Analysis of Community Care of North Carolina Cost Savings

The purpose of this analysis is to report on Medicaid cost savings achieved by the Community Care of North Carolina (CCNC) networks for the Division of Medical Assistance (DMA) during state fiscal years 2007 to 2010 (July 1, 2006 to June 30, 2010). Specifically, this report addresses the following two objectives, which are outlined in more detail in RFP No. 30-DMA-259-11:

• Determine the savings CCNC is providing to the Medicaid program relative to what program costs would have been without any concerted efforts to control costs (effective fiscal year-over-year savings).
• Determine year-over-year cost savings from any new intervention implemented by CCNC

The table above suggests that the CCNC risk-adjusted PMPM costs for fiscal year 2010 are about 15% lower than the non-CCNC PMPM costs for both Children and Adult eligibility groups. For the ABD Medicaid Only eligibility group, CCNC risk adjusted PMPM costs are about 3.3% lower than the non-CCNC PMPM costs. The ABD Dual Eligible group shows CCNC PMPM costs that are 1.8% higher than the non-CCNC PMPM costs.

Based on these PMPM savings estimates, and similarly calculated estimates for prior fiscal years which are shown in Attachment 1B, the following table estimates the total cost savings attributable to CCNC. The table suggests the savings potentially attributable to CCNC have grown during the four-year study period. In FY07, the total savings was approximately $103 million, or about $8.73 PMPM, with costs approximately 1.9% lower than expected if all members were not enrolled in CCNC. In FY10, the total savings was approximately $382 million, or about $25.40 PMPM, with costs approximately 5.8% lower than expected if all members were not enrolled. Note that all savings estimates are net of the PMPM payments paid to CCNC (i.e., CCNC management fees have been included in the expenses).