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Joint | March 25, 2015 | Committee Room | Joint Health & Human Services Committee

Full MP3 Audio File

We call a joint legislative meeting to order. First thing on the agenda, the senate pages Kethi Philips sponsored by Senator Highs, page Peterson. When you raise your hands whenever I call you. Thank you. Also Grace Ward, Senator Bafoe[sp?], and Wellington, Jin Davies. On the half side is Morgan Hirten, Sergeant Hamington Hurge, Representative Howard, Christian Jinkins, representative Halley, and Nia Jinkin Representative Halley. Our Sergeant at arms, Young Bay Jim Morgan from the senate side, Steve from Craig and Larry [xx] Dowe have any comments from the chairs or If not the overview of medicaid provider pretty which much Mr. Steve Owens. Well Mr. Chair and members of the committee, what I will start with before I jump into the presentation follow up from last meeting there's a lot of confusion and a lot of questions about the three percent right reduction as is related to physicians. I think you have a copy of the one-page document that tries to lay out one kind of one of the basic facts in what actions that department has taken the options at this point, now this is very briefly, in terms again of the short savings plan, it was proven in the 2014 in budget included two pieces, one was that 3% withholders was called but it was actually a reduction in rates, secondly there was a positions provided, the department was going to develop a series of initiatives or actions that will allow providers to recover a potion of that, that 3% reduction or all the 3% reduction through sharing in the serving the state will allow was through either more efficient care better outcomes and lower cost. The department again communicated a number of times is about this, also they submitted a statement amendment to effect the 3% reduction. That statement was approved by CMS, in June of 2014, which included the physician adoption as part of the providers who will be affected. They implemented the reduction for all providers effective on January first of 14, during State [xx] 14 with the exception of providers so all assuming with exception physicians all providers did receive their reduction on rates which set for physicians. On March second of 2015 the department implemented 3% reduction from from all physician services during this time is important to remember that primary care physicians were exempted until January 15, because they formal care, so at this point what we have is a reduction that was approved in the budget by the adjourned assembly effective on the 14th, for everybody except for primary here physicians which was effective on January 15 that was approved by CMS and everybody was implementing it with the exception of physicians which will implement on January 15, at this point actually there are four options that we have [xx] going forward. The first one is we just basically keep the right reduction in place as it has been implemented and then develop a plan to get back and recover those moneys from the physicians back to January 14 for non-primary care physicians and January 15 for primary care physicians. The second option is to prospectively keep that right reduction in place, and not go back and recover those funds. If we don't recover the funds are two potential alternatives. The first one is if we

do nothing else, we will actually owe the federal share of any monies that we had pulled down as a result of paying a higher rate, from January 14th for non-primary care, and from January 15th for primary care we would have that federal share back to CMS, now, we're still trying to get how much that would actually be. The other alternative is to follow a another state fund amendment to change that effective date which the department believes on widely the CMS will approve that retroactive if you will repeal that reduction. The third option is to repeal that reduction prospectively and still get back and get the money back that we've paid above the CMS approved rates back to January. Again we've got a CMS repayment, we need a payment plan or some methodology to pay than ban. The fourth option is to repeal the reduction and then to not get back and get it, which is the same issues. If we don't get back and recover those monies then we would have the federal share back. Also in consideration is if we do repeal the right reduction, we've already implemented this three percent for all of the other providers, so, how does this affect that? So, this is kind of a summary of we would other federal share back to CMS so, we're still trying to get how much that would actually be. The other alternative is to follow another state fund amendment to change that effective date which the department believes on widely the CMS will approve that retroactive, if you will repeal that reduction. The third option is to repeal that reduction prospectively and still get back and get the money back that we've paid above the CMS approved rates back to January. Again we've got a CMS repayment. We need a payment or some methodology to pay than ban. The fourth option is to appeal the reduction and then to not get back and get it which is the same issues, excuse me, if we don't get back and recover those monies, then we would rather have a federal share back, also one in consideration is if we do repeal the right reduction. We've already implemented this three percent  for all of the other providers. So, how does this affect that? So, this is kind of a summary of for help soon which we have actual numbers that would tell us, if we did this prospectively, in terms of repeal but reimburse what would have been charged already. Do we any idea what those numbers would be we did a total repeal. The thing that get's me concerned is [xx] a lot from these providers. Small providers are most powered and not part of large groups there are only hurting with the rates that [xx] to recover from these medicate patients to start to live I think it'd be good to know what the state is going to be on the hook for. Mr. Chairman I'll like to devote to the department for that information. Good morning my name is Chris [xx] the director of finance for division medical assistance, right now the current estimate for total dollars is between $16 and 18 million. Proposition, the average impact will be in between $900 and 1200, we are finalising that announcement in just by the end of the week. follow up.  Follow up. So, and I guess that is the total amount that we need to be re-reimbursed if we refill the prospectively if that is what am understanding. The between $16-18 million represent the whole dollar impact. so effectively the impact to the state will be around $6 million. I don't know if that answers your question. Are you able to follow up Mr. Kelly[sp?]? Follow up. Are you able to hand [xx] I gather that we got basically the $16 18 million impact. So is the state to I guess somehow find a way to cover that 16, 18 million. And we were to refill it going forward with that be that will be of impact upon our budget, is that what you are saying to me? That's correct. Thank you. Just a, just come in, I know this is difficult. any business to get back in and take 3% off top and refund it, I guess [xx] interest to make easy do you know where we will get the 16 or 18 million dollars out of the budget off top here. H [xx] I can honestly say I do not know at the same time I would think that we're looking at 13 billion it's a pretty

