House Reforms and Modernizes Medicaid

Raleigh, NC – Today the North Carolina House of Representatives passed HB-372: 2015 Medicaid Modernization in an effort to reform Medicaid in North Carolina and transition to patient-centered, provider-led healthcare.

Medicaid is a government run health insurance program for low-income individuals. Currently, the federal government pays two-thirds of the total cost; North Carolina pays a one-third of the total cost. Medicaid is the second largest expenditure in the State budget, behind Education funding, accounting for 17.5% of the General Fund.

HB-372 would transition the Medicaid and NC Health Choice programs from fee-for-service to full-risk capitated health plans operated by provider-led entities to manage and coordinate the care for enough program aid categories to cover at least 90% of Medicaid and NC Health Choice recipients within five years of the act becoming law.

All medical health services would be included in the coverage except dental, pharmacy, and pharmacy dispensing fees. The Department of Health and Human Services (DHHS) would manage and administer the program within the budget appropriated by the General Assembly. Once fully implemented, the State would retain only the risk of enrollment numbers and enrollment mix of populations receiving services.

North Carolina will continue the public management of behavioral health services through Local Management Entities-Managed Care Organizations (LME/MCOs).

“Since we started this journey of reforming Medicaid in North Carolina, our priorities always remained to provide patients with quality and compassionate care, reward effective doctors, and improve access to the program across the State,” remarked Rep. Donny Lambeth (R-Forsyth), Chairman of the House Health Committee and primary sponsor of HB-372. “We began with remodeling the gears that clog the system: dependence on hospitals and emergency rooms, superfluous tests and imaging, costly prescriptions, and lack of oversight. Then we built a model that emphasizes value, quality, and appropriate access, wellness and preventative care, and the utilization of new technologies.”

“Leaders have come together to chart a new course for our healthcare future,” stated Rep. Nelson Dollar (R-Wake), Senior Chairman of the House Appropriations Committee and primary sponsor of HB-372. “This new course will end the traditional fee-for-service payment model and move our State to a system that rewards value of service and not volume of service; quality of healthcare outcomes not quantity of procedures.”

“Healthcare in our State is changing, and our current Medicaid model is volatile and unsustainable for long-term care. Reforming and modernizing the system is a commitment to the State that the House is very adamant to uphold,” Speaker Tim Moore (R-Cleveland) stated. “It is a fundamental practice in fiscal responsibility and fortitude, and a process that deserves to see some of the best minds in the General Assembly at one table.”

Key Aspects of the Medicaid Modernization Plan:

  1. Shift to Provider-Led Care - Provider-Led Entities (PLE) will be reimbursed a full-risk, capitated fee to manage and coordinate the care for at least 90% of the Medicaid recipients in all 100 counties in North Carolina. Provider-led Entities will be responsible for all administrative functions including claims processing, appeals, care, and case management. This move will significantly reduce the State’s operational costs. Each PLE must enroll at least 30,000 Medicaid recipients and meet solvency requirements set forth by the Department of Insurance.
  2. Increased Patient Access to Primary Care - Each patient will select or be assigned to a PLE and a primary physician who will manage their overall healthcare and promote wellness and preventative care. This move will significantly decrease emergency room visitations, and improve each patient’s long-term care outcomes.
  3. Advisory Committee – Establishes a committee of experts in healthcare to advise DHHS on the development of the 1115 waiver application and performance goals.
  4. Gradual Transformation of Program - Transformation will occur over a period of up to five years which includes HHS preparation and successfully obtaining a Federal waiver from Center for Medicare and Medicaid Services (CMS) that allows North Carolina to implement this HB-372. 

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