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Senate | July 16, 2014 | Committee Room | Rules

Full MP3 Audio File

Ah, let's see. Pages today, Charles van Dyke, Charles, where are you in this big room? Welcome. Is it Richard Perigot? Is that right? Welcome, Richard. Tamara Williams, welcome. Jordan Raglan, welcome. Ruth Parsons, welcome. Who do we have? Is it Michelle Allred? Welcome. And Sophie Hennings? Welcome. And Davis Braswell. Welcome. A fine looking group. I wish the front rows looked that well. Okay. Sergeant-at-arms, they're running around here, I don't know if I have a list for them. Nope, so we won't do that. Okay do we want to start off with busses? Rep. Brawley, are you going to handle the busses? Let's do House bill 375, increase allowed size of passenger buses. Rep. Brawley. [SPEAKER CHANGES] Thank you Mr. Chairman, always a pleasant day in the Senate. This bill is to benefit the larges t suburb of the town of Matthews, it's a small town called Charlotte. They have some bus routes that are overcrowded, and rather than run 2 buses, they want to run a articulated bus, it's got a joint in the middle that will allow it to make turns. Right now they're not allowed in North Carolina law, this would only be allowed on major streets in the city of Charlotte, it's really more of a local bill but it needs to be public, I believe. I would appreciate your help. [SPEAKER CHANGES] Thank you Representative. Sen. Rabin? [SPEAKER CHANGES] Thank you sir. We've reviewed this pretty well in Transportation and the committees and we certainly move for a favorable report. [SPEAKER CHANGES] Okay. Sen. Rabin moves for a favorable report to House bill 375. Any further discussion or debate? Hearing none, seeing none, all in favor say "aye", [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Any opposed, "no"? Rep. Brawley, one quick question. Who is your senator? [SPEAKER CHANGES] It would be Jeff Tarte. [SPEAKER CHANGES] Jeff Tarte? Oh, I was hoping you'd be in Rucho's district. We're looking for someone to run, we'll talk some other time. Okay, let's do House bill 1096. Rep. Walters I saw you around here? Union county contracted ambulance service. [SPEAKER CHANGES] Thank you ladies and gentlemen, I appreciate the opportunity to present this. This bill allows Union county to collect on delinquent ambulance service fees. Currently the state law allows for counties to use a tax ?? garnishment to collect for wages if they provide the services or franchise. Union county contracts for these services, so technically they're not able to use those methods and this will allow our county to collect those delinquent [SPEAKER CHANGES] Thank you Representative. Sen. Brock's over there giving us the okay over there for a favorable report, any futher discussion or debate from the committee? Okay, hearing none, all those in favor say "aye"? [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed, "nay"? They "Aye"s seem to have it. [SPEAKER CHANGES] Thank you very much. [SPEAKER CHANGES] Okay, who's going to run that on the floor. [SPEAKER CHANGES] ?? [SPEAKER CHANGES] Okay, good choice. Tucker on the floor, I guess Tarte did the first one. Sen. Goolsby, are you around here? Good morning Senator Goolsby, I hope you had a good time last night. [SPEAKER CHANGES] I did. [SPEAKER CHANGES] Sen. Brown and I wish we could have been with you all, but we weren't invited. Let's do House bill 369, criminal law changes. [SPEAKER CHANGES] Well thank you sir, that didn't stop Sen. Rucho from coming. [SPEAKER CHANGES] Well he figures someone would pay him for it, Sen. Goolsby. [SPEAKER CHANGES] ?? [SPEAKER CHANGES] Appreciated him being there, appreciated the sophomores honoring me last night. We're gonna jump into House bill 369, a lot of moving parts, it has changed a lot since it was originally put forward. The worker's comp portion dealing with illegal aliens, we think Mr. Chairman's more properly dealt with in long session, so that has been dropped out of the bill but if you'll run through it with me there, 12 sections, let's start with section 1. That deals with expunctions, it expands expunctions to felony breaking and entering offenses, and attempt offenses. Again, to get an expunction after 15 years, you can have committed no crimes, have been a law abiding citizen, complied with all requirements of your probation for the crime you committed 15 years before. Section 2 ammends the statutes to replace all statutory authorization for deferred prosecution- [SPEAKER CHANGES] Sen. Goolsby, let me interrupt you one moment. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Sen. Brown moved we bring the PCS before us for discussion, let's do that.

All those in favor of bringing PCS before [??] for discussion purposes say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Any opposed? Sorry, go back to it. [SPEAKER CHANGES] Thank you Mr. Chairman. It basically turns deferred prosecutions into conditional discharges This is a request from local district attorney who deals with what we call felony district court, where we hear HNI felony cases in district court. The problem that we had with deferred prosecutions is that the defendant who enters the agreement, if he reneges on it we then have to sort of start everything over, I'm sure that Senator Jeff Jackson is aware of how that works and we hope that this will prevent that. They'll have to enter a guilty plea in order to get the equivalent of deferred prosecution under a conditional discharge. If they renege on it they can then be found guilty because they pled guilty, and sentenced accordingly. Next section three deals with separating the offense of drug parafernelia, currently marijuana itself is a class three misdemeanor. Since class three misdemeanors you can only be put in jail on the third offense, the problem we have with the fact that we treat all paraphernalia the same is that paraphernalia itself is treated as a class one misdemeanor. So if a defendant is arrested for possession of marijuana class three, possession of drug paraphernalia typically happens, class one, they then rate a lawyer provided by the state. If we excise out marijuana paraphernalia as a class three misdemeanor just like the drug itself, they would not rate a free lawyer until they have three prior offenses. This is a money saving attempt to equalize the law and the punishment and I hope that you'll support that. Section four deals with the Human Trafficking Commission and Aaron's law which we talked about a lot a few weeks ago. What we end up doing here is we will allow the Human Trafficking Committee to study the prevention of sexual abuse of children. Senator Robinson and I have worked on this and we'd appreciate your consideration. Including that we don't have to create an additional and separate commission in order to study this and to help us adopt some guidelines for our schools. Section five increases the penalty of an inmate with a cellphone from a class one misdemeanor to a class H felony. It also deals with the possession of a cellphone by an inmate and the local confinement facility it moves it up also to a class H and does the same for an inmate in a state prison. Six deals with creates a class I felony for a person who assaults a person in retaliation because the exercise of the duties of any legislative executive or court officer, that is some legislation that's come out based upon of course what has occurred in here in Wake county.I don't know how many of you all has the opportunity to meet the assistant district attorney when she was touring the courthouse with the DA asking that she was the one whose family member, whose father had actually been abducted and abused. We came forward with this and we would appreciate it if you would support that bill. There's also another portion of it making a class I felony for anyone who knowingly or willfully makes any attempt to inflict serious injury or kill any other person in retaliation. So, tries to cover all those bases, similarly on the back on the summary you'll see that. Section seven adds qualified retired correction officers to the list of officers that are exempt from taking firearms courses for concealed carry. Section eight authorizes forensic and chemical analyst to testify from remote locations by video if certain conditions are met. Section nine authorizes detention officers who are employed and authorized by sheriffs to carry firearms on educational properties when acting in the discharge of their official duties. Section ten basically takes air rifles, air pistols and BB guns, not including the definition of dangerous firearms, off that list in certain counties, Hanson, Cleveland, Harnett, Stanley and Surrey. Section 11 authorizes plaintiffs in summary ejectment proceedings to complete service of process by using a person who's at least 21 years old. Basically what it does is it strikes from the current section of the law the requirement that if the sheriff is not able to serve an individual then in most cases except in summary ejectment and executions, you can then hire a private process server. What this does is basically it includes summary ejectment with all the other cases. So the sheriffs if they're able to serve the person do it, if they're not after a certain amount of time a person is able to seek private process, which is the way it is for everything else but summary ejectments and executions in the state right now. And lastly, section 12 amends the stature authorizing expunction of...