big number to start with more that we're looking at in terms of when the state money is coming in the state dealing with this, in terms of where we are I would think we can probably look deeply and find out and of course we already do have a reserve has been established has not been dealt into, and it looks like we're really ahead of where we need to be in terms of where medicaid are [xx] today. Again March 31 is around the corner so we'll know what the third quarter numbers are but I will think there will be sufficient wiggle room based upon reserves and best upon projects expenditure nad here today to check rights that's the number ought to be workable within the grant scheme and things but to tell you that I they can identify it, I will have to say no at this time I guess now that a lot of his aren't hurting and I hate to see us impact them any more than we already have.  Just one follow up. Follow up. Mr. Owen just to be clear that we will only have further notice and have to wait six months from CMS for them to approve the rate reduction I guess. The department says they're not likely to do that so what in 16, 18 million dollars federal stadium pact what kind of time we're going to take the money and the if we're going to turn around and give it back, there's still some time lapse that's going to be required there so we don't have any immediate fix for it. Do we? I think this answers your question, the immediate impact is, one, if we don't go back and recover the money, the federal share back, which is somewhere between 9 and $12 million based on the department's information as the federal shear. If we prospectively also eliminate the 3% reduction, we're talking about the $12 million dollar effect in terms of total spending which would obviously will need to be into the re base into the next year and so forth   Senator Heist?   Thank you, just to cover please to kind of just point out on this and I think the concept of why and I guess, rhetorical question, why would CMS reprove our rate increase when we just made the argument to CMS of why you need a rate reduction of three percent and may have approved that to turn around and immediately go back and say wait, now you need to increase that, sorry our whole arguments were wrong and false it's not something I see as likely. I think it's also important to note that, and I say this on news, the providers were communicated with in December of 2013, January of 2014, September, October, and November of 2014 to notify them at the rate reduction and to notify them that they're receiving a payment 3% higher than what we have requested for CMS no one was unaware of this that it was becoming back it's a requirement of our notification and to suddenly come back and say, we didn't see this coming or that is inconsistent with the communications we've put out from the department. Senator [xx]   Thank you Mr. Chair, are there any tax implications for the providers Mr. Owen? Again assuming that most providers physicians are cash based payers to the extent that they'll receive the cash that will be tax for income, if it's taken by that will reduce our tax for income and the [xx] actually taken by and I apologize for being late and you may have carried this issue already but one of the questions I've heard about this is when was the providers aware that there would be no a cost savings programme. no shooting in that [xx]. The only 2014-15 budget that was removed from the legislator to provide that they shared savings component. So it wasn't you a full year after the programmers put into place. The rate reduction went into place in January the 14 the budget I believe was approved in June, the session removed would have been about 6 months after the [xx] programme was implemented.

center, and that. Thank you chairman. Could you explain to me, I am still having problems understanding this, how does it cut in are we in passionate rates, causing increase in federal payment that we would have to pay back. Basically the reason there is a repayment North Carolina continues to pay the harrow range, the range above what senate has approved and [xx] on that higher payment so when we go back and reduce that in [xx] or we recover that or don't that we would have that federal share back. Thank you very much [xx] complete your report, that was before. so so we do have all fully implemented so that we won't have any more pay backs, I mean, are we set up to go so that nobody is going to be affected from motivation most perfect Thank you Ok what we talk about talk about hospital payment I wish all of this were significant. The two of this provider groups represent almost 50% of the total payment that Medicaid makes to providers on an annual basis or at least through February of this year. You also should have a copy of the document that's more of a narrative that summarizes through February of this year. This summarizes both from I talked about today, or what I've talked about last week. Briefly, just again, from the confectial prospective, in what this is the chart that shows how overall spending has changed every time from Medicaid between both the federal receipts as well as the state appropriation again trying to put in context to importance of understanding payment methodologies, again today as last week, what I'm not going to talk about is all these payments adequate. Are these payments equitable, much about how these payments have evolved or developed, I'm not going to do a lot in terms of really spending analysis. What I really want to do is provide you information, educational information negotiation about how we pay medicare providers for services they render. And again while there are many factors control spending what we're talking about today is the price component. LEMCS, the LEMCS contract is position medical assistants for a rare behavioural health services on a capitate basis incapacitated means we're paying them a monthly fee for all the services regardless of how much is used or how little is used, what they actually pay for those services to stay negotiates to a single monthly ride based on age cobalt's, for what it will pay for services to LEMCS. When Israelites were originally published they actually took into consideration a number of things they first look at historical standing so all the crime status that the department had went in to the development rates. The crime stand was a just like treaming factors, what they are actually restored in term of trends and term of spending. As you remember then a lot of this time we had community support so they had to go adjustments for that as an example. They also anticipate a rebuilt in factors for each of the rates around what they expected to see from utilization management so that we had basically a right bill, a right range got on historical spending adjusted for trans and then adjusted for the actual believe we should realize with utilization management. To those rights there was added 2% added on, that 2% add on was really to provide funding for the risk reserves that each of the LEMCS is required to have. I believe that 2% add on

