Even with savings, HHS chief frets about Medicaid 

Nearly $1 billion is still a big number in state government — except maybe for North Carolina's Medicaid program.

Health and Human Services Secretary Lanier Cansler got some good news as he prepares to leave his job at the end of the month. The news was about cost savings associated with a nationally-recognized health care initiative for the state designed to manage better outcomes for Medicaid consumers.

An outside actuary estimated a cumulative $984 million in Medicaid savings from 2007 to 2010 from the nonprofit Community Care of North Carolina networks. The networks help 1.2 million patients with treatments for chronic and special conditions, ensure they aren't overprescribed drugs and encourage them to go to a primary-care doctor, not the emergency room.

But with a projected $150 million Medicaid shortfall this year, a larger shortfall next year and a projected one-third increase in enrollees in 2014 because of the federal health care law, Cansler sounds justified in worrying about the overall Medicaid program's long-term finances. For an agency that will spend almost $13 billion in federal and state funds this year, $1 billion over four years remain just one piece of the Medicaid savings puzzle.

Cansler hopes to find more ways to control Medicaid expenses in a commission he will be leading at the behest of Gov. Beverly Perdue after his departure as secretary to recommend how to make the state's health care system more affordable.

"I remain very concerned about Medicaid and the sustainability of Medicaid," Cansler said in an interview a few days after announcing his resignation. "You've got to find a way to control health care costs, because we can't sustain it at the rate it's growing."

Patient advocates and lawmakers generally have given high marks to Cansler, a former Republican lawmaker and deputy HHS secretary for four years. Perdue, a Democrat, hired him as secretary in January 2009. His final months on the job have been marked by a Medicaid spending fight.

The Republican-led Legislature directed $356 million in budget cuts this year to the Division of Medical Assistance, which runs Medicaid, the federal-state health insurance program for 1.5 million people. Most of them are in low-income families, people with disabilities and poor elderly residents. The state's share of nearly $3 billion is the highest state spending category, save for public schools.

Cansler and the Perdue administration told Republican lawmakers those levels of cuts can't be met this year.

The Legislature told Cansler neither to reduce rates drastically for doctors who provide medical services nor scale back optional Medicaid services to close the gap. But lawmakers haven't offered extra cash, either. Cansler said he believes GOP leaders are doing it to keep pressure on his department to find all the reductions it can before they provide additional cash before the fiscal year ends June 30.

"This year, we have enough money budgeted to get us to the end of May, the first of June. And if we don't get money, we can't pay the bills, and I don't think the Legislature is going to let that happen," Cansler said.

Rep. Harold Brubaker, R-Randolph, the senior House budget-writer, said Cansler's evaluation was accurate. Brubaker said the shortfall is forcing agencies to find innovative ways to save money that few would examine when government coffers are flush: "We never take the opportunity unless we are in a shortfall."

Cansler has said often during his visits to the Legislature in past years there are few options to make significant reductions to Medicaid without triggering more expenses elsewhere. Service changes are difficult because they bring out protests from the providers of the service and their patients.

"It's very difficult when you're trying to control costs of (Medicaid) that's one — constantly enrolling new people and two — that every decision you make upsets someone, and when you upset someone it creates a political reaction," he said.

A jolt to the Medicaid program will come in 2014, when North Carolina could see its rolls increase by about 500,000 people because the Affordable Care Act requires the state to cover more uninsured adults. While the federal government will pay for nearly all the coverage cost, North Carolina's cumulative share could be more than $1 billion by 2019, according to the Kaiser Commission on Medicaid and the Uninsured.

"It will be quite a feat to absorb that sudden influx of new Medicaid recipients, while maintaining quality and levels of services amid continued state and federal budget pressures," Medicaid program spokesman Brad Deen wrote in an email.

Adam Searing of the North Carolina Health Access Coalition said he doesn't believe the state's share for those enrollees will be that large — perhaps $50 million a year instead. Searing said state officials need to be smarter about cutting Medicaid costs.

"We need to get health care costs under control, but I just don't think taking an axe to the Medicaid budget is that way to do it," Searing said. Cansler, who is being succeeded as secretary on an acting basis by Perdue senior policy adviser Al Delia, hopes smart solutions can be found through the affordable health commission's work.

Otherwise, Cansler said, "year after year, that's going to be a struggle until we really find the answers."

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