Defense for 15 years dealing with finger prints and such A lot of things that had some controversy in this bill had been taken out. I would Appreciate your support if they have any questions that I and my staff would try to answer, Mr Chairman. [Speaker Changes] Lets Start with Senator Stein [Speaker Changes] Thank you Mr Chairman. Senator Goolsby, Thanks for the changes you had made in the bill. I like it a lot better. Appreciate all the work you had done to it. Question about section11. And I don’t know if Sheriff Harrison was able to make it this morning. But he called me last night said he couldn’t make it. But that if could he would make it. He called about section 11 and expressed some reservation about allowing 9 law enforcement process servers and that his fear is that process serving is an inherently conflict ridden process and that to allow 9 law enforcement to do that work may end up resulting in escalation of violence that isn’t in society’s interest. Just want to get your comments on that. [Speaker Changes] Senator Stein, yes the concerns that Sheriff that initially had, we had tried to addressed those. What we did was to completely take out that section and instead the staff can correct me if I am wrong, is it rule is it A1or 4A I can’t A1. [Speaker Changes] Yes 1-1A rule 4 [Speaker Changes]: I had the numbers correct just didn’t have them all together But what basically happens right now Senator Stein, is in all service if the Sheriff doesn’t serve somebody within the allotted time, all we are doing now is striking some rejectments and executions of the two that were left out of the law. So, the sheriff is still be able to get their fees and still be able to do their service. And part of the problem that understand from the , I don’t do this kind of law, but from the folks who multi-family dwelling and those kind of places and folks who rent them. The sheriffs are more than happy to come out and post it. And you can sure reject somebody with posting. But if you don’t get actual service, you can’t get money damages. This just gives the ability for folks who have rental property to then be able if the sheriff is unable to serve someone who makes themselves unavailable for service that is when the sheriff is not able to do that after the appropriate period of time and in this site. Please correct me if am wrong. Then it’s like all the other cases in the law you are then able to have some one to go and serve the process as currently is the law. We are only striking some rejectment from the exclusion list which only is execution from rejectment list right now. [Speaker Changes] So, is the Sheriff’s association now supportive of the language. [Speaker Changes] I do not know. But it is significantly better than what they had before [Speaker Changes] Fair Enough, Mr Chairman, we see someone from the Sheriff association is here to address this point. [Speaker Changes] Sure. I see a couple of them sitting in that row. One of you would like to speak on this. Mr Stall Please grab a mike. [Speaker Changes] Thank you Mr Chairman Senator [Speaker Changes] Let us know who you are not everybody knows [Speaker Changes] Thank you Senator Greg Stall North Carolina Sheriff’s Association. Senator, we had not seen the language although we had some discussions with some of those who had worked on the language and we would agree this looks better that it did before. But we would like some time to do some analysis of this and contact our sheriffs, particularly some of our sheriff attorneys, who do this regularly and see if it passes muster. We are sympathetic to the issue. But just want to make sure this do not what we would be concerned here and that is to have some conflicts in your communities over these ejectments and not having an uniformed officer serving court issued paper. We can get the paramount issue any time the court issues that paper that it gets served it gets served properly and that there is no conflict where conflict gets avoided. Thank you. [Speaker Changes] Thank You Mr Stall we will have time to check this out before it reaches the floor. Yes you may Senator [Speaker Changes] Senator Stein and other committee members. I would ask you to turn to page 13 of the bill you will see at the top section 11 A . You can see that only thing that is still there in the last senate. This subsection shall not apply to execution pursuant to article 28 of chapter 1 and then we strike or some rejectment pursuant to article 3 of chapter 42 general statute. All that’s doing.

summary ejectments from that list of 2. Do you see that Sen. Stein? Again, it's a very simple change, and what it'll allow is allow property owners who have been successful in having the sheriff's department post the property to eject the tenant, to then be able to actually, if the sheriff can't serve them, then to at least to try to find someone else to serve them so that they can then get a money damage for the damage to their property or the loss of rent, whatever it might be. We thing that is a wonderful compromise, Mr. Chairman, and we'd appreciate the committee's consideration of that. [SPEAKER CHANGES] Sen. Jackson. [SPEAKER CHANGES] Thank you Mr. Chairman. [SPEAKER CHANGES] The old Jackson. [SPEAKER CHANGES] That's right. The one without the hair. Sen. Goolsby, I'm just trying to get a little understanding on section 10, and why those 5 counties are just singled out. [SPEAKER CHANGES] Sen. Jackson, I cannot tell you why it's those 5 counties. I do not know. [SPEAKER CHANGES] Okay, that's honesty. Thank you. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Can anybody answer that? Sen. Brown, can you answer that or do you want to ask a question? Okay, can we answer that question? Staff? [SPEAKER CHANGES] Thank you Mr. Chair. I can't tell you why we were removing those 5 particular counties, but I can clarify though what this is doing is currently under this particular statute of permitting young children to use dangerous firearms, those listed items, the air rifles, air pistols are not considered dangerous weapons under that statute except in the listed counties, so what we were doing is deleting 5 counties from that list so that those air rifles will not be dangerous weapons for the purposes of this statute in those 5 counties being deleted. As for why those 5 counties are now wanting to not considering them dangerous weapons when they previously before, I can't answer that question. [SPEAKER CHANGES] Follow up Mr. Chair? [SPEAKER CHANGES] Sen. Jackson. [SPEAKER CHANGES] Could maybe we get some clarification as to why we're even doing this in section 10? [SPEAKER CHANGES] Sen. Jackson, you may want to give Rep. Lewis a call. I think he might be able to help you out on that one. [SPEAKER CHANGES] Thank you Mr. Chairman, yes I'll do that. [SPEAKER CHANGES] Yes. Thank you. Sen. Brown. [SPEAKER CHANGES] Thank you Mr. Chairman. Follow up on Sen. Stein's concern on the sheriffs? My sheriffs have a concern as well on that piece. I understand Sen. Goolsby you're working on it. I do think we just need to make sure that we've just got this worked out. Because I think it is a concern by a lot of sheriffs. [SPEAKER CHANGES] Sen. Brown, the original portion of the bill actually allowed private process servers to immediately do all the work. So this is not what was originally in the bill, that has been excised from it and all this does is allow property owners the ability to actually have a private process server of the sheriff's unable to do it. It'll not affect the ability to get their fees, it'll not affect their ability to do their work, it's just if they can't do their work, there is relief now for property owners to seek money damages. [SPEAKER CHANGES] Mr. Chairman, Mr. Chairman. [SPEAKER CHANGES] I recognize the voice. Yes ma'am. [SPEAKER CHANGES] Yes, I'm not on the committee but if you will allow- [SPEAKER CHANGES] Well we're glad to have your input. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Yes ma'am. [SPEAKER CHANGES] If you will allow me, I would like to address section 10 about the bb rifles? This came as a request from a constituent in one of my counties because the father had gone to a local store to buy his son a bb gun, and he was told by the store that he could not purchase the bb gun because his son was under 12 years of age. So this was brought forward on this father's behalf, and when it was brought forward there was 4 other counties that wanted to tack on to the bill, so we ended up with 5 counties wanting the same option, to purchase bb guns for their little children just like all the other counties in the state of North Carolina. Thank you. [SPEAKER CHANGES] Thank you, Senator. Sen. Jackson, you good with that now? [SPEAKER CHANGES] Yes sir Mr. Chairman, thank you. [SPEAKER CHANGES] Okay, who else? Young, the before Jackson please go ahead. [SPEAKER CHANGES] Sen. Goolsby, I want to thank you for this bill. There's a lot of good stuff in here, in particular the creating a separate offense for marijuana paraphernalia has been common sense waiting to happen for a long time. So I thank you for that. My question here, the issue is regarding the conditional discharge issue on page 2, section A4, compliance with terms of additional discharge. Basically with deferred prosecution and conditional discharge, the idea is you get someone who made a stupid mistake, and you find a way to give them a second shot, they have to jump through a bunch of hoops, but if they do it, and complete everything successfully, then the charge gets dismissed like it never happened. One of the concerns in the transition we're making into conditional discharge is that for future applicants