was supposed to continue until the attain 15% of the annual capitation in the risk reserve. services that the [xx] contracts cover that previously [xx] for service included hospital services, inpatient hospital mental health services emergency services, outpatient services if they were deemed to be [xx] to mental health or behavioral health issue. Physician non-physician services services and RCFMR services. So these is the basic set of services this contract were to cover. CMS and the rights to actually develop are in range and that's what CMS actually approves. They approve a range of rates that are the department then negotiates with then for the LEMCL I believe they actually negotiated at the bottom of those ranges in terms of what we actually pay. One of the significant exclusions in one of the factors I think that everybody's wrestled with is a calculation of rates did not include drugs. So the mental health drugs continue to be paid on a fee-for-service by DMA as those claims are submitted. So that factor is not included in the right negotiation, the right factor that was developed. if you look at future updates to this per member per month of this decapitated rights they will be actually well determined, the process will be very similar to has been the past and actually is we use historical and counter claims which [xx] required to submit to DMA on a monthly basis as data to be used as part of the process for submitting rates using historical data on the plus this side obviously has those utilization management the facts, the cost, the claims, the amounts of services delivered beyond what the original acts or expectations were the state will realize the benefit of that in future [xx] the downside of that is again the state could potentially reclaim all those games in terms of it's rate, which then leaves the audience here in a position for maintaining financial reliability, or profitability is to continue to cut services and potentially cutting these services so in terms of considering rates this is one of the important factors that needs to go into the process and really the different process I think what State has experienced in terms of previous rates I think it's not a fact that we had to considered in the past. Hospitals. Hospitals are the most complicated payment methodology of all the provider groups in medicare page four. they have a variety of payments they receive. They receive claims payments, they receive settlement payments based on cost, they have uncompensated care payments through the dish or the [xx] they have supplemental payments for their lab of course which is called equity under the gap plan they have upper payment limit payments through that same gap plan. So they have a number of payments that you have to consider particularly when you're trying to figure out what's the impact of changes and these are all moving parts that are unrelated so as you make changes to one of these factors. You have to really process set through the entire system to understand how it affects hospitals. Those payments refunded by three basic sources obviously federal receipts is a big proportion as it is without medicaid services, state appropriations is obviously a significant portion but this one also includes provider funding. Hospitals providing assessment or [xx] transfer to fund portions of those variety of payments they actually receive. So payments begun the crimes payment and the cost settlements really begun to include the provider payments as part of the source of funding. Those portions of payment that are dependant on assessments also the state receives a benefit of 28.85% potential on any amounts that we assess to fund those payments. When you put everything together all the payments that hospitals receive on the outpatient basis they actually receive 100% of cost in terms of payments to them in terms of inpatient they receive the equivalent of medic care rights which is significantly higher than medic aid rights. But again I go back to what's really important to understand how each of these pieces are funding we were trying to understand how these affect individual hospitals or hospitals as an industry this is a very, this

is a complex try, what I'm trying to do is to give you a one page away to look at the pieces and parts work together, who pays for it and how they're funded. Want to start with example, the size of the bars of the boxes are not proportional, are not in relation in terms of what [xx] intended to give if you cut the picture of all the pieces and pads. So I will give a way to read this trial, if we tap straight on the top line, the sudden has and again in around community involvement and governance and so you got a group [xx] that category. So if you look at the first the very top line so adorable what I really talk about what that's is the what is called the dish specific limit . We're restricted and haves a total payment to hospitals to pay them more than the total cost of their Medic Aid services and their uninsured services. So that's a limit today the state pays 100% of that payment. The public hospitals also receive a supplemental payment through the MRI plan or the dish plan which what's the difference between that claims [xx] and cost. There's public hospitals, intergovernmental transfer to fund the state share of that payment additionally the public hospitals can receive a non-compensated care payment through the dish plan and finally for inpatient services they receive upper payment limit, supplemental payment which is the difference between the cost of their services for medic aid patients only here would have paid them for those services, that payment they find through an assessment plus the 28.85% so what's I'm trying to do is go through each one of this types of inpatient and outpatient hospital groups because there are groups within hospitals the public, the nonpublic, there's the UNC in the Carolina or have a specific or different payment methodology for some pieces of this, there are [xx] access hospitals so these are all, each of these hospital groups has a payment methodology that you have to look at. One point I might also want to make because of the nonpublic hospitals which are all the other hospitals within the state, [xx] access hospitals that supplemental payment they is made to public hospital to through the dish plan which gives him 100% of cost because of the way that is funded through the sort of about public expenditure which I can scrub as well they only got a portion of their cost so they actually have to use the hospital gap plan to get them to 100% of cost. I'm a lot through these each one individual you have to make a little more understandable than just trying to use as one charge So let's talk about outpatient. When I'm talking about outpatient really I'm talking about those diagnosed and treatment services that individuals receive from a hospital where not stay is required additionally I'm talking about emergency room services, so both outpatient and emergency room are paid under methodology I'm going to talk about nex. so the first that the hospital from Medicaid as a claims payment. That claims payment is an attempt to equate to 70% of their estimated cost based on the bill charges. And the department uses [xx] costs reports to figure out what that percentage write down should be. In other words if they bill a $100 to the department the department is applying a percentage to get it down to what we estimate or what the department estimates that 70% of that cost would be. That payment is funded a 100% by the state. The second in those payments are made to the hospitals weekly as claims are submitted, so every week when they submit a claim the department uses the bill charges, applies a percentage and makes the payment. The second payment they receive is an annual payment and that is a settlement payment. Now this can be a payment to the provider or can be a payment back from the provider to the state, but the settlement does is reconcile between

