NC Starts Medicaid Transformation Program, Sidesteps Expansion

North Carolina’s legislature has decided to put off Medicaid expansion for another year, but passed a Medicaid transformation bill to continue the transition from fee-for-service to privatized managed care organizations, local news outlets explained.

North Carolina’s Senate Bill 808 sets up the funds for the Medicaid transformation project. It also established that the Department of Health and Human Services (DHHS) will need to be ready for Medicaid transformation starting July 1, 2021.

The state already contracted with five Medicaid managed care organizations to administer the transformed Medicaid program: AmeriHealth Caritas North Carolina, Inc., Blue Cross and Blue Shield of North Carolina, UnitedHealthcare of North Carolina, Inc., WellCare of North Carolina, Inc., and Carolina Complete Health.

Meeting the 2021 deadline will be a challenge, Dave Richard, deputy secretary of the North Carolina Medicaid program, shared with HealthPayerIntelligence.

“I think it's doable with conditions,” Richard said.

The first condition is that the state needs to wrestle with how to handle the coronavirus pandemic. Strong partnerships with other agencies will be key to enabling an effective response.

The second condition is that the DHHS will need to restart its transformation process, which the coronavirus pandemic partially interrupted.

“Without COVID, it would be an aggressive campaign because you have to restart everything,” Richard noted. “With COVID, it makes it more difficult.”

That being said, he still had hope that the transition would be possible, as long as North Carolina avoided a major surge in coronavirus cases or some other health crisis that would divert attention and resources from the transformation.

As DHHS moves forward in its Medicaid transformation process, the first step will be to determine what coronavirus-related polices should become permanent, such as certain telehealth policies.

Supporting the program’s provider partners will be a critical next step as well. Hospital systems and primary care providers alike suffered financial losses by deferring nonurgent care. Thus, as the department ramps up its transformation, both the department and its provider partners also will be working with adjusted payment rates as well as handling an ongoing pandemic.

The evolution of North Carolina’s Medicaid program has been a bitter process for the Tar Heel State.

Since CMS approved the 1115 Medicaid demonstration waiver to reform the managed care system, the state saw a general assembly politically deadlocked over Medicaid expansion, challenges in passing budget, and a lawsuit over the managed care contract determination.

However, Richard, who said he is an eternal optimist, expressed hope about this new stride into transformation and that North Carolina would ultimately choose to expand its Medicaid program. To Richard, coronavirus only underscored the need for Medicaid expansion.

“What is clear with COVID is that expanding Medicaid is the right thing to do,” he said. “It was the right thing to do before COVID. It's the right thing to do now.”

While emphasizing that the decision is long overdue, Richard hoped to see the general assembly start a conversation about Medicaid expansion next legislative session.

“I don't ever want to tie Medicaid expansion to managed care in that way, because expansion is the right thing to do, no matter what delivery system we have,” Richard said. “But I am hopeful that those conversations will increase and that the general assembly will make that decision along with our governor to finally do what we should have done several years ago.”

North Carolina is not the only state adjusting its Medicaid program during the pandemic. This decision came in the same week that Oklahoma voters chose to expand their Medicaid program by a vote of less than one percent.