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House | June 1, 2016 | Chamber | House Health Session

Full MP3 Audio File

[BLANK_AUDIO] I wanted to welcome everybody to the meeting of the Health Committee and I wanna also start by recognizing our sergeant at arms staff, and I would like the sergeant at arms to raise their hands when I call on them. Warren Hawkins, David Platin, back in the back Malachi Macola yep and And Doug Aries, and we thank you for your service in here. On the pages we've got Austin Florez, Austin would you stand up please and I gave him an advance warning, I want them to each tell a little bit about themselves. He was recommended by representative Dollar and he's [INAUDIBLE] >> [INAUDIBLE] >> Okay, very good. And um Mathew Owens, representative Holly recommended him, and he's from Blake/g county. So Mathew [INAUDIBLE] >> Very good and Thomas Grab/g, the speaker of the house recommended Recommended him and he's from Pitkin. >> [INAUDIBLE] >> Very good, okay. Let's welcome both if you would. Okay now today as you As you all know we're gonna be talking about the application to the feds for Medicaid and DHHS is gonna present it and we've got plenty of time for you to ask some questions, so we'd like for them to get through the whole A whole presentation I had asked the secretary and he thought it will flow better if we just go through the whole presentation and you save your questions. So, with that Mr. Secretary, have had it >> Thank you so much Representative Pendleton. I very much appreciate the time of everyone in this room today, I think it really reflects really the spirit of collaboration that's been present Throughout the development of this 1115 waver and so we are very thankful for this opportunity to share with you, kinda where we've arrived. As a way of working through this material, we'll present an overview of the milestone and vision, how to liaise with session law, we went through a very intensive Public comment process, we'll describe to you the feedback that we received and how we acted on that public feedback. We'll discuss the changes that have been made between March 1st when we shared a draft version of this waver with the version that we have today which we believe is ready for submission to CMS. Cray Sutton will be leading us through a discussion on the finances and how they'll operate as a part of this waver. We'll briefly review proposed legislative changes that have all ready been actually submitted to the House into the Senate and then discuss next steps. Just by way of review, back in September, you all passed, as part of session law, there was a section on Medicaid reform, reforming our Medicaid system. That system that touches one out of every five North Carolinian's. And just as a reminder, over half of the births in the State of North Carolina or to mothers who receive medicaid services so it has many many important touch points as a healthcare program. That session law was signed into law by Governor McCory in September of 2015, and as outlined in session law, Medicaid reform will transform North Carolina's medicaid and North Carolina health choice programs through system wide innovation and will be describing the components of that system wide changes this part of the presentation. Importantly, it required us to hit several milestones. And we've hit each one of those, so in March one by March one to deliver a draft of the report of the waiver. Then to go into a process of public comment period, to share our vision for a transformation center, that would accelerate if you will these perform changes once launched,

and then to actually submit our waiver by today June 1 to see a master support these reform goals. We're gonna be using various terms today, just a descriptor of these terms. First there are two types of waivers are gonna be submitting what's called an 1115 waiver. the reason why the term waiver is used, it's an application that says we'd like to waive requirements that the federal government currently has in place so that we can test, we can experiment with new approaches, with our medicaid program. And so in section 1115 waiver provides dates and avenue to test and implement coverage approaches that do not meet federal program rules by virtue of the way that laws constructed and were funding a course. Many of you realize that two thirds of the funding for medicate actually comes through the federal government.One third Third is provided at the state level. As a result of that, the federal government has a say as part of this process.Secretary Burwell so the secretary for Health and Human services at a federal level has the authority to waive some of this requirements to allow us to use these monies more flexibly to test new approaches And once again in theory and in practice section 1115 waivers are there really to be research and demonstration projects. And we believe that we've met that threshold.So the time frame that we followed once again in March we submitted a draft a waiver and report to the joint legislative oversight committee on medicate.We then went into an extended public common period. By law we were only required to have two public hearings and a relatively short public common period We actually had an extended public common period that we'll describe in short order. We then proposed language back in April for legislative changes that we felt were needed to support our application. On May 1,we submitted a report description of what North Carolina health transformation center would look like in session law that was described as an innovation center ans so that was the basis for this some Health transformation center. And today June 1st, we are prepared to submit our 1115 waver CMS as a result of really broad scope of hard work by many North Carolinians across the State. What's true throughout this process and what will be true, following this process is that we will continue to listen and engage with stakeholders, it's what made us success and it's what will continue to make us successful going forward. At the very highest level are our vision builds on a foundation of innovation, grounded in the following four components. One is ensuring how we will deliver better health in our communities, second how we'll deliver a better experience of care to the patient, how we'll contain per capital cost and then how we'll improve providing engagement and support. Now our waiver initiative outlines a series of demonstration projects, and there are a total of five of them, and I'll seek a very high level to describe each of them. The first one that we have is to build a system of accountability for outcomes. So what do those words mean? What they essentially mean is that we will move from pain providers meaning physicians, healthcare systems for the volume of services, the number of services that they provide, and we'll move to paying for improved patient outcomes so as opposed to paying for inputs, we're gonna be paying for results, outputs. Today in our system we really focus on physical health, we're gonna move from Fact meaning from physical health to what we call person centered health communities. In person centered health communities, we're gonna be clinically integrating both behavioral health and physical health. And we're gonna be giving flexibility with that is well say for example what we say supporting providers through engagements and innovations, what we'll be doing is that we'll be providing practice supports, we'll be investing in workforce development meaning getting the right types of physicians in rural, in underserved areas of our stat, we'll be providing With access to information through our health information exchange so that they'll be able to see in real time the current clinical