all those estimated payments and what the actually cost was based on the filed cost report so, with cases cause we make that payment upto 7% of cost again that is funded 100% by the state. So this basic payment for services we now get under to those supplemental side the additional payment in hospital perse . The time on the out patient basis is the EMORAN payment Medicaid Reimbursement Initiative this is so with public hospitals so you and I had amount of transfer that's made from this facilities to the state, your non public hospitals are non PPH hospitals, you see they portion on their cause through spend on methodology. That payment is funded, through what's called as public expenditures these are expenditures within certain hospitals that CMS allows us to care as the state share toward these payments so in fact we're using expenditures and facilities to support the state share of these payments to the non public hospitals. The last payment that they received on outpatient basis is equity balance. And this only relates to non public hospitals because if you remember the public hospitals received 100% of the different between their claims cost and cost, with claims payments at 100% of cost through the MRI payment for the non public since they've got a portion this makes up the difference between what they're got from claims, what they got as MRI enhance payment and 100% of the cost. These hospitals fund these through an assessment, a payment to the state plus 28.85% both of these payments are supposed to happen quarterly, based on when CMS approves at this point and when they approve the gap plan and a variety of other reasons this doesn't necessarily happen on a quarterly basis I believe the bulkier of the payments actually happen in the last quarter of the year rather routinely on courtly basis from what I understand, so that's an outpatient. Inpatient service, these are services or payments that are related to services that are provided if someone goes and hospital has to stay overnight were admitted to the hospitals in inpatient. Again we have claims weekly as plans are submitted there are 740 diagnostic related groups which are called DRGs that we use to reflect the services that are provided on an inpatient hospital service or basis. Each of the DRGs relates to the average complexity of services this is a more of relative value scale for inpatient services. We then take each of those DRGs that has a relative weight we apply the hospital's base rate to calculate a payment. And that's the basic claims now there's additional payments that a provider can receive if the patients stay exceeds the specified standards cost are outside specified some abbreviations they can actually receive what's called an hour payment that's not a routine. So we go to basic claims. The only two hospitals that receive a settlement payment or UNC invite medical [xx]. Those two hospitals settled to 100% of their cost and that is funded 100% by the state. They are the only two hospitals inpatient facilities that do receive a unlike that the outpatient where the cost is a basis, we're settled to 70% now UNC invited to [xx] the other thing i public hospitals receiving one public difference

between hospitals 100% the state share of this equity payment is funded through the hospitals assessment that is 28.85% [xx] UPL payment, all hospitals receive what medicare what it pays through supplemental payment. All hospitals funds to assessment past 28.85%, going to say all hospitals, all hospitals but UNC. UNC has its own supplemental, their own UPL plan which they fund using the government will transfer. The blue coming at the bottom at it is important, because again if you at all this pieces still comes down to the state will be limited in what we can pay, for both inpatient and outpatient services based on this specific limit, what you gain is 100% of the medicaid cost, plus 100% of the uncompensated cure cost. So, those are the two that go into this formula as well in terms of overall payments. Well I've tried to do with the presentation is really how I, we focus and have [xx] focused a lot on how much we pay and who we pay rather than what we're paying for or what outcomes we're actually paying to achieve. Consisting of what we've talked about in the last few weeks is what one question I think is important is can this current payment methodology or this current payment systems support a shift to an outcomes-based program or a program focused on paying for outcomes happen to fast for questions Senator Hash. Thank Mr. Chairman, one of the questions these questions have is, I think we hear a lot of conversations about uncompensated care that occurs at the hospital and visions that insurance coming in What, In general, what is the state's cost back to pay for hospitals when we go through these settlements and they now have limits that include the uncompensated care. How much of that are the hospitals actually receiving payment for? I don't have, what I can do is just get you a percentage because what ultimately happens is we make all these payments we then check it against how much the cost for uncompensated care plus medicaid is to make sure we haven't exceeded that but in terms of your specific answer, I don't have that information with me that I can get that for you unless the department has something they would like to add to that. [ss] Steve, your last slide there I think really focuses on what we've been looking at, in terms of focusing on how much is paid and who is paid [xx] in outcomes. Now if we were to reformulate the way we do this to look more now is how we see that and how we go about if we have you're moving towards a whole personal approach but how would you even establish a baseline and then accomplish at least get in compared of data that will help you move to a different system, since right now it's very is pretty much the worse on that. I think what you're raising the actual question about what form and how do we change the medicaid and identify what is the most effective I think there's a whole science and a whole lot of effort that we need to put around. How do we develop what it is we want to pay for? What are the results you want to archieve and then create had a payment system that supports the achieving that. One that in actively will actually move us toward achieving the results that we will pay for the short answer, there's a lot of work