Of employment. On those applications, a lot of times it says have you ever pled guilty to an offense, and my concern is that under this bill, those people who successfully go through the conditional discharge program, which exists to help people get a job and keep their record clean, would be forced to say yes, under the changes that we’re making here. They’d be forced to say that they did plead guilty at some point, which would defeat a large part of the purpose. To that end, I do have what I intend to be a friendly amendment. Colorado has addressed this issue, and they added just a few words which would be added to A4, saying upon fulfillment of these terms, once you jump through all of the hoops, in addition to the court discharging the charges, the plea or any finding of guilt will be withdrawn, which I think may solve that problem. If you think it’s a friendly amendment, I have a copy here. [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Yes, thank you. The only other redress would be of course an expunction, which would then give that same ability but in case the person didn’t apply for an expunction or the time limit it takes to do that, I would consider that a friendly amendment and would be in favor, Mr. Chairman. [SPEAKER CHANGES] Okay. Do you have it written up, to send forth? Senator Jackson sends forth an amendment, moves to amend the bill on page 2, line 41, by re-writing the line to read conditions of a conditional discharge granted pursuant to this section, any plea or finding of guilty previously entered shall be withdrawn and the court shall discharge. Senator Jackson, comments on your amendment. [SPEAKER CHANGES] Personally, I’m for it. [SPEAKER CHANGES] [LAUGHTER] okay. Well that is good. Okay. Anybody in committee have a question of Senator Jackson? Senator Goolsby. Senator Jackson is for the amendment, okay? [SPEAKER CHANGES] Yes sir, thank you. [SPEAKER CHANGES] Are you for it? [SPEAKER CHANGES] I am, sir. [SPEAKER CHANGES] Sounds good to me. Are we ready to vote the amendment? Okay, we have the amendment as read and presented by Senator J. Jackson. All those in favor say aye. Any opposed, no. All right, squeaks through. Okay, amendment’s adopted. All right, further discussion or debate on the bill? Senator Barefoot. Oh, I’m sorry, Senator Brock, you’re next. Go ahead, Andrew. [SPEAKER CHANGES] Thank you. Thank you, Mr. Chairman. Relating to section number 4, we’re hearing reports that the federal government is transporting some children that are undocumented or illegal aliens into states without the knowledge of states, into, without any prior knowledge to the state government. You know, one of my concerns with that, not only is the federal government not letting us know about children being moved to different states, it could also lead to a type of situation where we might have some of these children delivered into some of these predators’ hands, that you know if they came here, the parents came here for what ?? for a better life, that the federal government has their hands dirty by delivering them to a bad situation. So if we could take a look at that in the trafficking commission. I believe the federal government is just as guilty of transporting people as anyone. [SPEAKER CHANGES] If I may, Mr. Chairman. [SPEAKER CHANGES] Please. [SPEAKER CHANGES] When we created the bill last year that actually pumped up the power of the human trafficking commissioner, human traffic or sex trafficking bill, we have substantially increased the punishments in this state. I can tell you having been at a meeting last week down in Wilmington, dealing with one of the groups that’s out fighting this, our law enforcement across the state is now receiving a lot of intensive training on human trafficking, sex trafficking and we are starting to see more and more prosecutions popping up. The federal government is doing that but now that we’ve empowered our state and local officials to do that, we’re seeing more and more of that Senator Brock. So I think the fruits of the bill we passed last year are starting to bear. [SPEAKER CHANGES] Senator Barefoot. [SPEAKER CHANGES] Thank you Mr. Chairman. I’d just like to make a comment, then I have a few amendments to offer. [SPEAKER CHANGES] Please. [SPEAKER CHANGES] My first comment, I’ve been contacted by my local sheriffs. They do not raise the issue of fees for the service to process. I think their concern is with the issue of summary

If you have a 22 year old college kid traveling down a dirt road in Franklin County, to tell someone that someone’s trying to kick them out of their house, there may be a problem. And so theirs is one of public safety, and I just would like for you to take that into consideration. The second thing I’d like to do is offer a few amendments. The first of which moves to remove Chowan County from the accepted section, or from the exceptions under the language in section 10. And I can send that forth. [SPEAKER CHANGES] Send it forward. Senator, if you have a couple of amendments, you said? Can we go ahead and get them passed out, do you mind? [PAUSE] Senator Barefoot moves to amend the bill on page 12, lines 44 through 47, and that is you’ll see it when passed out, I guess you’re striking Chowan, is that correct? [SPEAKER CHANGES] Apparently someone’s daddy in Chowan County wants to get their kid a Christmas present. [SPEAKER CHANGES] Okey-doke. Senator Jenkins? [SPEAKER CHANGES] Yes sir. A question of Senator Barefoot. [SPEAKER CHANGES] Senator Barefoot, do you yield? [SPEAKER CHANGES] Yep. [SPEAKER CHANGES] Go ahead. [SPEAKER CHANGES] Senator Barefoot, in that I represent Chowan County and have heard nothing from anybody in Chowan County about this, how did you get ahold of it, out of curiosity? [SPEAKER CHANGES] Senator Cooke. [SPEAKER CHANGES] Senator Cooke doesn’t represent Chowan County. I would ask that if I can speak on the amendment, Mr. Chairman? [SPEAKER CHANGES] Please, the floor is yours. [SPEAKER CHANGES] I would ask that this amendment be set aside until I can have a conversation with the leadership of Chowan County as to whether they do or do not like this. [SPEAKER CHANGES] Okay, I think that would be appropriate. [SPEAKER CHANGES] I have an objection to that. [SPEAKER CHANGES] So let’s just table this for now. Okay, do you have another amendment, Senator Barefoot? [SPEAKER CHANGES] Yeah the second amendment increases the penalty for second offense of carrying a concealed weapon that is a firearm. [SPEAKER CHANGES] Okay, where is that? Do we have it up here? Is it being passed out? I think it’s being passed out now. Senator Barefoot moves to amend the bill on page 13, lines 26 through 28, offense in a class H felony, for a second or subsequent offense, a violation of subsection A1. Is punishable under the GS14415-21(A). Not punishable under this section. Senator Barefoot, you have the floor to explain the amendment. [SPEAKER CHANGES] And Staff may want to explain the reference to the general statute. My understanding is this does not apply to people who have concealed carry permits who happen to leave them at home. The purpose of this amendment is to basically get at people who this is their second time they’ve been carrying a firearm without a concealed carry permit, and it increases the penalty. I think this is something that law enforcement run into in urban areas with certain types of gang populations, etc. [SPEAKER CHANGES] Senator Goolsby. [SPEAKER CHANGES] Thank you so much for bringing this forward, Senator Barefoot. My local and I can also concur with that, my local police chief and mayor and city council have been begging for this type of legislation. If the committee members will look at the last sentence, a violation of this subsection A1 in this section punishable, is not, basically what it’s doing is making sure that you understand that this is not dealing with concealed carry holders who don’t have their carry permit with them. It is people who are carrying concealed weapons multiple times, who are just doing it as often as they want to and the law is not punishing them very significantly and what it ends up doing as you can see, is moves it to a class H felony, from an I felony. So we would appreciate your support of that. [SPEAKER CHANGES] Thank you. ?? Jackson. [SPEAKER CHANGES] Thank you, Mr. Chairman. Senator Goolsby. I’m not an attorney as most everybody in this room knows. [SPEAKER CHANGES] And we’re happy. [SPEAKER CHANGES] And I think you Senator Apodaca, I am too. What’s the difference between an H and an I felony? [SPEAKER CHANGES] [SOUND] [SPEAKER CHANGES] If one of our staff has