information on that patient that's in front of them and these are capabilities that today don't exist in the state of North Carolina. When we talk about connecting Children and families in the child welfare system to better health today what happens when there's a family situation that is very unstable or unsafe for the child, let's say for example that the parents both have substance abuse disorders and we feel like we need to take that child out of that Out of that family situation for their own protection. Well today what happens is once we take the child out of that family situation the parents lose access to medicaid. Well if you think about it, once we do that the likelihood of reuniting that family in the future is Pretty low because those parents are getting the help that they need to get healed. Well as part of this demonstration project we plan on continuing to offer medic aid services to those families that are in recovery so that one day it's more likely that their children who are temporarily in foster care will be reunited with them. And when we talk about implementing capitation and care transformation through payment alignment, today once again we pay on a per service bases, a fee for service bases and today the state absorbs the entire prior risk behind that, we are moving from that system to a capitated system where in fact providers meaning health systems provider like entities positions, are sharing the risk with the state and we're all focused together on improved outcomes and cost containment. So the combination of of shared responsibility, flexible payments, demonstration projects are really what we're shooting for so that we can continue this history of innovation in our state. Now we won't have time to review each of the elements of session law that you all included that relate to medicaid reform in the requirements that we require to hit, but over the next two pages what we do is that we take each section of that aspect of session law that related to medicaid reform and we confirm, did we did we meet there, did we check that off, did we address that in the spirit and letter in which you laid it out and the answer is yes on each one of those and so we can assure you that we responded to the requirements of session law through this process in this waiver and and or that it will be reflected in the contracting approach which will be there if you were part of the implementation steps following the waiver, and so once again for each one of those we covered it and it will be reflected in the contract or it was reflected in the joint legislative of oversight committee report of March first and so know that you've got a team which was working in partnership with the community in North Carolina that was highly respectful of all the requirements that were laid out in session law. Now one of the things we are most proud of is the way that this waiver was developed. We worked in partnership with over 50 associations in the development of this waiver and through our public hearing process, roughly 1600 citizens Since participated in our public hearing process. We were only required to have two public hearings, in fact we had 12 public hearings across the state. From as far West as Silver which for those of you who don't know where Silver is, it's actually West of Ashville through as far North and East as Elizabeth city and as far South as Wilmington and I gotta tell you people who came to those came prepared, they were thoughtful, they were serious, they were advocating strongly for beliefs they held quite firmly and it was a beautiful expression if you will of democracy in process and we'll discuss in a minute or two how that influenced the content of our waiver. In total in our public comment process meaning both those public hearings as well as comments that were submitted through our portal in DHHS We [INAUDIBLE] we had over 750 commentors/g, over 1700 comments

and we read and cataloged every single one of those and we have a very detailed report that captures those and a summary of it will be included as our part of 1115 waiver that we'll be submitting to the federal government. At a high level, some of the themes were the following, a number of beneficiaries attended these hearings and they discussed really they wanted to make sure, one of their common themes was that they wanted to ensure that their voice would be heard in the future of Medicaid, the way that they would be included, the provider-led entities would be listening to them, there would be mechanisms for gaining their input on what's working well and what' not working well and the fashion that they believe exists today. They also wanted to ensure adequate patient access to providers. Today in our state relative to other states we have very high patient access. There are numbers that people estimate as high as 90% of physicians accept medicaid patients into their practices at some level of access. That's very unusual in a positive way relative to other states. There was very strong representation by providers, the concerns that providers expressed is that with working with so many new plans mean there could be upwards towards five or more plans that they would now have to deal with from dealing with justice state with Medicaid to now working with five or more plans that they were concerned about the potential for increased administrative burden and this is a concern for them because today they already view that they are many requirements associate with Medicaid and their concern that each of those plans would have different administrative requirements Everything ranging from different report cards if you will for quality metrics through the way that they would be credential through the way that they would submit their claims etc, and they felt like this would negatively impact access and quality if in fact they are not constraints around Provider led-entities or to say more positively if we didn't put in place approaches to minimize this administrative burdens. Third, there was strong representation by people advocating for Medicaid expansion. In every single public hearing, the people who came to talk about expansion, were largely waited towards those supporting expansion. They supported it from a number of different perspectives, for some people, it's a social justice issue, for some people, it's just civil right issue, for other people they describe it in terms of economic issue, It's clear that there were many people supporting Medicaid expansion. There were also some people coming to caution us against Medicaid expansion, examples of families that cautioned against Medicaid expansion, are those families with family members with IDD or traumatic Brain injury or we can lay on other Medicaid services. And the reason why it's today, we have an eight to ten year waiting list, fro people for innovations slots and other slots, and they are saying that the amount of money that will take for the government for the State to expand Medicaid, is the same amount of money that it will take to clear the waiting list that some of those people have waited for five, seven years who are in very desperate circumstances and therefore they are very concerned that expansion, would come ahead of those innovations slots and those other slots. And so we had perspectives, both of those perspectives were offered. At this public hearings. In terms of case/g and cure management, there is strong strong support for CCMC specifically but more broadly case and cure management support to ensure continuation of case/g management provider support. and analytics. In terms of supplemental payments they were requests made for either safety net providers and or subcafetations in other words ways of protecting are public health departments, are EMS departments or providing funding. In for various entities and in terms of behavioral Health, if you willed the vision for integrating behavioral Health with physical health, we'll strongly support it. The more focus that we can bring to behavioral health, not only through this reform, but also through investments that are reflected in the governors budget. Were highly supported wherever we went across the state. So in these public hearings we have had people that are associated