that has to happen before we can actually get to that once we decide we [xx] form of system Are you familiar with of models that are utilized today elsewhere that is really what help us here in North Carolina exactly you look out convictional and how long it will take what option have I don't think [xx] thank you I think when I heard about [xx] was isolated critical component [xx] Thank you. Representative [xx]. Thank you Mr. Chairman. I'm intrigued by puzzles and mazes and I have to admit even this is beyond my capability, what I would like to ask is for me is a sketch against this would be used of a patient who comes in, let's say a cardiac case for x number of dollars, and illustrate for me how that billing process works from the hospital's standpoint throughout every machination of moving money to upper payment and agitates wherever, so that in the end I have the amount of money that the hospital gets paid for that treatment. I can pull that together. Thank you. Senator Wales. Thank you Mr. Chair, I believe three questions that should be yes or no kinds of answers, if you bare with me. If you're in a hospital that is subject to a 100% reimbursement for your cost. Do those cost include overhead lights, building cost, things like that. Is that all cost or is that just direct cost? The quick answer is yes. Allowable costs include basically all the cost of operations, including administration facilities, plant supplies etc. Are property taxes in the case of full profit hospitals allowable costs? It is. So to the extent the State of North Carolina allows local governments to tax hospitals. Do we offer a transfer of approximately 70% of those cost from the federal government to the local governments. Those council be included in the course report for those similar meaning, we use CMS for medicare con-standing methodology so those cause will be include, the FED will be paying like in 65%of that cost that we would pay for with settlement would actually paid for by the FED as well Senator Telker without you what I see in this 100% of cost, who get to set 100% of cost on my own 100% of cost is unique to every hospital. Every hospital files a cost report which includes put on that all the direct cost of care, indirect, and overhead cost of care, and then you go through as soon as four minutes to calculate the actual cost. Okay. Hold it I thought there was a case, OK, the other thing when you talked about a method of payment for the Elamy[sp?] MCEO, which is a manage care organization, pretty much do we have how could the budget predict ability there. We have, we maintain the risk for enrollment, we have shifted the risk for realization in that scenario so, in that how much will we pay per person, for our cure, and the the MCEO is responsible for paying, either getting the networks together, the rights that they pay and

realization of those individual receipts so we have shifted that down to MMC. Follow, follow do we have budget to what is that enrollment, in terms of the number of people we can predict what we will spend based on the number are. Representative Belin, yes. Ye sir, yes Mr. Chairman I've got about three questions, you're good. I'm far away is there any effort from the state department of HHS to help hospitals across the state to whatever we need to do and it's a hard process, to quit, so people quit to use an emergency department as a primary care. position because giving an example I had studied from a major hospital. If we found that anything was the same tax service was about 1100% more and emergency department in the years of agent care, and cancelled letters was about $115 outside the hospital, inside the hospital, it was about 1200 bucks. There're no specific center of payments if you were to provide a decent center for the use of the instruments. They were part of some of the activities that CC and sequence has responded to perform is to try to encourage or minimize the use of it, but there're no specific direct payments around less use of emergency room Well, is there anything been done to work in just to assist hospitals in working as a team with the state to try and overcome this problem. Mr chairman I would like to refer to the department on that. Mr chairman Representative Hamilton had him show with the HHS certainly is force the way medicaid payments go, I do not know, but I would defer to try if there's anything goin to consider payments, but there're other initiatives particularly in the behavior of health room that we have in place there more recommended in the government budget this year to help with crisis diversion and to also assist individual hospitals in certain cases when there are problem in the notice rooms. There are things we are doing in trying to help to follow up to find more information follow up OK, what about is anything that is done if a hospital or surgical group because if they make a mistake so they saw surgical tools inside the body. They have to go back in and get them out of so that the surgical tools have a hard, we allow medicaid to pay for that, to collect that In 2012 I believe it was we implemented the same policy around negligence which was intended to try to capture those readmissions that provided to them so that should never have happened that we don't medicate knowing we are paying for so, do you what is it and what is empirical hospital hospital about is critical access, representative Insco Thank you Mr. Chairman, I'm on page, slide seven, we, the positive side is the state can realize the benefit of utilization improvement downside is it, if the state recapture all we gains in you have maybe reduction in rate and services, I think one of my concern has to do with the presentation we heard by the Pew group, talked about evidence based services, we have the crisis,

