By Sarah Ovaska-Few and Rose Hoban

The standoff between North Carolina’s state government power brokers over the state budget and Medicaid expansion has claimed a victim: the planned roll-out this fall of Medicaid managed care.

N.C. Department of Health and Human Services Sec. Mandy Cohen announced Tuesday morning she was pushing back the Nov. 1 start date of Medicaid managed care, given the uncertainty caused by the lack of a state budget more than 60 days into the fiscal year that started on July 1.

“We don’t have the budget, and so we can’t move forward,” Cohen said in a mid-morning call with reporters.

shows Cohen standing at a podium with a presentation displayed on a screen behind her.
HHS Secretary Mandy Cohen spoke to a crowd at a Medicaid managed care listening session in 2017. Photo credit: Rose Hoban

November was when Medicaid recipients in a significant portion of the state – a 27-county area including the Triangle and a large swath of the Piedmont – were scheduled to switch from the current fee-for-service system to a managed care system.

Now, the entire state will move over all at once to managed care on Feb. 1, 2020, a scenario that will affect an estimated 1.6 million mostly low-income children and their moms; along with some seniors and disabled persons who qualify for Medicaid.

[An additional half-million Medicaid recipients with complex physical and behavioral health needs will move over to tailored managed care plans in 2021.]

Cohen said having the entire state switch over at once to managed care isn’t ideal, but the best option given the current budget impasse.

“Sometimes we don’t get the ideal, we have to work in the practical realities of what we have,” Cohen said.

Medicaid is one of the largest providers of health care in the state – nearly 1 in every 5 North Carolinians, many of them children, depend on the federally administered program. It’s also one of the largest government programs run by the state of North Carolina. Its $14 billion annual cost funded through a mix of federal and state dollars with the federal government chipping in $2 for every $1 the state spends.

North Carolina had long been using a fee-for-service system, where the state managed and paid for every Medicaid patients’ flu shots, hospital stays and other health care needs. The Republican-led legislature called for a switch to privatized managed care in 2015 in hopes prepaying for health care would bring about budget predictability and better health outcomes. North Carolina is also the largest state that does not have a significant presence of commercial managed care companies running Medicaid. The state does have locally grown managed care organizations running the state’s mental health Medicaid programs, but the legislature retains significant control over those organizations.

shows a map of North Carolina broken up into six regions
Four companies were awarded statewide contracts, while a partnership made up of managed care giant Centene, the North Carolina Medical Society and the North Carolina Community Health Center Association received the nod to provide services in regions 3 and 5. Regions 2 and 4 were slated to “go live” in November, with the rest of the state following next year. But now, the entire state will make the switch at the same time. Map courtesy: NC DHHS

In the new managed care system, the state will pay an agreed-upon monthly rate per Medicaid recipient to four managed care companies– AmeriHealth Caritas, Blue Cross and Blue Shield of North Carolina, United Healthcare and WellCare – that will, in turn, handle the entirety of a person’s medical needs. A fifth group, Carolina Complete Health, which is a partnership between the managed care company Centene and the N.C. Medical Society, can serve people in a region of the state that includes Charlotte and the southeastern corner of the state.

Politics behind the delay 

N.C. Gov. Roy Cooper, a Democrat, has also made clear his desire to expand Medicaid coverage to low-income adults currently without health care insurance in the state, a signature piece of the Obama administration’s Affordable Care Act.

But the Republican-led North Carolina state legislature has so far been staunchly opposed. This has lead to a standoff over the state budget, which Cooper vetoed on June 28, with Cooper saying he won’t agree to a budget unless Medicaid expansion is in the mix.

Once the governor sent the budget back to the legislature, it became clear that there are not enough votes in the state House of Representatives to override Cooper’s veto. The two sides have been in a stalemate since early July.

In a recent attempt to do an end-run around Cooper, the legislature has been passing “mini-budgets,” such as increases to many state employee salaries, which Cooper signed last week. But on Friday Cooper vetoed the General Assembly’s attempt to pass a partial budget that would have funded the switch to managed care.

“Health care is an area where North Carolina needs us to do more, and to do it comprehensively,” Cooper wrote in his veto message.