with our department that were both taking notes literally typing up each comment. And were recording all of the comments. In addition for all the comments that we received through the internet and we received anywhere form short comments through multi-paged letters we cataloged those as well with a very detailed compilation of virtually every. Every single one of those comments. In certain cases we combined as well that were on common themes and what you see over the next two pages I've already given you the high level review so I won't go through details on the next two pages. But what we've done is we've categorized them by more detailed themes. And then we've discussed on the right side how we changed the draft waiver to reflect those comments, so if you pick up, if you have a copy of the March 1, draft report for the waiver you cannot compare it to the waiver that we're submitting today you need to get the copy of the waiver that we're submitting today. In format it's different, in content well, it's largely similar, I would say probably 95% similar, 5% of it is different and that 5% matters to the people who have participated in the public comment process. And so what we've done is we've discussed by public common theme what we've changed to what we haven't changed. The only one of these that I will mention is the one that will have of course, among the strongest interests is, what did you do on medicaid expansion? And as all of know in this room, enrollment is within within the purview of the legislature. Legally it belongs to the legislature. We are reflecting what was laid out in session law as part of medicaid reform. Therefore expansion is not part of this waiver. We'll go through Highly we believe that we stay consistent with, if you will, where legislative law is right now, and what we've done is, with these other areas, we've reflected how, if you will, how we addressed a number of the concerns that were raised and we believe that we were highly responsive to most of the concerns that were raised. As I indicated before, did we respond to literally every need and interest of all stakeholders? No we did not because we live within the same budgetary operational, regulatory, legal, and financial constraints that all institutions do but we believe that we've been highly responsive to really the vast majority of comments that were made throughout the public comment process. So other waiver changes, we did modify the format somewhat to improve flow and readability based on comments that we made, we've also had additional internal reviews and discussions, we felt like there were certain areas that needed to be clarified. On May 6th medicaid issued an updated managed care rule inclusion and we've sought to reflect requirements of that into the waiver. We've also added the numbers. So in the March version, we didn't have any numbers in that draft version of a report. Now we added the finance and budget neutrality section, independencies in there as well and I'll now turn it over to tray to talk through that. >> Thank you Secretary [UNKNOWN] good morning my name is Tray Centum, I'm CFO for the division of medical systems. So what I wanna do is really just touch on two topics and if I could The clicker, is there one? >> Yep >> Two topics that I'm gonna touch on this morning are on supplemental payments in the budget neurally calculations. What I'll say about the supplemental payments, is that the theme or the pattern of working closely with our stakeholders certainly held through for our supplemental payments work that include Included working closely with our partners in division of public health. I had by weekly calls with the hospital association and a lot of CFOs. So really the intent was to carefully craft a strategy to ensure that this financial resources continue to explore to the State of North Carolina. And what we're really talking about, when we talk about supplemental payment, And this approximately $2 billion and payments that go to safety net providers, local health department, our EMS providers etc. and so is really important that we crafted a strategy that both work for them and with new rules that CMS provides and so let me give you a specific example.

Under managed care, a payment to a provider is supposed to be all inclusive of the care that's delivered as part of that capitation rate. So one of our challenges was for example was court settlements, and so when a provider provides care to an individual, if those payments for that care to that individual don't fully cover the Cost of care, then what we do is at the backend we do what's called a cost settlement. And so we carefully designed a strategy that would cover all those and ensure at least the same level of funding to those respective providers. Um and so they really, given the transition it prevents several risks um So what we've done is we've structured around four payment strategies. One is uncompensated care pools, um there's very large dollars that will continue to remain in those pools and that will be subject to negotiations with CMS. The next one is delivery system reform incentive payment and what these are is in addition to a capitation payment or regular monthly payment for an individual, what we'd do is then deliver effectively an incentive payment or a bump payment on top of that. If providers met certain thresholds or made certain investments in infrastructure systems, training of certain individuals etc. The next one was direct payments to so to provide as I mentioned court settlements and in very certain circumstances we are allowed to continue to make those for example federal equal filed health centers, rural house centers, we've also asked for exceptions for some of our other special mission or safety net providers and we're hoping that through negotiations with CMS we will be able to continue to make those payments And then the last strategy is directive payments through the base rates and this is around valued base payments and other things so similar to the bump payments for this rib it would mechanically happen the same way but for different measures. Lastly I just wanna mention that there are a lot of dollars that come both throughout just proportionate share hospital payments for our dish payments as well as our graduate medical education payments, those are both gonna remain outside of the waiver and will be eligible to remain exactly the way that they have been handled in the past so that's a little bit of good news, in terms of budget neutrality you'll see a whole section of this on the waiver and what this effectively is saying to the federal government is that when we go to reform or this waiver that we are submitting to you will not cost more than what you would have incurred without this waiver and so what it is, is it's providing the federal government in assurance that we're not gonna spend more money than we otherwise otherwise would have, really this is a basis for the discussion or the negotiation with CMS, this isn't a reflection of what we actually believe will happen in our state budget, the goal here is to advance the goals of the waiver in the most advantageous fashion that we can and again this is only a basis for negotiation with CMS and not a reflection of what our true budget will necessarily be, but I will say is that based on those preliminary incidents we're looking at about $400 million savings over the course of the waiver, beginning in an 18 and running out of the next five years, the way that the waiver is currently designed nearly all those savings will be reinvested in the system gain through tings like rural training for our health workforce, the incentive payments that I already mentioned In some other investments. The final budget estimates and savings as well as the reinvestment amounts are of course subject to the CMS as well as the office of management and budget, we will work with them over the summer and into the fall I suspect at least to finalize these numbers. Again what I will say is that I worked with the team and I think we've positioned ourselves in the most advantageous fashion as we possibly can. And so from here it will be negotiation with CMS/g. With that I'll turn it back over to Secretary [UNKNOWN] [BLANK_AUDIO] >> So, in April we submitted a series of requests to legislatures of changes to support the implementation of Medicaid reform, we would ask as those are acted up on That you make those some of them retroactive to June 1, and we've communicated with our Chairs which of those we believe need to be retroactive today but [INAUDIBLE] to say there are series of changes that have been included as part of our prior communications