Miss Sikes has the punishment chart, Senator, she can tell you. I don't have it memorized, but it is greater punishment. [SPEAKER CHANGES] I assume then I'm just curious as to how much greater. [SPEAKER CHANGES] ?? The presumption ranges. [SPEAKER CHANGES] Thank you Mr. Chair. Senator Jackson was ?? it depends on your prior ?? level. But just for the largest difference between H and I is in an H you can get an active sentence with any prior record. Whereas with an I felony you have to have at least 10-13 points before you can get an active sentence. And I felony the absolute minimum you get with no prior record would be three months and H Felony the absolute minimum you can get with no prior record would be four months and not that much difference there. When you get to the highest record levels then for an I felony the maximum that you would be looking at would be 24 months vs. a maximum of 39 months. So, a little bit higher month-wise but the biggest distinction really in my opinion is you can get an active sentence at any level for an H. [SPEAKER CHANGES] OK. Thank you Miss Chairman, thanks Senator ?? thanks staff. In front of the discussion on the amendment Senator Brown. [SPEAKER CHANGES] I think we need incarceration note on this. If this does increase prison time we will need a note on this. [SPEAKER CHANGES] OK. [SPEAKER CHANGES] If I may, Chair. The PCS as it was put before you does have it in form 1 incarceration amendment because it's not an official version of the bill, it's not official yet. This section if it's added is very ?? provision that was in Senate 594 so I don't think it will take long for them to update the incarceration memo to include this provision. [SPEAKER CHANGES] Let's see if they can update it and we'll move forward with it now anyway. Further discussion and debate on the amendment. All those in favor of Senator ?? amendment say "aye". [SPEAKER CHANGES] aye [SPEAKER CHANGES] any opposed no. It so passes. Bill's back before ?? amended. Further discussion and debate? Listening for a motion. Somebody. Senator Brown. [SPEAKER CHANGES] I'll make a motion for approval as long as we can still work through the provision that the sheriffs have concerns with. [SPEAKER CHANGES] Lord knows we want the sheriffs to be happy. They like to complain. OK. Any further discussion or debate? I am hearing none. Senator Brown puts forth an unfavorable ? to the original bill favorable to the proposed committee substitute as amended. Senator, one moment, Senator Barefoot will check on Shawn and we can do that on the floor. OK, I just want to move it on out of here if you don't mind. OK. All those in favor say "aye". [SPEAKER CHANGES] aye. [SPEAKER CHANGES] opposed no. A bill so passes, thank you. Senator Goolsby. Yes sir. We adopted both amendments. Well, no, we adopted one in table one and adopted two in table two. it's a busy day. Ok. Let's start House Bill 1181. PCS brought forth Senator Brown moves we bring to PCS to force for discussion and consideration all those in favor say aye, aye, it is now the force. Well, getting ready to, they're passing it out. OK, and I like if we have questions from the gallery I'd like them to sign in with a Sergeant in Arms so we can get a sheet started and our intent is to start this bill today, discuss it as long as we can, we'll come back tomorrow and talk about it a little more, and see if which direction we're going to go. Senator Hise, floor is your's, and Senator Pate, double teaming. ?? and Brinkley, ok. You might have to tell Senator Jackson,?? Jackson, who they are. [SPEAKER CHANGES] Thank you Mr. Chairman and members of the committee for the opportunity to take a look at this bill and get better understanding of it. Glad to see all the members of the public here as well. In the 2013 budget a provision was put in there that talked about making Medicaid more predictable to budget more predictable for Medicaid and to

And treat the whole person, and to make it more accountable to the General Assembly. From that time, the department undertook a very, I think a very good hit at taking Medicaid to a better position than we’ve experienced over the past several years. As you know, since the Republicans came in charge of the General Assembly, we have had four straight years of budget overruns from Medicaid. And we have had to appropriate about 2 billion dollars extra in order to stem the flow. That is no fun, ladies and gentlemen, to do that, and we’re having to cut things that should not be cut but we’ve cut to the bone now. So and at any rate, the department worked very well and very diligently on trying to come up with a better plan for Medicaid. And then the House has worked since the commission report to develop a plan as well, and so we have the Governor’s plan which the department came along with, and also the House has developed their plan. And now the Senate has developed a plan, which we think is more inclusive and will give better results to the outcomes of Medicaid. And also better health care for the citizens who rely on Medicaid. And that’s the purpose of this bill. [SPEAKER CHANGES] Thank you. I think probably best as we go forward, if the Chairman will allow, I think most of this will come, there’s several questions in, but I think it may be best if we could have Staff, Mr. Chairman, Ryan Blackledge come up and go through the sections at a high overview. [SPEAKER CHANGES] That’d be fine. [SPEAKER CHANGES] Mr. Chair, members of the committee, I’m Ryan Blackledge with legislative drafting. Good morning. You should have before you a copy of the PCS and also a copy of the summary. What I’m going to do is just give a brief overview of the main components of the bill and then go through in a little bit more detail, talking about some of the specifics up there. So the bill itself has sort of three main areas that it’s trying to address. It’s trying to address the goals for reform, then provide some general direction for the reform. Oh ok. [SPEAKER CHANGES] Yeah if you’ll hold for just a minute, and let the feeding frenzy in. [LONG PAUSE] Seems to have died down a bit. Ryan, go ahead. [SPEAKER CHANGES] Thank you, sir. All right, so as I was saying, the bill deals with sort of three large areas. It provides goals for the reform, it provides a little bit more information on the general direction of reform, and then it gets into a little bit of the governance and authority model that’s going to be necessary. This particular bill does not go all the way to make all of the statutory changes that will eventually be necessary. That will have to come in a later, much longer bill. But this does set up a new department. What this particular bill does in comparison to the third edition of the bill which the House passed, is this says that the capitated health plans would not just be provider led but would also be non-provider led. The other big thing that this does different from the House is that it creates a new department to handle Medicaid and also the NCHealthChoice program. And that new department is to be the Department of Medical Benefits. The bill itself, as I said, covers goals, direction, governance and authority. Before I go through in detail, just a general overview, the bill itself covers the intent in the goals, it goes through those building blocks, provides a timeline, gives details on what the detailed plan is going to have to look like, it provides for reports. There’s a portion on maintaining funding mechanisms. Also it talks about DHHS’ role in the reform, and then we