On Tuesday, Cohen also gave hints that when it comes to the transformation funding at least, negotiations may be making headway between the Cooper administration and state Sen. Phil Berger, the Republican state leader. A proposal to cut Cohen’s department that was originally contained in the funding bill was amended out on the Senate floor last week.

“We’re getting to a better understanding that cutting the department at the time that we’re making a huge transition is not the way forward,” Cohen said.

She’s hopeful that a final budget, whenever it does come, would include enough to see the switch to the new managed care system through.

Managed care still happening

Cohen said the delay announced Tuesday isn’t a sign that managed care is at risk, but rather that the state legislature and the governor missing the July 1 deadline for a two-year budget was causing too many uncertainties for the massive roll-over to happen so soon.

“We’re still committed to managed care,” she said. “We are trying not to lose any time on the back end here.”

The financial impact on the state because of the delay will be minimal, she said, with no financial penalties for putting off the Nov. 1 start date.

Her assessment was echoed by Matt Salo, head of the National Association of Medicaid Directors, who said delays in rolling out managed care programs occur for many reasons.

“You know, maybe there’s an impasse with the legislature on the budget, maybe there is an impasse with a particularly powerful provider type, say, for example, the hospitals are [not] completely on board and you still got a lot of work to do,” Salo said. “Or maybe the impasse is that you’re not completely confident in the plan of attack for the rollout.”

He said that sometimes state health departments simply delay or stop a rollout because their early indicators show that a program is not quite ready.

Medicaid – say what? Two terms – Medicaid transformation and Medicaid expansion – are being bantered around a lot these days in Raleigh. Though related, they’re different.

  •  Medicaid transformation is the ongoing switch to a privatized managed care system from North Carolina’s current fee-for-service model, where the state pays for every doctor visit and hospital stay for the 2.1 million low-income North Carolina seniors, disabled persons, children and their mothers already on the federal safety net program. In the new managed care system, the state will pay preselected managed care companies a per-person rate to handle all of an individual’s health care needs.
  • Medicaid expansion is an outgrowth of the Obama administration’s Affordable Care Act and would use mostly federal dollars to extend Medicaid coverage to low-income adults currently unable to afford to buy their own health insurance on the open marketplace. North Carolina is one of 14 states, mostly in the Southeast, who have not expanded Medicaid.

“It’s kind of like launching a rocket, you know, you want to launch it on time,” he said. “But if there’s anything that goes wrong, it’s much, much safer to just scrap the launch, rather than go ahead and try to meet an artificial deadline.”

The delay does, however, raise the stakes come February, with no partial rollout to learn from before having 1.6 million Medicaid recipients switch to a new system.

Extra time for loose ends

Medicaid recipients in the rest of the state will begin open enrollment – when they get to choose which managed care company to sign up with – in October and make their final decisions by mid-December, she said. And there needs to be a state budget by mid-November, at the latest, in order to meet the new Feb. 1 start date.

The delay came as a relief to many, with concerns mounting that the Nov. 1 start date may have been too ambitious given the complexity of the move to managed care.

“We’ve been worried for a while that the state hasn’t really tested anything,” said Cody Hand of the N.C. Healthcare Association, which represents various hospital and health care systems around the state. “They weren’t ready to go live Nov. 1.”

Beneficiaries in the 27 counties who were, up until this week, expected to switch over to the new system on Nov. 1 were likewise having issues figuring out how to navigate the coming changes for themselves and their families, said Ciara Zachary, health program director for N.C. Child, an advocacy group for children in the state.

One problem is that providers – such as primary doctor offices and specialists — have been slow to sign contracts with the managed care companies.

That meant beneficiaries on Medicaid or who have children on Medicaid or getting benefits through N.C. Health Choice were going to have to choose a managed care plan without knowing if their favored practitioners would ultimately be in their networks, Zachary said. N.C. Health Choice is a program for low-income children who don’t qualify for Medicaid but are still otherwise uninsured.

“It’s a big change and not enough education and awareness has been deliberately targeting enough beneficiaries,” she said.

She’s hopeful the delay will allow for more time for providers to sign up with care networks, and for the state to assess how it and the enrollment broker it hired is communicating with those beneficiaries.

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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...