with the legislature. Now in terms of near term next steps we have a press conference today at 11 AM where the governor will be signing our cover letter that will go along with our submission that will be formally sensing to CMS later this afternoon so we will hit the June 1 date as outlined in session law. This will be an 1115 demonstration waiver. As Tray indicated, this will then begin the process of discussions and negotiations with CMS. We expect those to take roughly 18 months so this won't be a short process, this will be a fairly long process, further complicated by presidential election and what will continue to be the constant throughout this process and going forward we'll continue to revise and improve upon this plan, we'll continue to engage stakeholders as closely a we have today and we're very proud of the partnership that we've developed and capability that we've built as a state. Thank you so much. >> Thank you Mr. Secretary, questions or comments? [BLANK_AUDIO] All right? >> [INAUDIBLE] >> Go ahead. >> Thank you Mr. Chairman, just two questions actually. When you spoke about to, since there are gonna be new systems that we're gonna have to deal with as providers, in trying to prevent different bureaucracies from each one, how are you going to try to streamline that? >> Well, the ideas that we've discussed, some of which have been reflected at a very high level in the waiver. So for example, physicians have asked that there become and reporting requirements for each of the plans, the matrix that we would use would be common, we're proposing that we're about to go into a process that will lead with the input of others that will actually define what are those matrix that should be used broadly across the system, second is is that they've asked for uniform credential in requirements so there would be one process where a physician would get credential for all plans, physicians have asked for a common claim submission process so as opposed to submitting claims in different ways with different formats to different plans, through different systems with different passwords they've asked for consideration that there be one if you will unified pipe that they will submit their claims to that would then go out to the appropriate plan. These are examples of things that have been requested and discussed and some at a certain level had been reflected in the waiver. >> Follow up. >> Follow up, so with those request will you now require companies who say they want to come in and do business in the state of North Carolina will you require them to do that before they are allowed to do business? >> So as you know representative Murphy we will be developing, contract development will be a very important part of this, settle layout really the requirements that provider let entities and commercial plans will be required to follow if they are interested and we'll be going to an extended art. Our P process etc so that contract will layout exactly what is required, so you'll hear us increasingly using terms like value base purchasing, so what are the outcomes that we're driving for, how we define those outcomes, what will be the provider protections, what will be the patients protections etc, we will all be part of that process and so as we complete it yes we'll have those requirements laid out, which of those specifically will be requirements plus not specifically be requirements, let's have It hasn't been settled yet but that's the vision that we are driving towards. The good news is that with NC Fast/g I will remind everybody that we have a capability in North Carolina that exist in no other state in the nation which is that we already have a system that's capable of multi payer therefore the ability to accept claims from a number of payers and off to folks, so we believe we have capabilities that could address many of these provider concerns. >> Thank you. Just one other follow up question. >> I'll allow it. >> When we are talking about capitated payments that always works great in a world where you have primary care folks. Have you guys delved into how were gonna deal with specialized payments Is under the capitation system? Or that's going to be part that has to be worked out yet? >> So at a very high level, those capitated payments will be risk adjusted. So they will be adjusted for aquity/g. There're well known process that are able to do that. Trey, go ahead. >> I just heard that right now it's envisage that for special That

would be backed inside of that and then when we do our rate setting they would obviously [INAUDIBLE AUDIO] set the rates and actually sound rates but it will be contemplative of a specialty services and so the manage care company would effectively receive a payment that was intended cover all those now would represent the. Is seen historically in terms of the needs of those individuals for specialty services. We haven't gotten through exactly how that's gonna to be done yet, but some more work to do there. [BLANK_AUDIO] >> Representative Dodge. >> [BLANK_AUDIO] Thank you Mr. Mr. Chairman, Mr. Secretary thank you. Thank you for the report. I am encouraged by what I'm hearing. Just one question, this may be for Trey, you can defer if you would like. 16 talks about supplemental payments and the last bullet says, funding for the dish/g programs and GME will continue outside the waiver? And that slide talks about Holding harmless as much as we can and they call settlements and things like that I think it’s what it's maybe implying. And in the next page talks about 400 million projected at savings. Are we confident that we can meet or at least come close to that 400 million? Million without adversely affecting these supplemental payments or payments of the GME [INAUDIBLE] >> The answer is yes, but I'll try to give you the support for it. >> So the $400 million savings is roughly what we've seen other states do and based on the data that was available and so really what that is suggesting is that by moving To capitation and through economies of scale and other measures that they manage current to these can bring other pre-paid health plans can bring, we're looking at about one to one and a half percent savings on over fee for service and so that's really the wedge that you're seeing right between with and without waiver, $400 million is the amount of money Amount of money that we are actually spending is very small savings and again we are hoping that we are able to reinvest that into other incentive payments, so not only we [INAUDIBLE] we are actually investing more money into the system, that's the goal. That consist really with the plus of CMS which is [INAUDIBLE] that's the [INAUDIBLE]. >> Thank you. >> Representative [INAUDIBLE]. >> Thank you Mr. Chairman, I have a comment and maybe a couple of questions related to that, and this is somewhat a followup to your comments with Representative Murphy, and talking about the desire of providers for a standardization of processes what I think is the terminology you've used, the concern that that raises with me is that it if we are going to get the benefits of competition that we can't prevent the people who are managing the care from doing things that are different from what others are doing so that some will prosper and set the pace, become the role models and that others may have to change the way they do things to keep up and so I hope in this process of standardization that we're not going to lurch back into requiring that so many things be done in the same way in order to accommodate provide natural desires, you know you'd like to have one system system, you may rather not have 14 insurance companies filing claims with you on different forms so that's a concern which I pressed the department fully understands and can try to accommodate appropriately without giving up the competitive process that we're trying to get to. >> Absolutely Representative Blackwell, so what we're talking about, to use your terms, standardizing are the back office capabilities. Across industries back office administrative is not considered the strategic or innovative side where companies compete and drive value against each other. So we're talking about harmonizing those aspects of administrative burdens, that's not how companies are gonna [INAUDIBLE] so I wouldn't describe, I'd use very different words than you have used, I'd not say that what we're talking about here is a process of standardization, we're talking about a process of innovation. Now there are certain elements that we want to standardize to get them behind us so that the market can focus all of it's time and attention on the innovative side of it. But hopefully through the way that we've described the way that we're gonna be clinically integrating behavioural health, and physical health, the way that we're gonna be using payments to really drive reformed changes, the way that we'll be shifting the location of care, all those elements that we've talked about,