Get in to the specifics of the new department to be created as well as a new oversight committee here at the general assembly to be in charge of the new department. Alright so lets turn to page one and take a look at section one, these are the intents and the goals. These are very similar to what was passed by the house there are a couple of additional items on there. For example I’ll point out on line 12 number 3 it does say that one of the specific goals is whole person care. But the goals set the general overarching direction. The building blocks, section 2 provides a little more detail on what components of the reform are going to be. So you can see those there is everything from a new department to full risk capitated plans. Mr. Chair in the interest of time when we go through these I’m not going to hit every particular item in detail I’ll let the members read through. I can answer specific questions but I’ll just be hitting up a few highlights unless there is any objection. [speaker change] No, thank God, that’ll be fine. [speak change] I thought so. If you turn to page 3 I do want to point out there’s that time line there in section 3 that time line also appears on the first page of the summary. This timeline is a little bit more aggressive than what the house had. The house had full capitation by 2020 for the majority of those covered under medicaid. What this timeline does, if we’ll just sort of go through, August 1st of this year there would be the new department created as well as the new oversight committee. By September 1st there would be an identification of a central medicaid and NC health choice personal and also a transition team identified by the secretary of health and human services. We’ll talk a little bit more in detail about what that actually involves in a few moments. By the end of September the board appointment should be made, we’ll talk a little bit more about how this new department is going to be governed by a board rather than a secretary. By march 1st there’s to be an initial report on the details of the plan that’s going to be prepared by this new department. By January first of 2016, that’s the date to receive the final approvals from CMS. That’s six months in advance of the actual shift in plans occurring so there’s a little bit of wiggle room but also so that we know what the federal government is going to approve so in those last six months we can just work out the details and know what is actually is going to be approved. July 1st of 2016 is when the capitated plans would begin. Initially the non provider lead plans would be full risk capitation. The provider lead plans though would have 2 years to ramp up so there needs to be some sort of mechanism designed whereby they initially come in and their participating within the system but they are given until July 1, 2018 to then be at full risk. Section four calls for a development of the detail plan and I won't go through everything in here but there are a lot of details as what needs to be in that plan. Things that the department needs to consider is then to come back to the general assembly for review. That plan is to come back by March 1st, if you turn to the top of page 4 you can see the report of that detail plan in section five. Section six calls for a semi annual report going all the way until 2020 just on regular updates on the reforms process 2020 is two years after the full risk implantation in 2018. Section seven just deals with one of the issues we have there. A lot of medicaid funding comes from provider assessments, it’s not clear how those would necessarily fit into the new capitated model and so this is just a directive here that the new department of medical benefits, look at the options and try to see what can be done to maintain some of that funding. Section eight covers the department of health and human services role within the reform process. The basic idea with the reform and the reorganization is that the issuance of medicaid through these capitated rates is something that is so new and so different that we need to set up a new department to focus on ramping up to that for a good year and a half, two years. But we need to have the existing system maintained. So section eight tries to deal with the maintenance of the existence system as well as insuring that the HHS works with the new department heading forward. So you can see that section 8A on page four

It just says that the two departments should cooperate on reform, enter into appropriate memorandums of understanding to make sure they're on the same page. Section 8B is something important. It's the identification of a stabilization team. It's a directive to the Department of Health and Human Services to identify the key leaders within Medicaid, form this group, recognize this group of individuals, and ensure that they are working on several items that you can see listed in the subdivisions there. Section 8C provides an incentive to keep staff working in Medicaid. Many of the staff positions within the Division of Medical Assistance, although it's not provided for in this, those positions would disappear, on the theory that what the new department is going to be doing is going to be something that's very, very different from what's being done now. And so, there needs to be some sort of incentive to keep those essential personnel within the departments, so there's a 5% bonus payment that's provide for. And there's an additional bonus payment if they stay until the very end, equal to the sum of all of the bonus payments that they received. On the identification of the essential positions, this is to be done by the Secretary, and the language does make it clear that essential is not just top leadership, but it's non-supervisory staff, it's state personnel protected positions, it's the person who carries the piece of paper from Point A to Point B, or puts things into envelopes, without whom the system couldn't function. If you'll turn to page 6, there's just something dealing, Section 8E, just to be sure all of the contracts going forward that are related to Medicaid that the Department of Health and Human Services enters into, just to ensure those have a 30 days cancellation clause, so when we start to look at what contracts are necessary for the new entity, those can be cancelled as necessary. And finally, Section 8, and I apologize Mr. Chairman, I will have a technical correction. I have two Section 8Es, but the Section 8E that appears on line 30 makes a change to when the Department of Health and Human Services may submit state-planned amendments. This just adds that they may do it, at the request of the Department of Medical Benefits. Section 9 sets forth a commitment by the General Assembly. The first sentence is identical to what appeared in the House, just that the General Assembly recognizes and commits to the time and the funding for this change. It goes a little bit further with that second sentence to that the General Assembly commits to allowing the board to do its work, and also commits to a slightly different approach with some of the funding and the forecast, in which we'll talk about in a little bit more detail. Section 10 creates the department itself. As I said earlier, there's going to be a lot of addition changes within statutes and reorganization of some statutes later on down the line, but what this does is, establishes the department itself, the framework. It's created and organized to be managed by a board. This board is going to be appointed by governor and the General Assembly. Three appointments are made by the governor, four are made by the General Assembly. The General Assembly, four, as you might imagine, two are on the recommendation of the Senate pro tem, and two are on the recommendation of the Speaker of the House. If you look over on page 7, you can see that there are provisions to ensure that those appointees have requisite levels of expertise and experience to manage such an entity. And you can see those listed on page 7, line 6 through 21. There's also a concern that these individuals be fairly independent, and not be beneficiaries from actual Medicaid payments, so they don't have an incentive to just increase the rates as they would go. And so you can see, at the bottom of page 7, beginning on line 32, there's some exceptions, some individuals who may not serve on the board. And so, there's some requirements there. And Mr. Chair, I am getting close to the end. [SPEAKER CHANGES] Good to know, thank you. [SPEAKER CHANGES] Yes, thank you, sir. On page 8, you can see the powers and duties of the board. Several of these are fairly standard as to what you might see for a state department. Some are a little different and I'll talk about those. One that I do want to mention on page 8, beginning line 37, and going through 46, is a requirement that there be a detailed 5-year forecast presented by January 1 of each year to this General Assembly, so that you all know--

