By Sarah Ovaska-Few

A North Carolina administrative law judge shot down requests last week from a trio of organizations that wanted to hit the pause button on the state’s ongoing transition of its Medicaid system to a managed care system.

Judge Tenisha Jacobs recently ruled in favor of the N.C. Department of Health and Human Services to deny preliminary injunction requests from Aetna Better Health, a commercial health care company; Optima, a health care group connected to Virginia’s Sentara health care system; and My Health by Health Providers, a provider-led coalition of a dozen hospitals around the state.

The three groups unsuccessfully tried to convince Jacobs in a series of May hearings at the N.C. Office of Administrative Hearings that they were unfairly passed over for lucrative state contracts to handle the health care needs of more than 1.6 million North Carolinians who depend on Medicaid for their health care needs.

“Aetna has failed to show a likelihood of success at this time of demonstrating by a preponderance of the evidence the requisite bad faith, lack of fair and careful consideration, or lack of any course of reasoning and exercise of judgment that would warrant revisiting the scores,” Jacobs wrote in her June 26 order for one of the groups.

Read our previous story for more details on the managed care protests.
The judge’s decisions were welcomed by DHHS officials working toward a Nov. 1 start date to bring large sections of the state into the new managed care way of delivering care to beneficiaries.

“We were anxious as were others,” said Dave Richard, the DHHS deputy secretary in charge of the Medicaid system, about the wait for Jacobs’ decisions.

The three groups can, and likely will, continue to pursue their appeals at the administrative law court, but Jacobs’ order denying the injunctions indicated that all three were unlikely to overturn DHHS’ contract decisions.

“Optima is unlikely to succeed on the merits of it claims against the Department,” Jacobs wrote in one order, with similar language in the other two.

Medicaid is the federally authorized health care program that provides care for some of the state’s most vulnerable residents – poor seniors, people with disabilities, and low-income children and some of their parents.  It’s paid for with a mix of federal and state dollars, with the federal government paying $2 for every $1 North Carolina covers.

The state legislature opted in 2015 to transition away from the existing fee-for-service system, where the state essentially cuts a check for every doctor visit, lab test, X-ray and hospital stay for the more than 2 million people on its rolls, in favor of a managed care system where commercial for- and not-for-profit groups are paid a yet-to-be-announced amount per beneficiary to handle that person’s total health care needs. The desire expressed by lawmakers was to bring savings and predictability to the state budget, as well as improve health care outcomes by encouraging Medicaid managed care groups to incorporate lower-cost preventative care approaches.

In February, the state selected four commercial managed care plans — AmeriHealth Caritas, Blue Cross Blue Shield of North Carolina, United HealthCare and WellCare – to operate around the state. A fifth group, Carolina Complete Care, that will be administered by managed care giant Centene and is affiliated with the N.C. Medical Society, didn’t initially receive a recommendation for a contract until HHS Sec. Mandy Cohen and Richard, the Medicaid director, intervened, citing the need to have at least one provider-led group in the mix.

Want to read what the judge wrote? Scroll to the bottom of the page.

The plans are in line to receive a cumulative $30 billion over five years for the care of 1.6 million North Carolinians, some of the biggest-ticket contracts in the state’s history.

Medicaid beneficiaries will begin receiving information later this summer about how to select their new managed care groups, while providers are in the process of negotiating and signing contracts with the managed care companies. People who don’t make a selection will be automatically enrolled with plans that their existing doctors are aligned with and have options to switch during the roll-out, in this  new way of managing Medicaid.

The state is slated to move an estimated 565,000 beneficiaries in two regions of the state – a 27-county selection of counties located in the Piedmont and Triangle – to the new system on Nov. 1. The rest of the state will follow in March. Following that, the state will begin transitioning an estimated half-million additional patients with complex behavioral health to several tailored managed care plans.

Face-off over Medicaid expansion 

The move to managed care is a separate but closely-related issue to the ongoing debate over whether North Carolina should extend Medicaid coverage to low-income adults who are currently unable to access affordable health care on their own. North Carolina is one of 14 states that have opted not to expand its Medicaid program.  Gov. Roy Cooper and Cohen, his DHHS secretary, have made clear their desires to expand Medicaid, a move that he and others say will help struggling rural hospitals stay afloat and inject needed federal dollars into the state while giving more low-income North Carolinians access to needed health care. A recent report estimated that 634,000 would benefit from Medicaid expansion in the state, as well as bring $11.7 billion in federal dollars to the state, with 37,200 jobs created between 2020 and 2022.

Cooper vetoed the proposed state budget late last month because it lacked language to expand Medicaid to those currently unable to access affordable health care.

But legislative Republicans, especially in the state Senate, have been opposed to expansion so far, saying it could lead to additional costs for the state. They have argued that the state’s health care system is simply not prepared to handle the influx of patients that would come from Medicaid expansion, among other objections.

The biggest question in Raleigh right now is how, or if, these polar differences will be settled.

headshot of older white man with mustache and glasses
Rep. Donny Lambeth (R-Winston-Salem) Image courtesy of the NC General Assembly website

The state’s new fiscal year started Monday, when a new budget is technically due, but an automatic continuing resolution keeps state government open until a new budget is in place.

Delay for managed care switch? 

Meanwhile, there’s a chance the march to managed care could be pushed back. State Rep. Donny Lambeth, a Forsyth County Republican and key House lawmaker on health care issues, inserted language in a pending bill last week that would delay the Medicaid managed care start date for the first counties from Nov. 1 to next March.

Lambeth heard from doctors and other health care providers concerned the standstill in state budget negotiations could further complicate the already complicated switch to managed care. The proposed delay would ease pressure on DHHS to meet the Nov. 1 deadline during turbulent budgetary times. At the same time, the delay would give  health care providers, many of whom have yet to sign contracts with the incoming Medicaid managed care groups, a little more breathing room, he said.

“We don’t have our capitated rates, we don’t have contracts and the clock’s running,” Lambeth told N.C. Health News. “I felt like it was important to say, ‘We don’t get this budget done, it will put off the date.’”

Cohen, the DHHS secretary, was okay with that change while providers, he said, were thrilled.

Richard, the DHHS deputy secretary, said the department didn’t ask for an extension on the managed care start date from Lambeth but would work with whatever deadline the legislature imposes. The agency is still gearing toward a Nov. 1 launch, and has communicated a proposed payment rate to the managed care groups it is working with, he said. It will become public after the state and managed care groups settle on a final number.

If the state budget is significantly delayed past the summer, a go-live date in November won’t be doable, he said.

“At some point in time a budget has to be passed for us to go live,” Richard said.

Optima Health Ruling



MedicaidOptimaorder (Text)

My Health by Health Providers Ruling



MedicaidMyHealthorder (Text)

Aetna Better Health of NC Ruling



MedicaidAetnaorder (Text)

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Sarah Ovaska is a freelance writer based in Orange County, who has called North Carolina home for well over a decade. She’s reported on criminal justice, education, health and government issues at publications...

One reply on “Some managed care groups want a piece of N.C.’s Medicaid pie, but judge says ‘No’”

  1. As a patient advocate, I am grateful to Judge Tenisha Jacobs. From what I hear in the patient trenches, access to care is difficult for North Carolinians and preventable adverse events are out of control. Seems to me that before managed care groups get a bigger piece of the pie, healthcare organizations need to improve their current jobs and stop handing out multi-million dollar administrative salaries for lackluster results. Thanks again to Judge Jacobs for looking out for our state’s citizens. Glad you didn’t hand out big pieces of that pie yet. Good job!

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