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Governor signs Medicaid transformation bill; new format projected to start in July 2021

Governor signs Medicaid transformation bill; new format projected to start in July 2021


A Medicaid transformation initiative five years in the making has received final clearance from Gov. Roy Cooper.

Now comes the hard part, particularly launching the statewide prepaid health plans, or PHPs, by July 1, 2021, for a potential 1.6 million North Carolina participants.

Cooper signed Senate Bill 808 into law Thursday.

It also features several COVID-19 pandemic relief projects and the $15 million appropriated to move the N.C. Department of Health and Human Services from the Dorothea Dix campus in Raleigh to another site in Wake County.

NC Medicaid currently serves 2.22 million North Carolinians, or 21% of the state’s population. That number is projected to increase to 2.28 million by mid-2021 and 2.39 million in mid-2023.

Those affected by the initiative are scheduled to be enrolled through a federal waiver approved by the U.S. Centers of Medicare and Medicaid Services in October 2018.

Transformation was supposed to debut initially on Feb. 1, 2020, in the Triad and Triangle, and then statewide on June 1, 2020, before being postponed Nov. 19 by the N.C. secretary of health, Dr. Mandy Cohen.

Cooper’s approval pleased state Sen. Joyce Krawiec, R-Forsyth.

“I’m excited that Medicaid recipients will be able to now move to managed care and receive the ‘whole person’ care they have been waiting for,” said Krawiec, a primary co-sponsor of the bill.

“The Medicaid system will likely have huge growth due to the economic downturn caused by COVID-19,” she said.

Managed care

Managed care is a system under which people agree to see only certain doctors or go to certain hospitals, as in a health maintenance organization, or HMO, or a preferred provider organization, or PPO, health-insurance plan.

Under the current Medicaid system, providers are paid on a fee-for-service model administered by the DHHS.

By contrast, the PHPs will pay health-care providers a set, or capitated, amount per month for each patient’s costs. The DHHS will reimburse the plans, and people will be able to choose which PHP they want to sign up for, or a provider will be assigned to them.

The PHPs are Centene (operating as WellCare of N.C.), AmeriHealth Caritas N.C., Blue Cross and Blue Shield of North Carolina and UnitedHealth Group.

The program is expected to be worth up to $6 billion a year for four years, with an option to continue the contract at the same rate for another year. That represents a change from the original proposal of three years and two option years. 

Some of the initial Medicaid transformation funding would go toward patient enrollment-broker contracts, provider credentialing, data analytics and other program-design components.

Blue Cross has said it plans to create 500 jobs for its portion of the transformation.

Centene committed Wednesday to creating an East Coast regional headquarters and technology hub in Charlotte with an estimated 6,000 jobs and $1.03 billion capital investment.

Integrated care

One projected selling point from the transformation initiative is providing a whole-body care approach to individuals experiencing mental health, substance abuse and developmental disabilities issues.

“We know that the best health outcomes emerge from caring for the mind and the body simultaneously, while also considering the individual’s environmental factors such as housing, food security and other important drivers of health,” said Trey Sutten, the chief executive of Cardinal Innovations.

Cardinal oversees behavioral-health providers in 20 counties, including Forsyth, Davie, Davidson, Alamance, Rockingham and Stokes.

“We are hopeful and supportive of the move to integrated care and are evaluating opportunities and partnerships to do exactly that,” Sutten said.

Dr. Tunde Sotunde, the president of Blue Cross and Blue Shield of North Carolina, said in a statement that “Medicaid transformation of is one of the most significant and positive changes North Carolina has ever made to our state’s health care system.”

“The move will save taxpayers over $200 million a year, and bring much-needed resources to tackle social factors — things like food insecurity, housing and access to transportation — that have a major impact on health outcomes,” Sotunde said.

COVID-19 funding

Cooper chose to focus his comments about signing SB808 into law on how it will provide additional money for COVID-19 testing and tracing, “which are vital in our fight against the pandemic.”

The law provides $125 million of federal CARES Act money for “periodic testing for surveillance and occupational safety, and the hiring of temporary staff to augment contact tracing functions performed by local health departments.”

It also provides $20 million to the N.C. Division of Childhood Development and Early Education for “various childhood initiatives” in response to the COVID-19 pandemic.

“I will continue working with legislators and the federal government to increase our testing and tracing capabilities to protect North Carolinians from this virus,” Cooper said.

Expansion fight

Cooper has made it one of his signature public-health initiatives to get the N.C. General Assembly to expand Medicaid coverage to an additional 450,000 and 650,000 North Carolinians without health insurance.

The previous Medicaid transformation startup funding effort, contained in House Bill 555, was vetoed Aug. 30 by Cooper, in large part because the bill did not contain any Medicaid expansion language.

North Carolina is one of 13 states that have not expanded their Medicaid program through the federal Affordable Care Act.

In a referendum Tuesday, voters in red-state Oklahoma narrowly approved Medicaid expansion.

North Carolina’s top Republican legislators, including state Senate leader Phil Berger, R-Rockingham, have been adamant in their opposition, foremost citing concerns that the federal government could renege on its promise to pay 90% of expansion’s administrative costs.

Berger’s opposition carries more weight than similar Medicaid expansion scenarios in other states because North Carolina citizens do not have the ability to initiate statewide ballot referendums, and a 2013 state law signed by then-Gov. Pat McCrory, a Republican, surrendered an N.C. governor’s ability to expand Medicaid through executive order.

Krawiec said the legislature has “put so much effort into transforming Medicaid to help with budget certainty and better health outcomes.”

“We should not put more pressure on a system than it can handle. Currently, the DHHS has a plate full. Medicaid transformation should be implemented, as law requires, before other issues are addressed.”

State Rep. Verla Insko, D-Orange, said she is hopeful that “the managed care companies would enjoy a big increase in patient numbers. I expect them to actively advocate for expansion.”



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