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Overhaul of North Carolina’s Medicaid program moves one step closer

If you’ve been reading about Medicaid reform for years, but not fully understanding how the state plans to reshape the program that currently serves 2.1 million North Carolinians, hop over to NC Health News this weekend and read the latest article by reporter Sarah Ovaska-Few.

This week the state Department of Health and Human Services (DHHS) released a Request for Proposal (RFP) for private insurance companies that wish to takeover the $14 billion state-managed health care system for low-income children, seniors and those with disabilities.

As Ovaska-Few and reporter Rose Hoban explain:

DHHS Sec. Mandy Cohen

All told, private companies or commercial managed care companies will earn about $6 billion of that annual total, tallying up to $30 billion over five years.

“It’s 2.1 million folks in the program, right now, and we think it’s about 1.6 million who will move into the program once it’s fully phased into managed care,” said Mandy Cohen, the N.C. Department of Health and Human Services secretary, in a call with reporters Thursday. Many of these are children and pregnant women, people for whom care is relatively cheap.

The remaining 500,000 – such as low-income seniors in nursing homes and people with mental health and intellectual or developmental disabilities – have more complex needs. Cohen said they will be phased into the managed care system in later years.

Medicaid recipients will have four statewide plans to choose from, as well as up to 12 smaller provider-led entities, which could be led by hospital systems or other localized health care groups.

Selected prepaid plans will come on for an initial three years, with the option to renew the contract, and renegotiate rates, for an additional two years, Cohen said.

Seeking budget stability

The major shift in Medicaid management comes at the behest of the N.C. General Assembly, which decided in 2015 to move Medicaid away from being managed by DHHS in favor of contracting the program out to commercial managed care companies or hospital-led health care systems to oversee patient care. Members of the Republican-led state legislature had voiced their displeasure for years about fluctuating Medicaid expenditures and said moving to a system where the state prepays an upfront price for each patient will lead to more budget stability and savings.

North Carolina is the largest state that does not currently have big swaths of its Medicaid program run by managed care companies.

Thursday’s RFPs make up the largest set of contracts the state’s health department has ever sought, with an estimated $6 billion a year in combined state and federal dollars expected to be contracted out, Cohen said.

But it’s not clear how much the move will save, if it even saves anything.

Pay for doctors and hospitals will remain the same, at least initially, Cohen said. Contracts will require that physicians and other providers who stay in the Medicaid network will receive 100 percent of what they’re getting now.

“So, doctors should not see any decline in what they’re getting in terms of payment per person for the kind of services they’re delivering,” she said. “Hospitals will have a temporary rate floor as well as we move into the managed care program.”

Nor will patients be denied services they need, Cohen said, with the department maintaining control over what’s defined as a medically-necessary service.

Insurers wishing for a piece of the pie must submit their proposals by October 12th. The state will award the lucrative contracts to select health plans in February 2019.

Read the full story on the NC Health News website.

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