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North Carolina Outlines Proposed Design for Medicaid Managed Care

This week, our In Focus section reviews “North Carolina’s Proposed Program Design for Medicaid Managed Care,” a draft proposal published this week for public comment, which provides a detailed overview of the planned statewide Medicaid managed care program to be launched in 2019. By 2023, North Carolina estimates it will have transitioned roughly 1.8 million Medicaid beneficiaries in the state to managed care. North Carolina’s Department of Health and Human Services (DHHS) is encouraging public comment on the program design proposal through September 8, 2017, ahead of a planned request for information (RFI) release later this year.

Current Medicaid Structure

North Carolina’s Medicaid program currently covers most beneficiaries through a Primary Care Case Management (PCCM) system, with most services, aside from behavioral health, paid for under a fee-for-service (FFS) structure. The PCCM system is comprised of primary care medical homes (Carolina Access practices) and the Community Care of North Carolina (CCNC) networks. All behavioral health services are currently provided through capitated arrangements with Local Management Entities – Managed Care Organizations (LME-MCOs). However, in 2015, the state legislature enacted legislation, which directed DHHS to transition Medicaid from a FFS to a managed care structure.

Medicaid Managed Care Covered Populations

The Medicaid managed care program will initially aim to enroll around 1.5 million of the state’s roughly 2 million Medicaid beneficiaries. The program will initially exclude:

  • Dual eligible beneficiaries;
  • Program of All-inclusive Care for the Elderly (PACE) enrollees;
  • Medically needy beneficiaries;
  • Beneficiaries only eligible for emergency services;
  • Presumptively eligible, during period of presumptive eligibility; and
  • Health Insurance Premium Payment (HIPP) beneficiaries

Certain special populations, including dual eligibles, are scheduled to be shifted to managed care through a phased-in approach after the planned 2019 implementation.

Special PopulationEstimated EnrollmentExpected Phase-In

(no later than)

Children in foster care, adoptive placements22,0001 year after implementation
Certain beneficiaries with a severe mental illness (SMI) or substance use disorder (SUD) diagnosis, individuals with intellectual or developmental disabilities (I/DD), and members in the TBI waiver.85,0002 years after implementation
Non-duals receiving long-stay nursing home services2,0004 years after implementation
CAP/C and CAP/DA waiver members3,500
Dual Eligibles245,000

When fully implemented in 2023, North Carolina estimates it will cover 1.8 million Medicaid beneficiaries in Medicaid managed care. This total would increase if the General Assembly passes proposed legislation to implement the Carolina Cares program. Carolina Cares would expand Medicaid, incorporating a number of personal responsibility requirements including work requirements and monthly premiums based on income.

Managed Care Plan Design

North Carolina DHHS will procure and contract with two managed care plan models, known as Prepaid Health Plans (PHPs).

  • Commercials Plans (CPs) – Per the managed care legislation, DHHS is to contract with three CPs to provide integrated physical, behavioral, and pharmacy services under statewide contracts.
  • Provider-Led Entities (PLEs) – PLEs will be able to bid on individual regions in the state, and are not required to operate statewide. PLEs must cover a region in its entirety, and may bid for more than one region, provided the regions are contiguous. There are specific statutory rules regulating the ownership structure and governing body of PLEs.

Given that PLEs and CPs will be competing in the same geographies, and PLEs may be directly owned by or have strong ties to providers, DHHS has outlined steps to protect against anticompetitive behavior. Per the program design proposal, “DHHS will prohibit exclusivity provisions in contracts between PHPs and providers and will require providers that partially own or control a PHP to negotiate with rival PHPs in good faith if those rival PHPs seek to contract with them.” Additionally, DHHS has the authority to review contracts between PHPs and providers and enforce changes if anticompetitive behavior is found.

Managed Care Product Design

DHHS intends to allow both CPs and PLEs to offer different types of managed care offerings, although this will require legislative amendment of the authorizing statute.

  • Standard Plans: PHPs will cover physical, behavioral, and pharmacy services for most Medicaid beneficiaries.
  • Tailored Plans: PHPs may offer targeted managed care plans to serve special populations, including behavioral health and I/DD specific plans, as well as those for individuals with SMI and SUD.

DHHS also leaves open the possibility for future Tailored Plans for other populations, including a specific plan for dual eligible beneficiaries.

Next Steps and Timing

As mentioned above, DHHS is requesting comment on the program design proposal through September 8, 2017, ahead of a PHP RFI scheduled for late fall 2017, and submission of a waiver proposal to the Centers for Medicare & Medicaid Services (CMS) by the end of the calendar year.

Early 2018 will see the release of a formal RFP for PHPs, as well the release of preliminary capitation rates. Assuming the waiver is approved by CMS and procurement and contracting proceed as planned, DHHS is targeting implementation of Medicaid managed care on July 1, 2019.

Link to Managed Care Program Design Proposal