that's really what innovation occurs, that's where reform occurs. Really not on the administrative burden side so I assure you we're in line both in terms of market competitive, believing in the markets and wanting them to really compete with each other to drive innovation. [BLANK_AUDIO] This is the 5%, what we're talking about is the 5% standardizing 5%, 95% is market driven and innovative. >> Second question. >> Follow up. >> Yeah.>> Well it's not on the precise thing but on the overall copy. When we talk about sharing cost, in moving to the reform, my concept was that we were trying to shift the ongoing risk more to the providers, pay them for positive outcomes so that we didn't have a situation that the providers came to the general assembly each year they are asking us to appropriate additional bonus to simply pay them. I think that I understood, to avoid negative impacts on providers as we get started on this reform, we're gonna have some supplemental pay much to try to keep them not lower than maybe where they've been but at what point are we protected from the traditional risk and the providers all coming back to us and saying, you just don't giving us enough under this capitated system even with the supplemental payments. What about this new waver is going to To prevent that circumstance from reoccurring >> So let me talk through in terms of time frame and what we could expect. So, first, there does need to be a transition from current state to future state okay? And therefore, what we've outlined in our plan, is retaining, if you will some of current state and having that shift to more risk based in the future, so there is a transition time. Now, what we also envision, is that the initial contracts with this provider lead entities, and commercial plans will be four and five year contracts. Why are we doing that? To both encourage them to make investments to really focus on truly on reforms and to gain the benefit of that investment as well, for them to make the benefit of that investment as well because we really do envision capitation as we described with our payments holding the growth on cost fairly dramatically, okay? So that's how we do it. Now, in terms of how can we prevent it, that's a term that's used in absolute, right? And I don't know if there is anything that we can do in absolute but what we're doing is we're also trying to increase the market dynamics, so by having three competitors at a statewide level up to three at a statewide level and then say two each region. We prevent ourselves from a situation from let's say one commercial plan says, hey listen, Like United is doing, across the US right now. United is literally walking away from states and saying sorry, we're not making enough money in that state. To prevent ourselves from being vulnerable to one particular plan. I did as an example. It could have been any plan I could have named. By having a multiplicity of those we have the ability to say to that plan, so sorry to see you leave. Good news is we still have four and that's more than enough for us. So using those market dynamics will help Help us. Longer term contracts will help us. The way that we utilize incentive payments to get people moving in the right direction. Giving them time to gain the benefit. Those are mechanisms that we can use to minimize the likelihood of that happening. But we can't prevent it. [BLANK_AUDIO] Representative [INAUDIBLE] >> Thank you. I've got a couple of questions. Who's gonna be responsible for the oversight of the managed care organizations. And then who's gonna be responsible for oversight of the providers and will all of the managed care companies that are over the state, will they be I guess judging and looking at the same standard? So all the providers will be kind of judged and based on The same policy. And what will be the results of any kind of, if they are not performing to the level. But first of all who's gonna be responsible for the oversight. >> So there will be two, if you will, organizations that will be responsible for oversight and team help me if I say something wrong here.

Both the commissioner of insurance and the department of health and human services would be involved in the over sight of those commercial plans and provider lead entities with different types of responsibilities. So for example commercial plans and provider lead entities will be held to the same standard by the commissioner of insurance. They'll need to be able to have the capital in place to absorb the financial risk in the same way. Many elements of what's called chapter 58 will apply to both provider lead entities as well as. Commercial plans they'll be held to the same standard. Okay will be network adequacy standards extra so they will be treated the same. Similarly the department of human services will have a very important role in the contracting process. Developing the metrics the measurements the incentive plan if you will. To drive behavior extra. So we'll be influencing through at a high level the department of health and human services will be influencing through the contract. The commissioner of insurance will be doing it through statute or whatever it's called. What their big big books are based on. Add something . This Dave Richards from DHHS. So one thing I would add is that CMS federal government will hold DHHS accountable for how the plans operate and the entire medicaid program. because we are the single state agency for CMS and so the requirement we will continue in that role. Follow up. >> Follow up >> Will the legislature still be and I'm thinking it will still be responsible for eligibility and for the optional services. Will we still make those decisions if necessary for a change or whatever. >> Certainly for enrollment, and then there are services outside of those provided by these provider led entities and commercial plans that in fact the legislature will be responsible for as well. >> [INAUDIBLE] to just add the legislation had moved as a disposition, the general assembly attained the right for eligibility category so that is not a DHHS decision on those. >> Any other question? >> No, I'm good. >> All right, Representative Insko. >> Thank you Mr. Chairman, I have I think three questions and first of all I'm curious about where legislators should go when constituents call and say that we have some problems because there will be multiple plans dealing with right now called DHHS, it says fairly simple to get a constituent problems dealt with. How will that change? Will we be expected to go to each of these plans directly or with there be a constituency service plan, or person available? >> [INAUDIBLE] It also depends on what types of issue it will be Representative Insko. As you know there are a broad range of concerns that you all receive, sometimes they're related to care in adult care home facilities or other types of institution whether it's run by the state or run privately but here I assume you're talking about a care related to the provision of medicaid services by a PLE, or commercial plan. >> [INAUDIBLE] with DHHS Representative Insko we will operationalize that plan as we're moving forward but I think from he DHHS perspective, we obviously are very responsive to members of general assembly, we know this is a joint effort so we will have a process by which if you have concerns that you'll be able to get directly to DHHS, and we will address it with plans. >> Follow up. One of the ongoing concerns I have is about quality and how How to measure that and I think I've raised this question a little bit before about will we be using just population data or will we be able to identify outlier patients who really are falling off The radar, they're not getting appropriate services. Will the department be able to identify the- >> Couple of ways of responding to your question. The first is at a high level from process standpoint. We're about to go into over the next three months a process where the department will be working with stakeholders to in fact define what will be those health outcomes That will track those quality measures that we'll put in place. And what is the right set at both multiple levels in our system for that.

