Managed care rollout threatened by budget stalemate

Published 4:13 p.m. Thursday

The Governor and the Republican leadership in the General Assembly both have their feet dug in on the budget battle. The fiscal year ended at the end of June and North Carolina currently does not have a budget for the new biennium (FY 2019-21).  

The Senate and House both passed a conference budget which the Governor vetoed because it did not include the funding for Medicaid expansion. Fortunately, funding levels from last year continue into the new fiscal year if there is no new budget passed. The other side of the coin, however, is that not all of the new provisions in this year’s conference budget will be funded. 

The transition to Medicaid managed care is one of the most significant new provisions that is threatened by the budget impasse between the Governor and the General Assembly. Traditional Medicaid pays for enrollees services on a “fee for service” basis while a managed care program pays commercial groups a “per member per month” or capitated rate to pay for enrollees services. Transitioning from the traditional Medicaid structure to a managed care structure is a massive overhaul of the Medicaid program, which currently serves over 2 million North Carolinians. 

The transformation to managed care will be costly and disruptive. The state is divided up into six regions, and the first two regions are set to be transitioned to managed care in November of this year – less than five months away. The conference budget appropriates over $232 million in FY2019-2020 and over $198 million in FY2020-2021. Completely restructuring North Carolina’s Medicaid program will require substantial funding for new staff, enrollee information, data management, and many other changes that will need to take place for a successful transformation. 

Every day that the transformation funding is not appropriated is less time that NCDHHS has to prepare for this substantial change in the way our state Medicaid program runs. This disagreement over whether or not to include expansion funding in the budget could bog down the rollout of Medicaid managed care.

UPDATE – 7/11:

In anticipation of a prolonged budget standoff, members of the North Carolina House have passed a bill which would delay the transition to managed care if there is no budget passed by July 15th. From HB320:

PART III. POTENTIAL DELAY OF MEDICAID AND NC HEALTH CHOICE TRANSFORMATION SECTION 7. 

If House Bill 966, 2019 Regular Session, does not become law by July 15, 2019, then the Department of Health and Human Services shall delay, until at least March 1, 2020, the implementation of the Medicaid and NC Health Choice transformation required by S.L. 2015-245, as amended, and by the 1115 demonstration waiver.

North Carolina has been split into six regions for the purposes of managed care. The original plan was to rollout regions one and two in November 2019. The remaining regions would be rolled out in February of 2020. With this new provision, managed care would be rolled out for all six regions in March of 2020.