Featured in Health Business Daily, Nov. 14, 2017

N.C. Legislature Passes Hybrid Medicaid MCO Bill That Includes PLEs

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. Subscribe today!

October 1, 2015Volume 21Issue 19

After several years of discussion and at-times heated debate, both houses of North Carolina’s legislature on Sept. 22 easily passed a compromise bill that would establish the state’s first capitated Medicaid managed care program using a hybrid of “provider-led entities” (PLEs) and insurers (MAN 9/3/15, p. 6). Gov. Pat McCrory (R) has indicated he’ll sign the measure into law, but it will be years before the full impact of the statute will be felt.

House Bill 372 will require North Carolina to enter into contracts with three organizations — presumably but not guaranteed to be insurers — that would offer statewide Medicaid managed care organizations (MCOs). But the legislation also divides the state into six regions and allows for the establishment in those regions of up to 10 locally run PLEs to compete for enrollees with the statewide plans. The bill’s goal is to have at least three plans compete in each region, partly in an effort to reduce expenses of the Medicaid program, which is expected to cost North Carolina $3.7 billion this year. The entire program in the state now costs about $14 billion, including the majority federal cost share.

The composition of the regions in the legislation will be determined by the state, explains Bob Atlas, president of the EBG Advisors unit of law firm Epstein Becker Green and a consultant to the North Carolina Department of Health and Human Services (DHHS) on Medicaid managed care. DHHS will retain jurisdiction over Medicaid in the state but will do it under a new Division of Health Benefits. The regions specified in the measure will have about 330,000 Medicaid recipients each, Atlas says, and it is not yet known whether PLEs will apply to be in all portions of North Carolina.

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The compromise bill retains the state’s publicly funded behavioral health managed care organizations until they are integrated into the larger MCOs after four years. The measure also exempts Medicare-Medicaid dual eligibles and dental care from coverage through the MCOs. And it requires capitated entities in the new program to have at least an 88% medical loss ratio.

The current contract of nonprofit Community Care of North Carolina (CCNC), which has served as the primary care case management entity in the Medicaid program, would not end until the prepaid plans start enrolling patients. CCNC also would have the option of trying to compete for the new capitated contracts. And PLEs could compete for the statewide contracts as well as regional ones, Atlas points out.

All this will take quite a bit of time. The legislation, Atlas notes, gives DHHS until January 2017 to come up with the specifics of the capitated managed care plan. But it also must submit by June 1, 2016, its request to CMS for a waiver to allow the program. CMS could take more than a year to approve a waiver, and the bill says that the start of enrollment in capitated plans would begin 18 months after the waiver authorization.

This is “not a highly aggressive timetable” compared with other states launching Medicaid managed care, Atlas acknowledges to MAN. But it is in keeping, he adds, with North Carolina’s history of trying to balance the interest of all parties, including providers, and thus is a “suitable approach.” Provider organizations have been very powerful politically in North Carolina for many years.

Jeff Myers, CEO of the Medicaid Health Plans of America trade group, calls the legislative approval of the Medicaid managed care bill a “great step forward” for beneficiaries. “We hope this hybrid statewide and regional arrangement results in a level playing field in which true competition will lead to the best care at the lowest cost for those most in need,” he adds.

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