So that will be developed. There's already been work that's been done that will be progressed over the next three months. And the health information exchange Allows providers at all levels to be able to do something both at an individual level, as well as at a population level. In practice Representative Insko this already occurs today. There are if you will high utilizers of the system whether it's at an EMS level, whether it's at an emergency room level [INAUDIBLE] etcetera are already tracked and provided with services in care management service system minimize if you will the burden for them individually as well as to the health care system. >> A follow up on that. >> Follow up. >> So currently as I understand it we have [UNKNOWN] doing care coordination Care management so will their be a uniform process across all this different planes or will each plan have it's own individual care coordination process so that they might be actually different from plan to plan. >> So part of the waiver is premised on having. have if you will a built a personal care home model, as well as a person's centered health community so those concepts that you're describing will continue to be in place even terms of how it works once there are multiple plans in place. >> Certainly the individual plans we'll expect them to continue these efforts and make sure that we have a clear understanding of how they're gonna manage that. As the secretary mentioned we have in the waiver that we're building upon those concepts that we've had in North Carolina and we don't wanna see a reduction. We also might expect that CMS is gonna make sure as we're moving forward with these effort, that we will have to explain to them To them how it works, but in light of I think the question around, how do we expect plans to innovate this is a place where we're gonna see plans do innovations so we don't wanna hold them so accountable to one model that we don't see the innovation that would expect from them so I think what the outcomes would be the thing they would be judged on. >> Follow up follow up. >> And this would be a question I think also for Dave Richards. On page four of this handout under the request for clarification, the third bullet down says that it was clarified that the waiver will change delivery but not coverage of the state plan and community so the waiver will change for both of those programs or is this an out of date statement. >> [INAUDIBLE] with DHSS again. [INAUDIBLE] there are so just maybe if you give me the liberty to talk about, I know there's a lot of concern that people have expressed about the Cap C program as it currently exists. Last week we issued a statement about how stopping the process with CMS to approve that waiver so that we can take time to work with stakeholders to make sure that we're addressing the needs needs that they have expressed. But that is a separate and apart from this waiver. When this waiver come into place the Cap C will roll into the waiver but our expectation is that it will be based upon a design that will work with stakeholders to get to this point. So I guess the message that we wanna make sure that those Recipients of Cap C here is that this submission today does not impact that waiver at this point and that our effort is to make sure that we get it right now so that when we transition into manage care that we have the best program possible for those constituents. >> Thank you. >> Any Any follow up? Chairman Lambert. >> I have a two part question, but first Secretary Brajer I wanna thank you and your staff for just a yeoman's amount of work to get us to this point, I would say that there probably was a fair amount of healthy skepticism we would never meet this deadline and you've done it quite well. And also to thank Thank the many providers and insurance companies who are probably in the audience thank you for working with the secretary and his staff as well. This has taken a lot of work to get us to this point and we're actually pleased with what I've heard and seen. Two part question first, as you scan the country and as you Seen other states who've done Medicaid reform and you've learned some things from them in terms of their waiver process as it's worked through CMS have you learned anything that would help us here in North Carolina and those negotiations and the second part of that is as we change utilization patterns across North Carolina we know there's regularization of the maturing/g for example and those patients move to alternative settings. What are you gonna do to help providers and others who are changing

patterns and are impacted by their patterns. Have you given any thought to that at this point? Well taking your second question first, the Governor's task force on mental health and substance use disorders produced a very detailed plan that has now been published that responds to the questions that we are asked by legislatures virtually everyday, you know what can we do to respond to the Overcrowding issue in emergency rooms and I have legislators literally say directly to me face to face tell me what I can do to help this state deal with its opiate crisis and those recommendations are detailed in a very detailed plan, Brian Perkins would be delighted to share it with absolutely every legislator in terms of what we can start doing right now in those priorities by line item are reflected in the Governor's budget under the Governor's task force for mental health and substance use. I would ask that you give the strongest consideration to funding it so that we can really address those problems in a systematic manner until we do so we won't be able to address make those changes that you've discussed. Now with regards to learning from other states that have gone through the medicaid, if you will, reform process, certainly we have learned from them through several forums First Dave Richard is part of a medicaid leadership institute. Where he is meeting actually with those medicaid directors that have gone through that process as well as gained access to them. As you all know while call it 90 -95% of the work on this waver has been done by the people of North Carolina. The association providers, public comments our teams legislator that have come together.We have supplemented that with 5% of expertise has come through of consultants that we've had experience either help people from CMS part of those, part of those consulting firms and or. Or that have interact supported other states so they are guiding us also in terms of process content, things that should be included excluded at this time. And and so we have brought access to it and as Tray indicated also we've a lot of input on the financials. To assure that they'll meet the standards required by CMS. Also position the state appropriately. So the answer is yes we've availed ourselves and we will continue to do so through this very long process, 18 month process. >> All right next we'll call on. On our committee nurse Representative Adcock. >. Thank you Mr. chairman. I have several questions I would like to add my thanks to I'm sure everybody in the room for the amount of work that's gone into this particularly the public comment, period and all those summary of those point were really helpful I think. My first question's on page 17 is a little kind of a follow up to what representative Dobson asked in the fourth bullet on the slide 17 I will let you get their. Talks about the significant portion of the savings sales in senate payments. Do we have idea current target for that and if so how was that set. so currently, the way that I've [INAUDIBLE] on the exact number in front of me, but I can certainly get that to you. The way that it worked is we basically took the, what we likely would spend without reform and then what we intended to spend with reform and nearly all the dollars between those two trend lines were reinvested so as I talk about the over $400 million, the exact savings calculations is roughly $438 million. I think in balance of that 438 there's about 10 or so million dollars left over after those reinvestments. And so we're also talking about a reinvestment of over $400 million. >> Okay call that quite a significant investment, that's great. My next question are really- >> Follow up. >> Thank you Mr. Chair. My next questions are really processed questions, there is several times it's been discussed or stated negotiations within there so my question is, what's the process for that? The CMS approve the waiver in it's entirety, what points are negotiated, at which points do you come back to the legislature if it's kind of outside what we've asked to have happened? >> So the process is that DHHS as a team we will negotiate directly with CMS and that will be a very long process at times, it will be quite, there won't be much discussion. At other times there will be high level of discussion, and in terms of we know what our boundaries are in terms of this actual waiver. But for examples, each of us will have goals coming into that discussion.

