shows a red cross with the word Medicaid printed on it, in front of a pile of dollar bills. For Medicaid transformation

By Rose Hoban

More than a year after the Department of Health and Human Services sent off a tentative plan to federal regulators to overhaul the state’s Medicaid program, state officials unveiled details of the plan.

A 77-page report released Tuesday morning fleshes out the bones of the plan submitted last June to federal regulators that describes how North Carolina plans to change Medicaid from a fee-for-service program to one where insurance companies get paid a per-person, per-month fee and are instructed to provide better patient outcomes.

headshot of Cohen with the sign reading "DHHS" behind her
Mandy Cohen in her office on the Dorothea Dix campus. Photo credit: Rose Hoban

“We have been in a process of implementing the law that was passed by the General Assembly… to transition the Medicaid program to managed care,” said HHS Sec. Mandy Cohen, referring to the 2015 law that transforms Medicaid.

“This really fleshes out a lot more of the program design and really gives you an end-to-end look at what we think Medicaid managed care can look like in North Carolina,” Cohen told reporters.

The hallmark of the plan Cohen presented Tuesday is the integration of physical health care with mental health care. But that will be complicated.

Sweeping changes, aggressive timelines

When the legislature passed House Bill 372 in September 2015, it set in motion sweeping changes to Medicaid, which provides care for about 2 million children, some of their parents, people with disabilities and poor elderly who live in nursing homes. Last year, North Carolina spent just under $3.7 billion to provide all that care.

A comment period for the plan runs through Sept. 8. Instructions on how to comment here.

One point of contention between members of the Senate and House was the fate of North Carolina’s mental health managed care entities, known as LME/ MCOs, which currently provide care for some of the most difficult-to-treat people with mental health, intellectual and developmental disabilities.

House members pushed to keep the LME/MCOs, while members of the Senate wanted to scrap them more quickly. The compromise was that they would remain in place for four years beyond implementation of the new Medicaid program.

But the proposed program design released this week says that in year two of managed care implementation, LME/MCO contracts would be terminated.

The speed of the proposed changes worried Rep. Nelson Dollar (R-Cary) who helped write the legislation creating LME/MCOs.

“I’m very concerned at the speed at which the department wishes to operate,” Dollar said. “The lack of specifics in their proposal is a recipe for a repeat of what we saw in 2001 when a community-based system that existed at the time was thrown out without full appreciation of what it takes to develop a viable behavioral health system.”

Dollar argued that since the launch of the LME/MCOs in 2013, North Carolina’s mental health system has achieved some stability, after a decade of near-constant change.

His concerns were echoed by Disability Rights NC’s policy head Corye Dunn, who called the timeline “overly ambitious, even unrealistic,” even as she praised Cohen for listening to the concerns members of her organization had presented to DHHS.

It’s complicated

Medical and behavioral health providers agree that patients fare better when people caring for a patient’s physical needs are closely coordinating with those attending to the behavioral issues. In some practices, that happens, where a psychologist or social worker operates down the hall from the doctor.

But many people in the behavioral health system have needs that are far more complicated than treating depression alongside diabetes. In North Carolina, LME/MCOs coordinate services for people with severe and persistent mental illnesses, kids with intellectual and developmental disabilities, and people with substance abuse issues. Some of their services are paid for by Medicaid, which means federal-plus-state dollars, and some services are paid for solely by state dollars.

Want to know more about Medicaid? Check out Medicaid by the Numbers.

This integration of care was one of Cohen’s top three priorities, she said. There are a lot of moving parts and she said those folks would eventually move into so-called “tailored plans,” which can account for needs such as housing, supported employment or in-home nursing care.

“There’s a lot of agreement about heading toward that integrated whole-person care,” Cohen said. “I think there are a number of ways in which we can get there.”

Getting this part of Medicaid reform correct is important because these are the beneficiaries that can be most expensive to serve.

Dollar agreed that integration is an important goal, but he said, “It really needs to happen at the provider level and that’s where the incentives need to be.”


The other big question mark left by the plan Cohen described is how to account for the services paid for by state dollars only.

According to Julia Adams, who lobbies for organizations that serve people with intellectual and developmental disabilities, those are services such as supported employment for people with intellectual disabilities.

“When you go to Lowe’s and you have someone with Down Syndrome bagging your groceries, that person may not be disabled enough to get an Innovations waiver slot [enhanced community support services], but they get Medicaid for their health care and they probably get a state dollar service that helps them work in the community,” Adams explained.

“Our question is what happens with the state dollar services, who is going to be running that? Right now, the LME/MCOs run it,” she said. She noted that in other states, when managed care companies were asked to take these types of services on, the services fell apart.

On top of that, North Carolina has continued to cut those state dollars.

“Why would a managed care company want to run something that’s constantly being cut?” Adams asked.

Dunn also expressed concern about what happens to those services.

“We will still need an investment of state dollars to act as the mortar for the bricks of our system,” Dunn said. “State dollars do all of those things that more restrictive federal dollars cannot do. They’re an essential part of the safety net because they provide care for people who are not Medicaid eligible, and for services that cannot be funded through Medicaid.”

Cohen also said her department is looking for feedback from people around the state who would be affected by the changes: patients, providers, advocates and those who run health care businesses.

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Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...

3 replies on “DHHS Reveals More Details about Medicaid Reform Plan”

  1. Great! More changes to changes made to prior changes when previous changes were changed in order to change changes that were not effectively changed!

  2. Its important that the new Medicaid Plan does not pull the rug out from under existing successful person centered plans being supplied by “local entities”. But its equally important that the Care Coordinators are professionals supported by continuing state funds and readily available to families.

  3. It’s critical that telemedicine is incorporated into the Medicare changes that are being made. Seniors are one of the groups who will benefit most from telehealth services – especially when it comes to their mental health.

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