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2005 Testimony

Testimony Before The House Human Services Committee

Clara Sue Price, Chairman

Regarding House Bill 1459 - Managed care development fund

January 25, 2005

Chairman Price, members of the committee, I am David Zentner, Director of Medical Services for the Department of Human Services. I appear before you to provide information regarding this bill.

This proposed legislation is a result of a study of the Medicaid program by the Medicaid Working Group. While the Department provided information, the report represents the work of the committee and the recommendations are the result of their deliberations. We were not involved in the final outcome of the report.

This bill would establish a special fund that would be utilized by providers, health care cooperatives, or health care consortia to develop and implement integrated systems of care including managed care, and other risk sharing options. It would allow these entities to use the funds to build the infrastructure necessary to move into a managed care arena. Many entities are hesitant to move to a risk sharing payment process, and this bill is designed to encourage these entities to develop the internal processes necessary for the implementation of managed care in North Dakota.

Currently, the Department does have one fully “capitated” managed care contract in North Dakota. It is with Noridian Mutual Insurance Company. It operates in Grand Forks, with Walsh and Pembina counties, with the Altru network, as the primary deliverer of services. Medicaid recipients have a choice of joining this organization or selecting a primary care provider to manage their care. If the recipient chooses the “capitated” plan, the Department pays a monthly premium based on the age and gender of a recipient. The process encourages the entity to manage the delivery of care, and promote preventive health services in order to ensure that enrollees receive appropriate care in a cost effective manner. We believe the process has saved about 2% over fee for service payments, since it was implemented in 1997.

The Department believes that managed care can be a partial solution to the increasing costs of delivering services to recipients of the Medicaid program. Many states have adopted this concept in their programs.

Section 2 of the bill appropriates $1.0 million that would be used for the purposes outlined in Section 1 of the bill. The Executive budget does not include funding for this project and therefore the Legislature would need to increase the Department's budget in order to implement the provisions of this bill.

I would be happy to respond to any questions you may have.


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