AL Medicaid reform in full swing - WDAM-TV 7-News, Weather, Sports-Hattiesburg, MS

AL Medicaid reform in full swing

MONTGOMERY, AL (WSFA) -

The Alabama Legislature could pave the way for the state to save potentially tens of millions of dollars relating to a Medicaid overhaul when lawmakers return next week.

"In this case we're taking a Medicaid program that is the foundation for healthcare in Alabama and we're trying to rewire the entire system and we're trying to do it while we're still operating the Medicaid system" said Dr. Don Williamson, Alabama's Public Health Officer who has overseen Medicaid for nearly two years.

Lawmakers could approve a bill that would allow the Regional Care Organizations that will be tasked with administering the Medicaid program starting in 2016, to file as non-profit organizations.

Conservative estimates by the Medicaid Agency predict a cost savings in the range of $30 million to $50 million.

"That's a big issue," Williamson said. "You're not paying the 3.5% tax caused by the affordable care act if you're a not for profit."

Williamson cautioned that it's not a guarantee that it will work but that "this gives us the best chance for the RCOs to work."

Regional Care Organizations will help the transition from Medicaid being a "fee for service" model to a "capitated model" that essentially places a cost figure on each Medicaid recipient rather than pay hospitals for the types and amounts of services provided. The capitation model places an emphasis on preventive care and keeping largely poor population out of the hospital altogether.

RCOs must meet certain financial solvency requirements already. The non-profit model could allow them to qualify for tax breaks.

"It doesn't do us any good to have entities that have to pay additional cost to the federal government because the taxpayers of Alabama would have to pay that. What we tried to do was to make changes that allow a not for profit status to work that would allow the RCOs to raise capital and to raise capital easily."

The state has also applied for a waiver from the Centers for Medicare and Medicaid in Washington in order for the Medicaid reform in Alabama to go through.

"That's still in the public comment period which I believe ends this month" Williamson said.

Once that period ends, the agency will respond to many of the comments and move ahead with the changes and the Regional Care Organization model.

It's unclear when Alabama will get a final answer from Washington. The state of Texas recently made changes to its Medicaid program and Washington didn't provide approval for two years.

Copyright 2014 WSFA 12 News.  All rights reserved.

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