Medicaid reform hits homestretch in North Carolina

By: Dan Way - Carolina Journal

RALEIGH — As chief budget writer in the House, state Rep. Nelson Dollar is accustomed to dealing with big numbers. But he marvels at the pending $6 billion layout to launch the first phase of the state’s Medicaid transformation to a managed care format.

“That’s roughly a third of the Medicaid procurement, so it’s the largest procurement in the history of the state of North Carolina,” the Wake County Republican told Carolina Journal. “It just tells you the enormity of what you’re dealing with.”

The government insurance program for the poor, elderly, and disabled serves about 2 million North Carolina residents.

Medicaid reform has been in the works since 2013. After release of a scathing audit, Gov. Pat McCrory and the Republican-led General Assembly began reversing years of sloppy management and chaotic practices that led to $2 billion in Medicaid cost overruns over four years. Since then, the program has stayed within budget.

The state Department of Health and Human Services is collecting bid offers from parties wanting to manage the Medicaid program. The reform has been called the biggest change to Medicaid in 40 years.

Delivery will shift from a fee-for-service system in which every doctor visit and service was charged to the state, to a capitated system giving managed care networks a flat monthly fee to cover all health care services, and contract with providers to meet quality and cost targets.

The managed-care plans will include up to four statewide commercial networks and 12 regional provider-led entities. They will offer standard plans, which include comprehensive services, to most Medicaid and NC Health Choice beneficiaries. Tailored plans will serve populations with unusual health care demands.

DHHS spokesman Cobey Culton said bid proposals will be accepted in October. Officials expect to award contracts in February, and plans are for the new system to go live the second half of 2019.

Culton said some networks and partnerships might include the state’s LME/MCOs — seven geographically arranged organizations that administer services for intellectual and developmental disabilities, mental health, and substance abuse. They already operate on a managed care basis. Health care providers and other parties will fill out the networks.

AmeriHealth Caritas, a national leader in Medicaid managed care, recently offered a look at its proposal. A press release announced it signed a letter of agreement with Advancing NC Whole Health Coalition to join in a network connecting behavioral health, physical health, and pharmacy services.

The coalition comprises three LME/MCOs — Alliance Behavioral Healthcare, Trillium Health Resources, and Vaya Health. They serve 715,000 Medicaid eligible individuals in 53 counties with $1.375 billion in public funds.

Alliance Behavioral Healthcare serves 471,000 Medicaid-eligible and uninsured individuals in Durham, Wake, Cumberland, and Johnston counties with a network of almost 2,200 private providers.

Trillium Health Resources operates in 26 counties in eastern North Carolina.

Asheville-based Vaya Health manages services in Alexander, Alleghany, Ashe, Avery, Buncombe, Caldwell, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, McDowell, Mitchell, Polk, Rutherford, Swain, Transylvania, Watauga, Wilkes, and Yancey counties.

AmeriHealth Caritas operates in 15 states and the District of Columbia, serving about 5.3 million Medicaid, Medicare, and Children’s Health Insurance Program (CHIP) members. It is seeking a standard benefit plan contract.

Dollar said while the General Assembly doesn’t sign off on awarding contracts, lawmakers ensure contracts follow both the law and the basic outlines of the reform model.

The Cooper administration hasn’t seen eye-to-eye with Republican lawmakers over Medicaid reform. He began negotiating Medicaid expansion with Obama administration officials without legislative approval when he took office in January 2013.

He said expansion could provide coverage for up to 650,000 uninsured people at a cost of about $6 billion over 10 years. His 2018 budget proposal recommended expanding Medicaid to 670,000 people.

Republican legislative leaders sued in federal court to block Cooper’s expansion in 2017, but withdrew the lawsuit because Cooper never filed an expansion request with the federal government.

Dollar said “that is always possible” Cooper’s administration could wage a turf battle over implementation of Medicaid reform, including attempts to expand Medicaid.

“We hope they will work cooperatively with us, and we hope they will stay within what the General Assembly has set out in the framework of a number of bills for how we want to system to operate,” he said.

Hundreds of details must be resolved on Medicaid reform, Dollar said, and the Trump administration may require tweaks before approving a required waiver for the reform plan. DHHS and the General Assembly may have to make other changes before reforms take effect.

Meanwhile, legislative Republicans are touting the Medicaid turnaround in this election season.

“We needed to do something to rein in the out-of-control costs that were eating into other critical programs,” Sen. Louis Pate, R-Wayne, co-chairman of the Senate Health Care Committee, said in a Tuesday, Sept. 25 press release.

“These vital reforms will ensure greater budget sustainability, and take the General Assembly out of the business of managing Medicaid, all while fostering better health outcomes,” Sen. Ralph Hise, R-Mitchell, said in the release.

Dan Way

Carolina Journal