in advance what the expected changes to the enrollment numbers, and also the enrollment mix, would be. So that’s the first portion. There’s also on line 42, sub-sub division B, an outline of what program changes are going to be made by the department in order to keep the program within budget, the idea being, if the program is capped at this level, there’s going to be some enrollment growth, the department is going to have to plan for the changes that will be made in order to keep it within total budget. In addition, on line 45, then, they should also present that if they want to keep the same level of services, how much additional money would be necessary to fund the projected enrollment growth. Over on page 9, I do want to point out there are some variations from some other state laws. Generally, state laws that are applicable to any State Department are going to apply, but these are the particular exceptions. For example, on page 9, line 15, you’ll see that employees of the department will not be subject to certain portions of the State Personnel Act. That’s initially, after July 1, 2016, the board may designate certain persons as subject to the State Personnel Act, as long as they fall under the definition of not exempt. In other words, if they’re having trouble recruiting clerical staff, for example, and they wanted to say “you will be subject to the State Personnel Act”, that’s something that the board could do, after July 1, 2016. There are other things in there, such as the Department may choose to retain legal counsel other than the Attorney General. There are some exceptions from some State Contract Review by some other departments. There are some additional reasons to move into closed session. Lines 30 to 35, you can see there discussions of rates, discussions of the forecast, are all reasons that they could go into closed session. Additionally, materials prepared for those closed session discussions would not be subject to public records requests until after the report had been submitted. In other words, there couldn’t be a public records request for the draft versions of the forecast until the forecast is actually made public, at which point, public records requests could be made on that. If you turn to page 10, I just want to point out there is an initial board compensation that is set. One of the powers and duties of the board would be to set compensation for the board and also for the employees. Initial board compensation is set at $8,000 per month. The state share of that would be $4000 per month, so it’s $280,000 for the first year. That’s assuming 10 months. Section 12, continuing down on page 10, sets up a new Oversight Committee. It has all of the regular things that you would expect to see in a regular Legislative Oversight Committee. And, with that, Mr. Chair, I shall conclude, and I’m available for any questions. [SPEAKER CHANGES] Sir Hise and Sir Pate, would you all like to wrap that up a little bit? [SPEAKER CHANGES] So since the advisory commission last met, we have taken a look at what we felt like the charge of the general assembly was in 2013, and from that we have this bill that has been developed, and I commend the bill to you, and Senator Hise and myself would be glad to answer any questions Mr. Chairman. Senator Hise has a statement to make, I believe, before we get started with questions. We will take your questions, Mr. Chair. [SPEAKER CHANGES] OK, let’s do it this way, folks. We’ll do questions from the committee first, and then we’ll branch out to - I see we have a lot of other members here - we’ll be happy to allow them to ask questions also. I want to fully vet this. I want to say up front, I want to thank the two gentlemen here for all the work and effort they put into this. I think that you should be complimented, and its a job well done, and needed to be done. OK, questions from the committee. Senator Clark. [SPEAKER CHANGES] Mr. Chair, under this new model, will the Medicaid director serve at the pleasure of the governor or the pleasure of the board? [SPEAKER CHANGES] Pleasure of the board. Subject to the contract issued with the board, but they serve at the pleasure of the board. [SPEAKER CHANGES] Senator Blue, did I see your hand? Please. [SPEAKER CHANGES] Thank you Mr. Chair, you did. Under the prohibitions of individuals who cannot serve on the board, I’m wondering what the thought process is of excluding those who, say

The health care economist and folk like that who would be found primarily in the Universities. [SPEAKER CHANGES] Provided that those individuals that they would represent a large business, so if they're an economist that comes form the business aspect, they would be allowed. I firmly believe in looking at it and similar models like in Oklahoma, individuals from the provider communities and others that are invested seem to collapse their system when they were part of the board as were moving forward. So that's why we placed most of those exclusions there, but if someone had particularly the actuarial experience or experience in a large business with a corporate model there are slots that those individuals would be eligible to fill. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Now the point that I'm getting at is that whether it's in state system or in private universities in the state, the people who are more knowledgeable about this, trends and everything else, usually are found in the universities, and I wonder why you want to preclude their participation in helping set the direction. They're the ones that write about it, who study it intensely, not just health care economists but the academicians who probbaly understand this better than anybody. Not just the - and I'll ask you another question about the corporate participation because it seems that to some degree you're excluding corporate participation also given the breadth of Medicaid spending and the kinds of things it's related to. Whether it's pharmaceuticals or various other things of that nature. [SPEAKER CHANGES] I'll take that to be a two part question Senator. Senator Hise go ahead. [SPEAKER CHANGES] First of all I think you'll see none that's exquiring corporate and matter fact two of the positions on there are required to be individuals with experience in large business and corporate boards. That work in that we're specifically looking for those individuals and in prioritizing of the seven lineated positions that we have we were looking for individuals that contained the corporate experience in working in the healthcare industries or in actuarial settings to try to set this board up, and I think that's what we reflected in the board. [SPEAKER CHANGES] Did you answer both questions? I couldn't tell. Thank you. Senator [??] any follow up? [SPEAKER CHANGES] Let me ask you a what if question then. Why wouldn't somebody from Glaxo be precluded from serving on this board? [SPEAKER CHANGES] It's to my understanding that provided that Glaxo did not receive their direct payments or they weren't a member of Glaxo's direct board from Medicaid, they were not a provider to Medicaid, they would not be excluded from serving on the board. [SPEAKER CHANGES] Next question then Mr. Chair. [SPEAKER CHANGES] Please. [SPEAKER CHANGES] Why would a professor at Wake Forest in the RUNC in the school of health be precluded from serving on the board? [SPEAKER CHANGES] Provided that individual has corporate experience and experience in working in the corporate setting in a corporate board, they would not be precluded. [SPEAKER CHANGES] But they would work for one of the - they would work for somebody who has - they would be an employee of a provider who had received compensation from Medicaid if you work for UNC or you work for any of the private universities that have health systems. [SPEAKER CHANGES] They would be precluded if they had received that payment within a year. So if they had not received that payment within a year they would be eligible. [SPEAKER CHANGES] One last follow up. [SPEAKER CHANGES] You said that a moment ago. I'm gonna give you some leeway Senator. [SPEAKER CHANGES] I'm chasing him, I'm trying to catch him. [SPEAKER CHANGES] Good luck with that! [SPEAKER CHANGES] Routinely the health system whether it's UNC, East Carolina, whatever their arrangement is with Novine, I mean the group down there, Wake Forest, [??] Vidant or Wake Forest or Duke for that matter will be continuously receiving payments from Medicaid because they run health systems. what I'm asking you is, why would you preclude any employee of those institutions from serving on the board because that's where you'll find the people who are most knowledgeable about what is happening in trends and payments, drug use and stuff. They may not necessarily work for the East Carolina Medical School or Duke Medical School, or Wake Forest or UNC, but they work for an employer who is receiving money from one of those boards, I mean from Medicaid. [SPEAKER CHANGES] I think you will.

Look, in [??] the caucus we are looking for someone specifically with healthcare system experience, we are just looking at the requirement that they have severed themselves for at least a year to avoid the conflicts of interest that could occur to their previous employer. [SPEAKER CHANGES] Senator Stein. [SPEAKER CHANGES] Thank you Mr. Chairman. The idea of having the provider led ACO's is one that's appealed to me and I worry that by compressing the time schedule that it may be too quick for them to get to fully capitated care, and I'd also like to understand what the consequence to those ACO's would be by having the manage care entities to compete. And I was wondering if Mr. Chair your plan was to allow the providers to have an opportunity to comment, I didn't know if folks signed up. [SPEAKER CHANGES] Yes. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Thank you, we do have a sign up sheet and we're going to carry this through til' tomorrow also for folks that have questions. [SPEAKER CHANGES] I think you will find that our plan is a compressed schedule to what has been previously proposed, however is not inconsistent with what has happened in other states. At this point you basically have a four year time window in which we expect the provider led plans to be at fully capitated. We have multiple examples from Florida, from provider led, hospital led, FQHC led programs that reach the full capitation rate within a two year window. Some went to partial capitation within 18 months, and we've got a two year for that, and then full capitation within another year. So there any many examples and particularly in Florida which you'll find our plan is most similar to. Where provider led plans have been able to do it on even a much more aggressive time table than we've put forward. [SPEAKER CHANGES] further questions? Senator Clark? [SPEAKER CHANGES] Mr. Chair could we have an explanation or amplification of what CCNC's role would be under this model? [SPEAKER CHANGES] Senator Hise? [SPEAKER CHANGES] There are two specific, and I say that delineated roles that CCNC plays. The first is their networks are a consideration in the boards development of regions. That is one of the areas that that I'm [??] is not the exclusive area that the regions are based on that is an area of consideration. The second explicit role in the bill has CCNC developing the factors by which we measure quality within these plans, that asks for CCNC. I say beyond that CCNC is a private organization that will still continue to operate the HIE, that is nothing that we have changed within this bill, but their ability to contract to others and provide that information to help the providers is still open to them, or if they made the choice to become a provider or those in any of these regions those options would be open to them as well. They're not prohibited from doing so. [SPEAKER CHANGES] My favorite, Floyd not you, Senator Robinson. [SPEAKER CHANGES] Thank you Mr. Chair, just to follow up Senator Hise on the CCNC's, based on the - and I'm trying to read quick, does this, the board appointments preclude them from being or some representative from being on the board? Because they do get provider payments, so is there strict preclusion from CCNC's [??]. [SPEAKER CHANGES] The preclusion is in just that, they have received direct payments form the Medicaid system for services, so any of those individuals who are on that board or have received those payments for one year would not be eligible to serve on that board. [SPEAKER CHANGES] Follow up Mr. Chair? [SPEAKER CHANGES] Yes Ma'am. [SPEAKER CHANGES] Is there any way since CCNC's also have boards and the board member would not be a direct recipient of the payment, is there any way to have a representative maybe on the board to be on this board? [SPEAKER CHANGES] Senator Hise. [SPEAKER CHANGES] I think that was a consideration in excluding boards that receive their funds, that would - to open it up would open it up to all hospital boards, all doctor associations boards, those type of things. We wanted to keep that arm length from the individuals who are receiving payment in order for that to occur. So the way they would serve is to not have received payment for a year prior to filling those board positions. [SPEAKER CHANGES] Senator Mckissick. [SPEAKER CHANGES] First I want to thank you for your work on this. I know you guys have spent a lot of time so I do appreciate your efforts.