I think the crisis standard are good example of evidence based services that we just don't do, case management is an evidence based practice that we dropped, and so I think my concern has to do with how would we go, how do we make sure that we keeping [xx] so I'm not doing this very well. Prevention and early intervention of both evidence based fee, for preventions, you put money into prevent things, you save a lot of money. Early interventions. So how do we when we loose? If we put into place evidence based practices, how do we know when we're not doing them anymore? Is there a way to track that? So that you have the [xx] for example. If they lose money, if their rates are cut so much that they are losing money, and what they're doing is peeling off parts of their practice, their evidence based services, I don't think we'll ever know about that. We won't have that information.  I think there's a number of issues   [xx] clearly the first one, the comment I make here on this side is one of the things I think we need to be constantly vigilant about as we set rates, and particularly as we setting rates in an environment where were are trying to produce the outcomes or were capitating[sp] or whatever that we we really think about what it is were paying for and I think were are going to talk about some of those the need and Susan's presentation about the the cost of evaluation that we have to do is different than just looking at the claims we pay and paying investment claims submitted so I have an example, if I think maybe, so UNC hospitals we, that hospital has to take anybody who comes so I've discovered that they have a clinic for people who have some kind of payment to make and which will be medicaid or private sector insurance of medicare, tricare and they have a pay. They have a different clinic for patients who don't have any payment at all, they are charity care basically. The charity care, I don't know how to put this. This is just one, this maybe just one service somewhere and I'm going to follow up want to find out but the non paying clinics that the patients can't make an appointment, I had a time thy can make an appointment for the next day of service which means we have lot of people who never get this service at all but they just fall off the grade, nobody knows about them, they just not get the service, so I think we ahve people I don't know how you track those kind of thing to find out whether we are providing the service that people nee, we are paying for it, we are the saving money that we are not paying for the service that they need Senator Burger  Thank you Mr. Chair, my question really relate to that very last word about outcome based measures, you mentioned Mr. Allan that that we take heuristic approach and awful a lot of collection of data so here is my question, is the department currently and this is a major shift in our philosophy in the state is the department currently developing a business plan to start capturing that data so that it would be available for analysis not just on a piece mail basis, but on a broad sector because this is a major shift and I would imagine if never been such a plan before Senator Barringer, Mr. Chairman but actually leaves in to the next presentation when we are talking about that very issue Then I will hold that question, thank you Mr. Chairman I have one more question we have  senator Hise, OK thank you Thank you Mr. Chairman, one question I want maybe I'm feeling a little interested in, an Senator Wale's question kind of led me to this direction, and I know it's an issue we've talked about for a few years now now but we have a large exceptional in sales tax in the state for hospitals, they're operating system, if they were being required to pay sales tax would that cause simply be added to their cost of operation and their settlements and as in

effect we would receive those payments would be paid by the state funds and by the federal government and not an actual loss to the hospital? [xx] You're correct, if costs were part of, if tax were part of the cost they incurred to purchase supplies as an example that cost will be included in the supply cost so it will flow through the cost report, and the cost report would identify that medicates portion of that tax if you will as an allowable cost. [xx] Thank you, is there a way to measure the participation rate of providers in our Medicaid program, not just for primary providers but for specials too, is there a way to measure that? My question would be if we could do that 'd like to know whether or not there's maintaining our high level of participation because when we cut rates so much or we dont fund the services that people may think they need to provide, our providers drop out and so I think that would be one way for us to get information that would be helpful about whether we're actually keeping up our end of the bargain. Can you do that for specialty services as well as primary care provider. Like in every provider has to be credential in roles separately so we identify who presending I can't answer, what the department has access to how many special concesus across the state how they can do to harmonize it. Our participation rate for the last five years I think that will be helpful.   Mr. Han, Representative actually we have calls for inpatient services and only 70% on outpatient services? I can ask for the change to 70% put them at the same position as all hospitals in this State. All hospitals receive 70% of course and then are settled up to 70% in terms of why you receive ECs or ECs receives 100% of the impention cost, I would divert that department for that [xx] Rodger Barns was a division medical assistant so the bidant hospital was known as Pip county was a his primary teaching facility of Brody School of Medicine and many years ago it was decided that the teaching schools would be [xx] 100 percent for both in patient and out patient and move some appropriation changes. We've settles vibrant at a 100% on in patient, and its most recent change in legislation last summer, well that outpatient changes to 70%.  Sander Wales. Thank you Mr chair, senator Heises[sp?] question raised another question in my mind I wanted to ask thus be sure understand the big picture. We have a large group of non profit on hospitals that are not paying sales tax or property tax, we have full profit hospitals that are paying both, and every time a non profit hospital acquires a full profit hospital, which happens to be under discussion in my district right now, that tax goes away at the local level, that tax goes away at state level and everytime a non-profit hospital acquires a position practice that has prior full profit that property tax goes away, that sales tax goes away. I'm I clear on that? Yes. Thank you Mr. Owen, Miss Jacobs, please take Mr chairman, Mr committee you have an additional handout where during all these presentations you heard several educational presentations. Steve has just wrapped up on how we pay medicate providers and unless we're going to give you some options about what to

