The Raleigh Report – Sept. 2

by Sep 2, 2010NEWS ka-no-he-da0 comments


One of the fastest growing parts of the state budget is Medicaid, the health plan for people who need extra help covering their medical costs. Since fiscal year 2000, the state’s budget for medical expenses associated with Medicaid, including federal dollars, has increased from $4.8 billion to $9.9 billion. The state and local share of those costs during that time has grown from roughly $1.8 billion to $2.3 billion. The original budget for this fiscal year called for an increase in this line item to $2.7 billion. The increased cost of Medicaid can be attributed to many things, including population growth, an aging population, rising medical costs and the recent economic downturn. Still, faced with balancing a budget without raising taxes, my colleagues and I identified several cost cutting measures this year that kept the budget essentially flat while still providing service to those who need some help getting through difficult times.


The state approved a number of measures this year intended to help trim Medicaid costs. These efficiency measures include:

  • Authorizing the Department of Health and Human Services to require prior authorization for brand name drugs for which the phrase “medically necessary” is written on the prescription.
  • Allowing the Secretary of Health and Human Services to prevent the substitution of generic drugs for brand name drugs if after consideration of all rebates the cost is less than the generic.
  • Requiring that medications prescribed for mental illness are included on the Preferred Drug List. This measure, in addition to the previous two, is expected to save at least $10 million in drug costs.
  • Limiting coverage to procedures recognized or approved by the National Institutes of Health.
  • Directing the department to apply Medicaid medical policy to recipients who have primary insurance other than Medicare, Medicare Advantage, and Medicaid. 

The state also made several steps in the effort to combat Medicaid fraud. The anticipated savings from these measures is expected to reach $40 million this year. These efforts include:

  • Authorizing the Department of Health and Human Services to create a fraud prevention program that uses information from state and private databases to develop a fraud risk analysis of Medicaid providers and recipients. 
  • Allowing the department to modify or extend existing contracts to achieve Medicaid fraud prevention savings in a timely manner.
  • Establishing a Class I felony for knowingly and willfully soliciting or receiving kickbacks, bribes, or rebates in return for or to induce a person to engage in Medicaid fraud.
  • Doubling the Medicaid Investigative Unit staff at the Attorney General’s Office to expand the prosecution of Medicaid fraud and abuse. Additional staff will ensure increased prosecution and additional Medicaid funds recovered from fraudulent providers.



The state’s budget also calls for saving $50 million in Medicaid costs by better case management. The initiatives:

  • Expand efforts of the Community Care Network of North Carolina (CCNC). The Department of Health and Human Services contracts with the network to manage use of Medicaid services. Savings will be generated by expanding care management programs in hospital discharge, mental health; palliative care, and pharmacy. The improved system will enhance data integration, analytics, and reporting, increasing performance and save an estimated $45 million.


  • Eliminate Medicaid reimbursement of ‘never events’ in hospital inpatient settings. ‘Never events’ are certain types of medical issues that develop or are acquired while a person is in a hospital, but should have been prevented. The policy change brings Medicaid in line with Medicare reimbursement. Estimated savings are $5 million.



Legislators have also asked for two studies related to Medicaid policies. The studies will examine:

  • Provider rates – The Department of Health and Human Services or a contracted group will study reimbursement rates for Medicaid providers and program benefits.
  • HIV waivers – The department will study the feasibility of reducing the waiting list for the AIDS Drug Assistance Program by expanding eligibility for Medicaid to HIV‑positive individuals with incomes at or below 133 percent of the federal poverty level.


Rep. Haire and Legislative Assistant, Sara Jane Lennard,
may be reached at 300 N. Salisbury St., Room 639, LOB
Raleigh, NC 27603, 919/715-3005,