look the other way than to correct a difficult situation that is politically loaded. If there is some step-wise process that DHHS is planning to use to downsize the numbers of LME/MCOs, they have not alluded to this so we must assume that we're stuck with our current 11. Expensive!

Further, it will likely be easier to have CCNC integrating its efforts if there are fewer MCOs. And we do want integration of mental health care with health care. It will be more efficient, more patient/client-centered, and will bring us into a future that will not be stopped, anyway.

Thank you for considering this message.


Laurie Coker

Director, NC CANSO
Psychiatric nurse by background
Member of the Commission for MHDDSAS for 6 years

Laurie Coker

North Carolina Consumer Advocacy, Networking, and Support Organization

Citizen self-advocacy and empowerment - State-wide from Winston-Salem

"One of the secrets of life is to make stepping stones out of stumbling blocks." J. Penn

Martha Brock