By Sarah Ovaska-Few

Talk about a health care policy cliffhanger.

On one hand, North Carolina is slated to drastically alter the health care landscape of the state with a scheduled February handoff for most of its massive Medicaid system to managed care companies. The hope is that these companies, which will be paid a capitated, per-person rate, will improve health outcomes and maybe even save money.

But, a now months-long state budget standoff between Gov. Roy Cooper, a Democrat, and Republican legislative leaders is threatening to get in the way of that start date as the opposing sides battle over the separate, but related, issue of expanding Medicaid.

Sec. Mandy Cohen and Deputy Sec. Dave Richard are sitting at a white table in an update on Medicaid transformation to the House Health committee
NC DHHS Sec. Mandy Cohen updates the House Health Committee on Medicaid transformation at a hearing last month. Also in the photo is NC Medicaid Deputy Sec. Dave Richard. Photo credit: Liora Engel-Smith.

N.C. Department of Health and Human Services Sec. Mandy Cohen has repeatedly said she can’t make a Feb. 1 start date work without a state budget in place by mid-November. She already nixed a plan to roll-out managed care in a portion of the state this fall over the budget delays.

Cohen also has been a firm believer in expansion, calling it “one of the most important things we can do to strengthen the health of North Carolina.”

Lawmakers, including State Rep. Donny Lambeth, a Forsyth County Republican leader on health care issues, suggested at a legislative hearing last month that Cohen start thinking about a July start date for managed care instead of February.

It’s now a few days shy of that mid-November deadline with no apparent signs that the budget impasse will be broken when the legislature returns to Raleigh today.

So, pop yourself some popcorn, and we’ll walk you through what led us to this policy cliffhanger.

Transformation years in making 

Medicaid, through a $14 billion mix of federal and state dollars, provides health care to low-income seniors, people with disabilities, children and some of their family members. In North Carolina, that accounts for about one of every five people. It’s also one of the largest government programs run by the state of North Carolina. Its $14 billion annual cost is funded through a mix of federal and state dollars with the federal government chipping in about $2 for every $1 the state spends.

North Carolina previously used a fee-for-service model, where DHHS essentially cut checks for every flu shot, hospital stay and occupational therapist visit a Medicaid beneficiary needed.

Need to pick a Medicaid managed care plan? Click here to compare different plans.

The Republican-controlled state legislature, citing frustration over fluctuating budgets, moved in 2015 to switch to a managed-care model. Under managed care, the state would use that same pot of state and federal dollars to instead pay insurance companies or care delivery groups a per-person, per-month rate to handle each beneficiary’s entire care needs.

The switch has been heralded in recent months as a potential game changer for the overall American health care system by leveraging the $14 billion North Carolina uses annually to run Medicaid to focus on improving a person’s overall health and moving away from the current fee-for-service approach.

The changeover also includes an ambitious pilot approved by the Centers for Medicaid and Medicare Services to look at paying to address what are called social determinants of health (housing, transportation, food insecurity) that can affect an individual’s health. The state issued a request-for-proposal last week for the Healthy Opportunities pilot and will make decisions on what regions will benefit from the pilot next year.

Budget grumbles 

This week could bring a few possibilities as it pertains to Medicaid transformation – an announcement from Cohen that managed care is again delayed. Or, when the legislature comes back into town this week, some type of agreement to keep Medicaid transformation on track, or a budget itself.

Many of those affected – including providers and health care plans – are effectively  on pins and needles, waiting to see what happens this week. The N.C. Association of Health Plans issued a statement Tuesday calling on lawmakers and Cooper to get on board with something that would allow for the Feb. 1 switch to Medicaid managed care.

Lambeth indicated Monday he’d heard no news from his legislative colleagues about a plan to fund Medicaid transformation. Nor had he heard plans for a vote on his idea for expanding health care coverage, a bill called the NC Health Care for Working Families Act that would include a controversial work requirement.

Getting smart on Medicaid

Medicaid is the biggest program run by the state, but that doesn’t mean it’s easy to understand. Here are some quick definitions to help you digest just what’s going on.

Medicaid: This is a federal safety net program designed to provide health care for vulnerable residents. In North Carolina, it serves 2.1 million low-income seniors, people with disabilities, children and their families. It’s funded with $14 billion in federal and state dollars, with the federal government paying $2 for every $1 the state chips in.

Medicaid transformation: This is the shift underway to switch North Carolina’s Medicaid program to managed care, where the state will pay five managed-care companies $30 billion over the next five years to handle the health care needs of 1.6 million Medicaid patients. A half-million other Medicaid recipients with complex behavioral health needs will move to special, tailored managed care plans later on.

Medicaid expansion: This is a signature piece of the Obama Administration’s Affordable Care Act, where states can elect to use federal funds to expand Medicaid coverage to low-income adults. North Carolina is one of 14 states, largely in the Southeast, to reject Medicaid expansion so far. N.C. Gov. Roy Cooper, a Democrat, has made Medicaid expansion a must-have in budget negotiations, while Republican state lawmakers have so far resisted calls for expansion.

When asked about a previous stand-alone funding plan for Medicaid transformation that the legislature passed, but Cooper vetoed, Cohen said it was the threat of future cuts that prompted the veto.

If the Republicans were successful in overriding Cooper’s June veto, that would mean $42 million worth of administrative cuts to her department, an amount she said would be historic and crippling.

“It can’t just be a budget,” Cohen said. “It needs to be the right budget for DHHS and for the state of North Carolina.”

a man at a podium tries to avoid talking about Medicaid expansion
Rep. Donny Lambeth (R-Winston-Salem) discussed some of the structural issues with Medicaid that the legislature has addressed over the past few years during a press conference at the NC General Assembly in June. Photo credit: Emily Davis

But lawmakers contend that they’ve offered all the solutions they can, from the stand-alone budget, to state Senate leader Phil Berger’s offer for a special session just on health care access.

“There is nothing else within our constitutional authority that we can do to fund Medicaid transformation,” said Pat Ryan, a spokesman for Berger in a phone interview last week.

And from Cooper’s point of view, Cooper spokesman Ford Porter said in a written statement, “Medicaid transformation should be considered in the broader context of health care access in the state, and the Governor and legislative Democrats are working to bring Republicans to the table on expanding access.”

In other words, don’t hold your breath for a compromise this week.

Meanwhile, open enrollment ongoing 

In the meantime, there are 1.6 million Medicaid beneficiaries who have already been sent notices to go ahead and pick from five statewide managed companies – AmeriHealth Caritas NC, Carolina Complete Care, Health Blue by BCBS, UnitedHealthcare and WellCare. (All but Carolina Complete Care are signing up Medicaid providers across the state. Carolina Complete Care is limited to a 41-county region in the state’s midsection.)

The deadline to enroll is Dec. 13.

Individuals can go through the enrollment broker hired by the state to explore the differences between the various programs, though all are required to provide the same types of doctor visits and services as the existing Medicaid program.

Meanwhile, providers are also hashing out contracts with the various managed care companies, making the selection for beneficiaries difficult because many don’t know what companies their primary care and specialist doctors may want to do business with.

In late October, only 40 percent of the providers the state currently has down as accepting Medicaid patients had indicated they signed up with a managed care company.

N.C. Health News requested copies on Oct. 21 and last week from N.C. DHHS of reports reflecting provider sign-up numbers but have not yet received that information from the state agency. 


This story has been updated to include the N.C. Association of Health Plans’ plea to state lawmakers and Gov. Roy Cooper to make a deal that keeps Medicaid managed care on track. 

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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...