I do have a couple of questions. How do you envision this system working with the provider-led as well as the non-provider-led, you know, accountable care organizations, in terms of territory, in terms of how they determine who is competing against each other, actually functioning and operating, since the original model envisioned four accountable care organizations split up by geographic areas. And to what extent has there been communication with Health & Human Services and their consultant Bob Atlas and others related to what you have before us now for consideration? [SPEAKER CHANGES] I think what you’ll find right now is that the regions are not yet drawn. That is a section we leave up to the board, to develop regions. I would imagine you’d see the state in some sort of range from three to ten regions that are set up. We’ve also left up the notion that they declare rural and urban regions, that you have priorities for urban regions if you have rural regions within those. They also, the board also has the limit to limit the number of providers who are, plans that would be available in a region. That is coming out, so if they set a cap of three or four, an individual would have the choice then of four plans for their region, that would cover them. And I think the competition to get patients to your plan as well as to bid for the process to come into a particular region, is what we believe will hold the costs down, and increase quality within each region. We have left it up. The regional model is not suddenly unique, and suddenly a first-Senate idea. It was the direction that I think clearly the, they began the process then and the Governor’s plan this year and was part of their initial considerations. We think it had a lot of merit for a final plan and that’s what we’re looking for. I think you can look clearly at Florida and see how they’re working, interacting with each other. But we also do give priority to provider-led plans, in requiring that every region must first have a provider-led plan, that is coming in barring some exceptions that they can’t get a plan to form within that region. But if provider-led plan forms in a region it will have priority for being a plan offered in that region. [SPEAKER CHANGES] Quick follow-up, Mr. Chair. [SPEAKER CHANGES] Yes. [SPEAKER CHANGES] In terms of input from Health and Human Services, where do they stand in connection with this particular proposal? And I’ve heard you reference Florida a number of times. Is it the state that has in operation today a system that’s most closely analogous to what you are proposing, and if so how long has that been in operation? If you could address that, then I have one other question. [SPEAKER CHANGES] First with the department I think the discussions with reform and others have been going on with the department for probably two years now. As to the specifics, that’s been a much more limited time window. I think when we look at what plans are out there, we’ve had discussions with Bob Atlas about regional plans, NCOs, ACOs, which is how they’re coming in the department. You know, it’s a different concept when you’re talking with somebody about whether a new department should be created without them, but we have evidence that goes back in Florida to hospital-led plans being formed in I think 2006, that are coming in that are operating within Florida. So they have some history with it. We’ve had some consultation with Florida about what worked and what didn’t. And I think we’re using that. But yes Florida would be the most similar. [SPEAKER CHANGES] And if you could, Senator Hise. I’ll get with you later, I’d like to see what that data looks like from Florida, and what insights can be provided to us. Now in terms of compensation of board members, it looks like we’re up around $96,000 a year. I mean, how did that number come to be the appropriate benchmark for compensation and what are boards in other states compensating their members? I mean, how much you know, I don’t know because I’ve not looked at models like this. But I’m trying to determine if that’s an appropriate level of compensation, how that benchmark was established, obviously we’re asking these people to do a lot of work. I assume they’ll be some kind of bilaws created related to the frequency of meetings. I assume at that point in time we’re compensating them at that level, it’s reasonably anticipated they’re going to give a substantial amount of time to these efforts ?? [SPEAKER CHANGES] Senator McKissick, let’s tighten our questions up just a bit if we could. [SPEAKER CHANGES] I’ve got to get a much as possible. [SPEAKER CHANGES]?? about five minutes ago. [SPEAKER CHANGES] I know we’ve got to get in as much as possible because we may not be able to get more in. [SPEAKER CHANGES] Senator Hise, are you good with that question? [SPEAKER CHANGES] I will go with this. The model we looked for established was corporate boards. We looked at boards like Blue Cross and Blue Shield in the private sector, and what

