Forsyth lawmaker and former healthcare exec sells Medicaid reform

by Jordan Green

One of the House Republicans’ lead negotiators on Medicaid, previously aligned with the old paradigm, takes up the banner of reform.

Rep. Donny Lambeth was back home in Winston-Salem on Monday for a luncheon at a Golden Corral that drew a crowd heavy with Republican elected officials, including the county sheriff, four school board members and a county commissioner, along with rank-and-file conservative activists in the party.

Lambeth can take credit for a legislative achievement that is rare for a second-term state lawmaker: He was one of two lead negotiators for the House Republicans on a bill to privatize Medicaid that is expected to receive Gov. Pat McCrory’s signature today.

“I think this is one of those legacy bills that will save the state money for years and years down the line,” Lambeth told the group. “If it doesn’t save us 10 percent I would be very, very surprised. It’s possible that it could save us 20 to 25 percent.”

Lambeth’s professional background heavily qualified him for the job of lead negotiator for the House Republicans, along with Rep. Nelson Dollar of Wake County. Lambeth retired from Baptist Hospital in 2012 as president of Lexington Medical Center and David Hospital.

Years of cost overruns by North Carolina’s Medicaid program, a government health insurance program that serves the poor, elderly and disabled, have long frustrated state lawmakers. Lambeth said some years the $14 billion program ran $2 billion short, forcing lawmakers to scramble to pull together extra funding. Interest in reforming the program emerged about five years ago from a desire to achieve better budget predictability.

House Republicans had traditionally supported the current structure, a fee-for-service arrangement known as the medical home model, while their counterparts in the Senate were pushing for the state to contract out the service to one or more private insurers that would assume risk for cost overruns. The McCrory administration, with former Health and Human Services Secretary Aldona Wos as its point person, initially took an interest in privatizing Medicaid, but backed off last year in the face of objections from hospitals. The new bill, which Lambeth said negotiators from the House and Senate had been working out line for line since December, came as a surprise to many.

Despite coming in over budget year after year — or being under being chronically underfunded, in the view of some — North Carolina’s Medicaid program received recognition for saving the state money by helping patients obtain preventive care.

Community Care of North Carolina, the nonprofit that coordinates care for Medicaid patients, received the Healthcare Leadership Council’s Wellness Frontiers Award during a ceremony at Baptist Hospital in Winston-Salem in April 2013. The recognition was based in part on an analysis commissioned by the state Division of Medical Assistance that found that the nonprofit saved the state almost $1 billion over a four-year period.

Among those who were on hand to tout Community Care of North Carolina’s accomplishments was US Sen. Richard Burr, a Republican from Winston-Salem.

“North Carolina has long been a leader in patient-centered healthcare, and I’m pleased that a North Carolina program was recognized as a model for how to improve outcomes for patients and get more value out of our healthcare system,” Burr said. “‘Medical homes’ promote primary care and prevention while reducing overcrowding in emergency rooms and preventable hospital readmissions. Raising the efficiency and quality of healthcare delivery is a win for both patients and taxpayers.”

Asked about the recognition after his talk at Golden Corral, Lambeth indicated he shared the view that the current model has saved the state money. He said it was clear that the House and Senate were never going to agree on every detail, characterizing the plan that emerged from negotiations as a “hybrid.” Lambeth said patients could choose among 10 provider-led entities and three managed-care organizations, suggesting the former would be similar to the arrangement currently in place.

But a written summary of the legislation provided by the lawmaker makes it clear that the state is switching from a fee-for-service model to capitation, in which funds are allocated per patient on an annual basis regardless of each patient’s utilization of services. The summary stipulates that the state will continue to use the medical home model to control costs during a four-year transition, but once the capitation model is fully operational, Community Care of North Carolina’s contract with the state will expire.

Speaking before his conservative constituents, Lambeth was talking up the merits of the new plan rather than emphasizing the advantages of the old one.

“Basically, the risk of the care will be shifted over to the providers,” Lambeth said. “They will manage populations. And, in my opinion, because I was in that business for 40 years, there’s lots of silos in that business. You have hospitals. You have doctors. You have hospice. You have home care. You have long-term care. And every silo is doing their own thing. And they’re all paid based on some type of volume: Admission to the hospital, more services qualified. This shifts it to managed-care organizations across those silos.

“There’s no quality metrics that monitors anything that goes on in Medicaid today,” Lambeth added. “Zero. There will be quality metrics. There will be access metrics [to] make sure they’re assessing the right level of care, and there will be some financial reward metrics. So if the providers do this correctly they will actually be able to be rewarded.”