do with this information is kind of pointless. So we thought it was time to just layout some draft options for you, some of which you will not like, and but we want to get your input on that, and see if you have committee direction or staff on which ones you will be interested in staff proceedings with the key question of course as you talked about this session moving from paying to investing is, does the committee want to invest in evidence based programs that will result in  their outcomes and improving the well-being of children, of course, the answer is yes and you'd not have agreed to let us do these presentations. The question is how will you do that. so we have identified two major strategies you can consider for the 15, 17 per annum, and one involves a business strategy, senator Barringer just asked that question, we'll talk about that just in a minute. The other involves a policy strategy. The business strategy would be, how do you implement a strategy that will result in a better based budget. So this deliberations would be different discussions maybe if you started from a different point. [xx] questions about what do we do about continuous evaluation in these programs. We have to start out with a better based project. We need the continual evaluation and capacity within health and human services to both develop an inventory as discussed by the [xx] center and to continue monitor the success of these programs, and so we believe that the capacity needs to be developed and a separate entity within HHS not part of their budget office in office or divisions specifically focused on planning and evaluation of HHS programs. So that will be one of the components and it looks like it was enforced on performance. Another option for implementing the business strategy would be to improve contract development and administration. We've had meeting in our oversite committee meeting and appropriations about the fact that even if you implement a special provision that designs a program that is intended to have good outcome, if the contract itself is not designed in a way that the state isn't going to get position, then the program will not successful, we fell like the contracts are critical for health human services and we feel like that another area where you need to be having that capacity within the Agency we would consider for the budget, we would offer for your consideration with the extending budget accounting and forecasting capacity with the NHHS. This is across the department not within divisions. All these would be at a very high level within NHHS, and not within your agency, so across divisions whether within NHHS and not within individual agency, so not withing medicaid, not withing public health but at a higher level. So, we believe that if this capacity was increased in NHHS, you would have a better base budget to start with with the general assembly, and can potentially make your job easier when trying to figure out which program works and which programs do not work. This will require funding, potential direction that you can give staff will be either to work with the department of evaluation division to design, a plan for you to consider and you can force for more impact from the department. I do know that they are working on a reorganization plan right now, I don't know how much of that include, increasing capacity or how much of it just reorganization but that is the first strategy that we're proposing for the committee to consider. The second part focuses on what we've been talking most about this session which is focusing on kids and how to improve both outcomes for healthier children. Now, next week we will have recommendations from both the school of public health and Denise is going to go over an inventory we have for program within HHS focused on infant mortality. So we've been focusing on specific programs for improving birth and improving the health of kids. So we will be talking specifically about these programs. In the mean time we want to go ahead and talk about even if you identify this programs, so if we come forward with the list of programs based on evidence you want to invest in, you have to be able to identify funds for these programs. So, unless you have a target that has an increased amount of money in it, you have to identify resources to invest in this programs and this where you won't like presentation so then you only 2 options, you have new money or you have the reallocation of money new money with the source, we the federal state local or combination, the first that we identify with the medicaid provider assessment she have heard they've talked about assessments, we have some existing assessments in this state we know they are risky, we know that North Carolina has not max that assessment forums hospitals there's debate at the federal level

