The resignation of Dr. Aldona Wos as state health secretary could be the catalyst for breaking the logjam over state Medicaid reform, analysts said Wednesday.

Wos’ last day will be Aug. 17. Gov. Pat McCrory said she is being replaced by Richard Brajer, a private-sector health-care executive.

Medicaid reform arguably is the biggest sticking point between state Republican leaders and McCrory, who has said repeatedly that he thinks the program is broken. Some health-care advocates dispute that assessment.

Under Wos’ oversight, the N.C. Department of Health and Human Services has struggled with major inefficiency issues, particularly with the state’s $14 billion Medicaid program.

Medicaid covers about 1.9 million North Carolinians. It has had a nearly $2 billion financing gap since the start of the 2009-10 fiscal year, although DHHS has claimed a combined $194 million in cash on hand after the last two fiscal years.

“To the extent that Aldona Wos became the focal point for concerns and criticism of (DHHS), her resignation and the appointment of Brajer as new secretary represent a fresh start for the McCrory administration and its relationship with the General Assembly,” said Mitch Kokai, a policy analyst with the right-leaning John Locke Foundation.

McCrory has said repeatedly he is not ready to recommend that the state expand Medicaid coverage to about 500,000 more people, even after the latest U.S. Supreme Court decision upheld the constitutionality of the federal Affordable Care Act. McCrory stressed that Wos’ perspective would play a significant role in whatever decision he made.

The House Medicaid reform legislation, preferred by McCrory and Wos, would attempt to “modernize and stabilize” the program through a “whole person” strategy of coordinating physical, behavioral, dental, pharmacy and long-term health services. That includes behavioral health managed care organizations, such as CenterPoint Human Services and Partners Behavioral Health Management, which serve the Triad and Northwest North Carolina.

Provider-led entities, such as health care systems, hospitals and physician groups, would take the risk of Medicaid enrollees’ use of services through a capitated — or fixed-fee per individual — payment format.

By comparison, the current system is based primarily on a fee-for-service format.

The Senate is committed to establishing the Health Benefits Authority, an oversight board nominally within DHHS, and allow for-profit providers to play a prominent services role.

Several key Senate Republican leaders, including President Pro Tem Phil Berger, R-Rockingham, have cited their frustration with DHHS’ inability to provide timely and reliable Medicaid data for state budget purposes. Authority supporters also claim Medicaid may have become too big for DHHS to handle efficiently.

“I suspect (Wos’ resignation) will make the Senate more willing to keep Medicaid in DHHS, which is probably a more efficient way to run the program,” said Adam Linker, a policy analyst with left-leaning N.C. Justice Center.

The House passed its Medicaid reform bill June 23. Since then, the bill had languished in a Senate Ways and Means committee, which rarely meets. However on Tuesday, Sen. Tom Apodaca, R-Henderson, and Senate rules chairman, said the House bill would be moved to the Senate Health Care Committee next week.

Berger said “there is still a great deal of work to do to get Medicaid on track and under control, but there is no question DHHS is in better shape now than it was before Secretary Wos’ tenure.”

Kokai said “it certainly appears as if there’s going to be a concerted effort to try to reach some agreement on Medicaid reform and other sticking points involving health and human services programs.”

Betty Taylor, the executive director of CenterPoint, said being state health secretary “is not for the faint of heart, especially during a period of national health care reform with competing models of care.”

“Observers will note criticisms and minimize the successes,” Taylor said. “Only in hindsight can improvements during her tenure in services and the system be validated.”

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rcraver@wsjournal.com (336) 727-7376 @rcraverWSJ

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