Compensation set. The ultimate concept is we are setting the initial compensation of the board, the board will set its own compensation as it does in corporate models all over the U.S. [SPEAKER CHANGES] Ask one [??] on compensation, that's simply this, are we envisioning that this is when they're getting that level of compensation, individuals that will not be actively employed, engaged in other professions or is this really supplemental income for these people who will be serving, and what time commitments are we anticipating? [SPEAKER CHANGES] Initially I think we're looking at something that would be close to a large or full time time commitment. Most boards when they set their own compensation set it commencery [SP] with the time required to be on the board as it moves forward. So I think you'll see a lot more requirements of the board when it's initially formed, and I think you'll see those diminish over time. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] I would now like to add onto that Mr. Chair. Senator Mckissick we're going to try to see that these people get up to the minimum wage. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] [??] Did you have any questions? [SPEAKER CHANGES] Yeah, our minimum wage. [SPEAKER CHANGES] Okay. [SPEAKER CHANGES] Mr. Chair if you will I have a few. [SPEAKER CHANGES] Let's take a couple of them right now and go down that road. [SPEAKER CHANGES] All right, first of all, if we can go to page three under section four, I notice that we have waivers. We have the SPA's and we also have 11-15's which I believe are demonstration waivers. Any reason why there will be no need for 19-15 waivers under this plan? Do we know? [SPEAKER CHANGES] Because we've providing for whole person care and are not looking to carve out specific populations. [SPEAKER CHANGES] So that everybody will be included. Okay, I appreciate that. Another follow up. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] On item 14 have we given thought to what will happen to NC Tracks and has their been any thought as to where IT will reside? Will we have a new IT organization here or will they link back to Joe Cooper's staff? Any thought yet? [SPEAKER CHANGES] I have thoughts but I think they're probably different than Senator Hise's. Go ahead senator. [SPEAKER CHANGES] DMB will have IT and IT responsibilities and I suspect that if those are the contracts they want to go with and move forward that the programs will be transferred over to the new department. [SPEAKER CHANGES] If I may continue? [SPEAKER CHANGES] Follow up please. [SPEAKER CHANGES] These are good clarifications and appreciated. Under item six with the regions as we define them, have we given any thought as to whether we would adopt CMS transportation standards as part of that definition for those reasons, or whether that will impact anything Ralph? [SPEAKER CHANGES] The transportation standards are not required for the board to look at but they are open to be able to have other considerations. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Okay, anything else from the committee at this point? All right I want to go to the audience, Baggett you out there somewhere? Chip? Cody you're backing him up, don't push him, he can wander your way also. All right. Hear form Mr. Baggett. [SPEAKER CHANGES] Baggett, Director of Legislative Relations for Medical Society. Always a pleasure to be before your committee Senator Apodaca. [SPEAKER CHANGES] Good to have you Mr. Baggett always. [SPEAKER CHANGES] Thank you very much. Everyone of your knows from the conversations that we've had individually over the years our priority that is set on Medicaid every single year for the physicians of the state of North Carolina, and this year is no different. I have been working diligently for the past three years to come up with a new value driven system of delivering health care to Medicaid patients that moves away from the fee for service system that we're currently in because we recognize the challenges that lie ahead if we continue on the same path doing the same thing that we've been doing in the past. So we have invested millions of dollars, we have invested staff time, we've invested research, we've done national grants in order to produce materials to train physicians on how to move to value driven care. All in a major effort to avoid going to out of state manage care entities, and as you know we've had two priorities and that is one major priority for us is opposing out of state manage care entities coming in and taking money that could be used within the state to apply to other priorities and instead send it out to profits for other companies. At this point in time we believe this bill incorporates many of the manage care principals that we oppose, and so without detailing all those different hings I will point out two specific things. The first is, it's manage care layout where we go into competition where there is going to be some money to provider led organizations and some going to non-provider led organizations or insurance companies or HMO's, however you want to use the terminology. That sets up the state to sending money to somebody other than North Carolina citizens, that is not going to be reinvested in the state, that is not going to be used to solve your budget problems, that is not going to be used.

to pay taxes in North Carolina or buy gas, or buy groceries, or pay home mortgage loans in North Carolina. The second piece that we oppose specifically around managed care is the idea that on the new entity that you've set up, you have a great wealth of insurance and managed care experience there while specifically excluding any physician experience. And I think we've shown great leadership experience over the years in bringing forward good ideas and bringing forward solutions and bringing forward plausible, realistic ideas on how to move forward, to move to the ?? system. And yet we are specifically drawn out here while the non provider-led entities that are allowed to compete with us on the local level are allowed to be on the board. So those are 2 specific things. We haven't had a lot of time to go through all the specific complaints, er, go through all the specific provisions on this bill. Sorry, Freudian slip. [SPEAKER CHANGES] We're going to let you go over tonight and find some more things you don't like. ?? Go ahead. [SPEAKER CHANGES] I bet you are, yes sir. But we have been given the opportunity to work with staff after this evening is over today and we look forward to continuing to work with you to try to solve this very important problem. So thank you for letting us have the opportunity to talk to you about it. [SPEAKER CHANGES] There are some things in it you do like, let's be honest. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Okay, good. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] I don't want you to be totally negative. Cody, step up. [SPEAKER CHANGES] Thank you Sen. Apodaca and committee, my name is Cody Hand from the Hospital Association. Again I wanted to thank you all for working with us on this bill, and this has been a process that we have each, Chip and I and all of our provider groups, dragged out members along kicking and screaming. We need budget predictability just as much as you all do. We applaud you for looking at ways to do that. Sen. Apodaca, there are many provisions in this bill that we do like. We think, all due respect to the state and the department, we think your providers can do a much better job managing your medicaid population and dollars than the state can, and frankly more than managed care companies can. One of the reasons that I think we can do that is we have quality metrics that we have to meet. We've set them for ourselves and the government has set them for us, and we have doctors that are working to meet those quality metrics. We have skin in this game more than anybody else. The thing that I don't like is that if you allow companies to come in that really don't have a vested interest in the patient out come, they're living and profiting off of the quality metrics that we are having to meet. So I would encourage you before you turn this over to ACOs and MCOs, that you give the ACOs a chance to prove that we can do it before you do anything else. There are many provisions in this bill that we do like, as I said, and I do appreciate you allowing us to work and continue to work on this bill. Now I would encourage you, as much as we've heard from you about this, you're going to hear from our members over the next 24 hours about their thought on this. So I would encourage you to take their phone calls and consider what they say as we all work to provide better care for not only our medicaid population, but everybody else who's not on medicaid that we also provide care to. Thank you. [SPEAKER CHANGES] Feel free to have him call Louis and Ralph. Cody thank you. [SPEAKER CHANGES] They've got your number too. [SPEAKER CHANGES] Adam are you out there somewhere? Come on up. Thank you Mr. Chairman. Adam Scholler, legislative liaison for DHHS. We appreciate the Senate's recognition that medicaid reform is important and the desire to keep the momentum going on this issue but we do have some concerns with this version of the bill that I just wanted to point out. First on the reform plan, this is kind of a different approach or there's some new things that were added on here that a bit different that what we've spent the last 16 months working with stakeholders around the state and the department to come up with. We're concerned about, particularly on the mental health side, a potential destabilizing effect that some of these changes could have. And we're also concerned frankly about the timeline, it's very aggressive and we're concerned that it's potentially not achievable. Not sure that CMS would approve some of these things within this timeline. On the reorganization piece, this is a more recent development and we do have concerns about splitting out medicaid from HHS, we appreciate some of the institutional barriers that the Senate has recognized and attempted to address in this bill, such as flexibility around hiring and that kind of thing, we do appreciate hearing us on these issues and that recognition, but this is an issue that we thing is very important and we would ask that it be studies rather than voting now, but we do appreciate the work you do working with us and we we look forward to working with you going forward. So thank you. [SPEAKER CHANGES] Adam, thank you. Hold on a second, I think

Hartsell has a question. [SPEAKER CHANGES] Thank you Mr. Chairman. Just very quickly you mentioned you thought it would destabilize the mental health. Can you identify a little more about what you mean by that? [SPEAKER CHANGES] Senator Hartsell, it's my understanding around the change in this bill, the ???CO's would change the nature of the way that they presently operate taking more of the whole person, the physical and behavioral healthcare care either becoming provider organizations or health plans for physical and behavioral healthcare and the path that the State has been on with these ???CO's for behavioral healthcare this would be a bit of a change for that while that system is still maturing. It's a path that hasn't had a chance to finish yet. [SPEAKER CHANGES] Follow up or are you good? Adam, thank you. [SPEAKER CHANGES] Thank you Mr. Chairman. [SPEAKER CHANGES] Well I think we're going to wrap it up today. Louis, Ralph, you have any final comments you want to make before we adjourn? [SPEAKER CHANGES] I think it's just been an evolution from three ??? managed care to an open door and I think we've come at a good position moving forward to use this computation to control costs in this state. [SPEAKER CHANGES ]Louis, anything? [SPEAKER CHANGES] Thank you for the indulgence of the Committee, Mr. Chairman, and for the other people who are here to hear about this. I think that we are working very diligently to see that Medicaid becomes predictable to the State of North Carolina. [SPEAKER CHANGES]Thank you Senator. I'm glad to see our friends from the House with us today. I know they'll want to concur when it goes over to them so they've gotten a lot of information on it. We are adjourned.