It's clear based on their history in other states, CMS's goals will be medicaid expansion, that's a very important goal for CMS. If that became part of our discussion, obviously that's something that's outside of DHHS's ability to negotiate. We would need to have direct interaction with the legislature, voice from the legislature on what are discussion or negotiating boundaries. Today expansion is not part of our vision or part of this waiver. There is actually a question in the waiver, will expansion be part of it and we say no. So that's how we begin this discussion. Where that ends up, I don't know. Other boundaries of discussion negotiation are things that might very well fall within the purview of DHHS, the way that we'll structure those payments over time. The way that the mix between how much is secure and guaranteed in terms of these payment flows versus the portion at risk. That's something that we would address as a department. >> Follow up. >> Follow up. >> So the bottom line is we can't send any more money than we've set. We have to set a certain amount of money and those kinds of thing. anything in between there between expansion and that is what's negotiable, is that what you're saying? Because I don't think any these is- >> No I'm not linking expansion to these numbers. >> I'm not either. >> Okay great so what we have is trade-described/g what we have for the finances in that waiver are essentially too lines. One that says CMS, if we don't reform our system, this is the rate at which we expect our healthcare costs. our medicaid costs to grow in the state. If you approve the waiver, we expect costs to grow at a lower rate that delta over time is roughly $400 million. That's what that is. Now CMS may choose or not choose to negotiate with us over if that amount savings is sufficient, should we be deriving even greater savings over that time. That could be a point of negotiation, expansion could be a point of negotiation, the range of experiments, it maybe that there maybe a Maybe a demonstration project that CMS is really excited about for example, they're very excited about the concept of providal/g entities. That's of great interest to them. We expect that they will be strongly interested in what we wanna do with the child welfare system. While we didn't talk about it today, we're looking at allowing tribes to have a pre-paid health Health plan. I think they’ll be very interested in that. So those are examples of things that they may want to add to. Say, hey, listen would you please include this. So there are various, it is a broad discussion essentially on everything in that application is up for negotiation. >> One last follow up? >> Follow up. >> Thank you So thinking about that, are there pre-determined check-ins with the legislature or does that come up as necessary. How do we find out where we are in the process? Give me some idea of that. >> Right. So there is a joint legislative oversight committee on Medicaid and NHC choice. Naturally I would think formally of interacting with that joint legislative oversight committee. Informally it's my style to have frequent touch points with DHHS chairs on both the senate as well as in the house. We meet informally to discuss, brainstorm, to with counsel and advice that helps us ultimately do things together. And so those are the touch points, without a doubt the governor's are very important part of this process. I speak to the governor frequently. He gives me counsel as well, so I think between the governor's input, the legislature's input, the team's input, our consultants' input we'll be talking throughout this process. >> Thank you very much. >> Thank you. >> Okay. >> Representative [INAUDIBLE] Chairman [INAUDIBLE] >> Thank you Mr. Chairman and I would certainly add my strong appreciation for The tremendous efforts of Ms. Secretary, yourself, the leadership team and the entire department, I didn't think you'd be able to have a waiver ready by June 1st, but you've done a tremendous job and really appreciate all of the input that you've taken from around the State and care that you have given to this process. I just keep it quick questions, cuz Ms. Secretary I know you've got an 11 o'clock, but if you could just comment a little bit about how a patient will ultimately choose their primary care physicians in this process when it becomes fully

implemented. I assume chairman currently has a relationship with a primary care physician. Let's say for example in the CCNC they have a medical home that they'll be able to retain that. At least I think that's the way I was reading it, but these new patients come on board. How will those be handled? And how will they be routed as it were or able to choose a primary care physician to have their medical home? >> Thank you sir. For the first message that it will be the choice of the person. This is a person centered plan, so it will be their choice to choose the doctor that they want to go to. Now, there are people who do not make that choice. When that happens we go into a process we call auto enrollment. But the first step in auto enrollment say, where was that person going? Which doctor were they going to before? And if they were going to a specific doctor we autoenrol them to the doctor that they were already going to with the assumption that that's their preferred physician. Now, in a case where a person has not made a choice, or they're a brand new eligible person, and we're assigning them to someone, then we'll be assigning them basically to create balance in the system. We wanna keep it fair between provider led entities These and commercial plans in a given area. Over time,over time we will increasingly direct patients to those plans that have the positive health outcomes for patients.So it's a process that will shift over time and increasingly towards those that generate the strongest outcomes Follow up. >> Follow up, thank you, let me follow up on that for just a second. It's a question I wasn't gonna ask but it's fair to say there will be metrics, that those metrics will be public and that there will be specific potentially financial consequences If quality metrics are not achieved. >> Absolutely, because what we envision, Representative Dollar, is that those incentive payments may start as low as if you will 1% of that capitation, they build over time to about 4% which sounds small but in fact you're getting very Very close to the profit margins that some of these plans have to their true internal profit and so when we get to 4% you know incentive payments that will be very meaningful to them in terms of risk of losing that by not hitting specific outcomes and those outcomes will be published as well. >> Just one One final follow up. >> Follow up. >> Yes, Mr. Chairman, thank you Mr. Chairman. I wanna make sure that I am clear with one another area. We of course working with prospective [INAUDIBLE] passing here and of course a lot of folks define that differently Depending on who's doing the defining, and I think also depending on what the real population is. And I think sometimes people mistake that there are so many different types of populations out there that we're attempting to serve and that's one of the great complications patients policy makers have had for years. But anyway with that said, what do you see the role of the LME MCOs in the future for example, currently the statute talks about them definitely being in place for at least four years but beyond that. So I'll share with you what what my views are but once again this is a broader discussion that will settle as a state. I believe that people with serious and persistent mental illness illness, substance use disorders as well as the IDD population have very specific needs that as you know are commingled between physical health, behavioral health as well as disorders that might be in cooperated as part of that as well, I believe that those patients benefit from having providers who not only understand their needs, their special needs in a very focused way, but in fact are delighted when they walk through the door. Based on the background that I come from, which is a strategy and business background, I would naturally first think of bringing