about whether they will even be continued, so not necessarily that we would recommend you balancing your budget on new assessments, or increase in assessments, but of you wanted to look for assessments for freeing that money or creating money to invest in programs on a one time basis, or creating a special reserve for programs to invest and prevention then you might want to consider new sources of money from assessments so that's developing new assessments their're provider groups that we don't currently asses in North Carolina including physicians groups. We could also talk about reforming one of our current payment methodology for hospitals by designing a UPL plan that could be assessed as well, all these will result of course in additional Federal money coming into the state that will require a lot of work, we don't know that any of these will get approved by CMS, but we're laying options for you to consider to see if you're interested in additional work being done by staff on this areas. The other bullet under new resources would be requiring or incentivising increased local participation, and accountability of course meaning you're putting out funds were you're require counties to put out a map [xx] program if it's a new program, and tying outcomes to that new grand their're states that are doing that they've had to identify funds to create the grants that counties cannot participate unless they identify local funds and put up a like amount of money to just pay the grant. On the back page we have reallocation of resources. Of course Steve just talked about payment reform options, and you've talked a lot the last several years about reforming Medicaid. You continue to talk about reforming Medicaid. I will point out that none of our existing Medicaid payments are based on outcomes. The contract that we currently have are not based of outcomes including your CCNC contract, including the LNEMCO contracts for capitation. It's like Senator McKissick offered up earlier what do you do when North Carolina currently has a contract with LNEMCOs. If you wanted to incorporate or begin to try to figure out how to incorporate outcomes into a Medicaid payment, then you could try to do this with your LNEMCOs contracts now so that when you are ready to reform your other component of Medicaid payments you would have something to base that on. So consider including outcomes in your existing contracts. You can redesign your current dish plan for hospitals. This would result in potentially moving money from urban to rural counties. Steve talked about add ons for LNEMCos. I believe it's about $18 million you included this when you began the LMEMCOs capitated payment. You are not currently getting a return on this money LMEMCOs will tell you that they do need the funds but from the states perspective you are not getting a return on the $18 million and you could potentially invest this money into programs where you would get a return on your investment. For example, investing in critical mental health of crises mental health programs for children or adults. Of course we want you to have the information you need. You were talk about eliminate symphony for other non evidence based programs. Several years ago you eliminated funds for the heath trust fund, to back or set up funds that money to the general fund you see I have a question mark here because this is a future it's not necessarily, so committee item, four chairs have made a decision to divert to settle fund into general fund. This committee might want to get back and revisit the program that were historically funded by that money and decide whether any of those programs were evidence-based and whether you want to go back and try to continue somebody's programs. You would of course, consider renegotiating existing contracts the two specific ones I mentioned CCNC and the army MCOs, and begin to incorporate outcomes into what it is you're paying for. So where you're paying a PMPM per person you might want to consider requiring that part of payment, be contention upon outcomes for the money that you're spending The last one will be budgeting over realized receipts  for prevention. This year the department has generated more money than we anticipated for drug base this is one example. So in an instance where you have generated more over realized receipts than you were budgeting you can say that part of money would to a different account to be used for example infant mortality or improving [xx] for kids. So these are the Adams we've come up for this committee and we will be looking for direction from you whether you're interested in any or none of them. Mr. Chair that concludes my.

Thank you sergeant. Senator Boren, she asked your concerns if I might or may ask a question, and so, or at least confirm my understanding so at this point because this is a new shift the department has not developed this way of tracking data. I don't believe that they have Senator Ballinger but I believe that they are currently working on a re-organizational plan that would begin to do that, I'm not sure how much the evaluation component is included in the real crime we just began this discussions with them, so if you want us to move forward on this item we would have to figure out what it is they're doing, they'll have to, they'll definitely have to be on board with this or just want to work, so we just have to figure out how the system with their current plan and how to make sure that the evaluation is a strong component within that plan. Thank you we got about two minutes left and we got three questions. Senator Robinson. Thank you Mr. Chair and I think I will [xx] my question this time as well to and the first question under the business strategy is, you can answer that in terms of working with program evaluation, but the second pieces about which examine what's there within the department in terms of, are there federal programs e. T. C that are passed through that already have evidence based programs as a requirement so that you work with the emperors to do that. Senator Robinson, we believe that one, the very first thing that this new unit will do will be the program inventory that appears in the reference when they I came to meet with the committee [xx] the very first thing they will do which the committee asked for the time which was develop this program inventory a comprehensive program inventory of all the program so then health human services, and it wouldn't stop there I think they wouldn't have to continually maintain and have it accessible to anybody who wants to know [xx] open windows but not sure how up to date that is but there will be this entity will be responsible for that inventory and maintaining it Follow The other thing under the policy strategy, you mentioned Medicaid provider [xx] increasing [xx] How would that work? To some of that is federal re-embursement etc, pass through etc. Tell me how that would work in terms of using Medicaid providers [xx] and then [xx] that to reallocate net to services, how would that work? Sir Robertson Mr. Chairman, you basically would increase the receipts. Your interest receipts, you reduce the general fund money needed for Medicaid and you take the general fund money and re-purpose it for other purpose. Representative Balam Thank you Mr. Chairman not sure much of a question or it's a statement. I always have concerns we introduce controls particularly when it is revolving around people saving money because of services, and that is the tendency to save money and not offering services in the case Representative Insko mentioned in case management, from a simplistic stand point that seems to me probably the most beneficial in being able to track how well we're doing in a persons care, and is that something that would fit in with what we were talking about in recommendations here exactly how? You're right Representative Avila and we believe one of other main goals of this new entity will be as far as helping HHS agency self monitor. So when they are looking at a case management program, they have to make sure that they're using the right evaluation tools to make sure that they are monitoring the program in accordance with national standards, or in accordance with what the journal simply has set those goals to be, and so it has to be, we believe not necessarily it has to be outside that agency so for case management it would be someone outside Medicaid saying the contract you have drafted says the case management is supposed to be providing the following outcomes or we're going to work with you in designing the contract to make sure that according to CDC or according to the Federal Government case management should be resolving in the following results you have to draft this contract and make sure that you're going to achieve those, and so it is working with this program for technical assistance to make sure that programs are designed and contracts are drafted to achieve outcomes and not necessarily just make payments. So they will be heavily involved in the design of programs not just the monitoring of programs Thank you Steph for thereporting, thank

you everyone for attending. Meeting is adjourned.