and maintaining focus for that population. Meaning that that population would be continue to be served by people who know them, look forward to them and understand them and that they feel comfortable in the presence of To be able to do that and recognizing that so much of, if you will, the issues or struggles that they live with are co-mingled. I believe that it's very important for LMEMCOs/g to first consolidate so that they will have the financial and clinical scale to be able to to be able to transition into this future of Medicaid reform, to successfully land in that future and then to have, if you will, strategically clinical options. And whether they're able to carry out those options depends a lot on whether Where they're at and where we're at as a state. Those options could range from continuing in the types of service that they add, they do today, which is essentially to contract and oversee the provision of largely behavioral health substance use etcetera services or we may approach a whole person's centered view for those those patients as well. One potential outcome, I'm not saying it's the only one, is for in fact LME/MCOs to progress toward becoming whole persons special needs plans as well, that's a strategic possibility. Another one is that they stay in their current role, another one obviously is that those roles are taken over by others, but I can't help having spent time with the population, you and others know them much better than I do. The level of uniqueness of their needs and the importance of relationships and the consistency of relationship is so important in this population that I believe that I personally, and I've been very open with this, have a bias towards supporting the current LME/MCOs system as imperfect as it is to strengthen it so that it can continue to focus on this population set, at the same time, If it does not make progress, if LME/MCOs do not gain clinical or financial scale, if they do not take seriously their role as public stewards of public money, if they don't demonstrate that they really can focus on these specific populations and serve them with innovation and focus Because not all of them do an equally good job, then the natural consequence will be that we won't hit popularly funded LME/MCOs, but I'm hopeful that there will be a pathway that leads to continued focus on this special needs population and to en-cooperate whole persons in our care, that would be my desire [BLANK_AUDIO] Representative Lucas. >> Thank you Mr. Chair. [INAUDIBLE] Given the fact that approximately half of our state State verdicts/g often medicate mothers. Have we moved along far enough with reform that we could predict a trend? I know that the economy may have attributed to a lot of that. But the economy has improved in recent years Can we make a trend or is it too early to do that as it relates to reform as to whether this trend's gonna be up or down. >> Well you've asked a very very thoughtful question Representative Lucas. And I'll just share with you my initial thoughts but I'd love to follow up and just sit down with you over lunch and have Have a broader discussion and get to know you. I don't believe that Medicaid in it's current format addresses that trend. And what I mean by that is that there are mothers in Medicaid are there There is a result of their economic status and their in often times their family status. And therefore there will be other initiatives in the state that will have access to, I think will impact that percentage more than [INAUDIBLE] as a program will. So for example under the governor's leadership we're beginning to evaluate policies and programs called 2-Gen, it's looking at poverty under a multi-generational lens as opposed to just interacting with a family where they're at only right now or situation to look at more More broadly to addressing those if you will social determinants

of health. I was recently in Utah and on this very program of two generational poverty which will address this. And a point that the governor of Utah made is that he said that his Plan is that what we can do to best address this percentage that you've described is that if we do the following things, if children ultimately do the following things in order. Which is they get an education, they get a job, they get married, and then they have children. But to do it in that order. And if you do that that will that will impact this percentage more than anything else. That's not the way life always works out and therefore we need to think about ways that we can wrap around these families and these individuals to minimize the likelihood of it. >> Okay, next will be Rep Avila. >> Thank you Mr. Chair Mr.Chairman I see in your third bullet point on the pages up on the screen currently that over five years, you're gonna be driving out 400 million in savings.That is not going to be an ongoing thing.You're gonna as you get better and efficient and cut out all the waste and Abuse and things of that nature. You're gonna reach a stable point at sometime where will begin to have to fund any types of expansion or new program or thing.Has there been a run out to any idea when that will happen? or some kind of idea long Term or we're gonna run a few years and then do something new, do we have any idea? >> [INAUDIBLE] >> Thank you for the question representative [UNKNOWN] So the numbers that you're seeing there actually begun in 2018 and then run out through 2022 and so I mean frankly I'm not comfortable going out more than three years. The case of the waver we have to go as far I do think that the point that you're making is absolutely correct and that is that, as we move to reform the goal is to drive certain savings out of the system than where we have seen progress [UNKNOWN] Other things. At this point it's envisage during the five years demonstration period that those dollars will then be reinvested after which point we're gonna have a new normal if you will and so the availability of reimbursement etc won't necessarily be there but the hope is that we will have a new trend and the trend that's different than what we would have experienced without reform, I'm not sure that directly answers your question but I'm sure that provides a little bit of context Okay thank you. >> We have another people on the list under the [INAUDIBLE] health [INAUDIBLE] services. We're gonna have their staff, now you don't have to come back. But on June 8th the On the six four [INAUDIBLE] You can't then you [INAUDIBLE] come and answer the question. >> Mr. Chairman, your microphone is not working. Okay on June 8th 10 O'clock Six Four we're inviting DHHS [UNKNOWN] if the secretary can't come and some of the staff can we'll get your questions answered because. We got to be out of this room in four minutes. >> Senator Pate this is certainly president making but thank you very much for the opportunity to speak in this August setting here, I would like to offer my thanks to the the entire department of health and human services, for what I consider to be a job well done, I think there was a lot of misgiving and a lot of doubts as to whether the department will be able to push and shove us along to this place but they had done and I'm so grateful for them just going back a little bit in our history secretary [INAUDIBLE] came on board just as the department and the governors administration was beginning to come to grips with the fact that North Carolina was going to have medicaid reform. There were several Doubts among several people and some of those doubts are still out there and we will have to address them as time goes on. There are and were doubts from providers, from the members of legislature, from consumers, and also from the national figures who are looking over our shoulder as we have undertaken this trend setting opportunity to do something about Medicaid. So I offer my Kudos especially to the secretary and to his staff, and I see all of you sitting over there and it's good to see all of you.

Thank you so much for your expertise. Especially though, I'd like to shout out Rep Lambeth, Sen Hise and Rep Dollar for the fine work of leadership that they Have done within our legislature, and within our various committees. I think we are on the cusp of something that the rest of the nation will be looking at. And five years from now, or ten years from now we will all sit down and have a drink together and think about how much fun it was to start off On this journey. And we'll count to see how many of us have gray hair left at that time. Thank you very much members of this committee for your constant guidance as we have attempted to do something that I think is going to be a great thing for our state, and most importantly, for the Medicaid patient in time to come. Thank you Mr. Chair. >> And Senator Pate we expect in five years when we have that drink for you to [INAUDIBLE] the liquor. >> Okay. >> [LAUGH] >> All right. And I'd like for everybody in here to give a big hand to the secretary and all these people [APPLAUSE] >> We're adjourned. [BLANK_AUDIO] >> Good job [INAUDIBLE] >> Thank you. >> It went pretty good. >> That wasn't so bad. [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO]