Ch. 4 - Medicaid Reform in North Carolina (149 pages)

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IV.

Medicaid Reform in North Carolina– Forecasting Structure and Preparing

for the Transition

Representative Nelson Dollar North Carolina House of Representatives

Raleigh, NC

Cody R. Hand North Carolina Hospital Association

Cary, NC

Lou Patalano, IV Blue Cross Blue Shield of North Carolina

Durham, NC

Andrew M. Walsh Partners Behavioral Health Management

Gastonia, NC

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2016 Health Law Section Annual Meeting

Medicaid Reform in North Carolina - Forecasting Structure and Preparing

for the Transition

Panelists: Representative Nelson Dollar, Cody R. Hand,

Lou Patalano IV & Andrew Walsh

TABLE OF CONTENTS

PROGNOSIS ................................................................................................................................................ 4 PARKER, “NORTH CAROLINA’S MEDICAID PROGRAM TRANSITIONS TO MANAGED CARE,” 32(1) PROGNOSIS 1 (DEC. 2015).

WALSH, “MEDICAID TRANSFORMATION: EXPANDING MANAGED CARE IN NORTH CAROLINA,”33(2) PROGNOSIS 1 (APRIL 2016)

PROPOSED REGIONS ..............................................................................................................................17

STATE ANNOUNCES NEW LME/MCO SERVICE REGIONS

LEGISLATIVE REPORT:

TRANSFORMATION AND REORGANIZATION

OF NORTH CAROLINA’S MEDICAID AND HEALTH

CHOICE PROGRAMS ...............................................................................................................................25 DHHS “LEGISLATIVE REPORT TRANSFORMATION AND REORGANIZATION OF NORTH CAROLINA’S MEDICAID AND NC HEALTH

CHOICE PROGRAMS,” STATE OF NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES (2016)

HTTPS://NCDHHS.S3.AMAZONAWS.COM/S3FS-PUBLIC/MEDICAID-NCHC-JLOC-REPORT-2016-03-

01.PDF

DEPARTMENT OF HEALTH AND HUMAN SERVICES

REVIEW OF MEDICAID REFORM REPORT AND

SECTION 1115 WAIVER APPLICATION..............................................................................................73 LEGISLATIVE OVERSIGHT COMMITTEE ON MEDICAID AND NC HEALTH CHOICE, “DEPARTMENT OF HEALTH AND HUMAN SERVICES

REVIEW OF MEDICAID REFORM REPORT AND SECTION 1115 WAIVER APPLICATION,” STATE OF NORTH CAROLINA DEPARTMENT OF

HEALTH AND HUMAN SERVICES (2016)

HTTPS://NCDHHS.S3.AMAZONAWS.COM/S3FS-PUBLIC/JLOC-PRESENTATION-REPORT-WAIVER-2016-03-01.PDF

LEGISLATION PROVIDED THE FRAME..............................................................................................................74

SESSION LAW 2015-245 DIRECTIVES

SIGNIFICANT EXTERNAL STAKEHOLDER ENGAGEMENT ..................................................................................75

A process built on collaboration

VISION BUILDS ON THE UNIQUENESS OF NORTH CAROLINA ............................................................................76

OVERVIEW OF 115 DEMONSTRATION WAIVERS ..............................................................................................77

KEY TAKEAWAYS ..........................................................................................................................................78

AGENDA .........................................................................................................................................................79

THE TRIPLE AIM ..............................................................................................................................................80

115 DEMONSTRATION WAIVER RATIONALE ..................................................................................................81

PERFORMANCE MEASURES ............................................................................................................................82

LEGISLATIVE CHANGES TO SUPPORT PROGRAM ..............................................................................................83

SUPPLEMENTAL PAYMENTS ............................................................................................................................84

SUPPLEMENTAL FUNDING UNDER REFORM .....................................................................................................85

BUDGET NEUTRALITY ....................................................................................................................................86

LOOKING AHEAD ............................................................................................................................................87

HYPOTHESIS ...................................................................................................................................................88

1115 DRAFT WAIVER ......................................................................................................................................89

Next Steps

DIVISION OF HEALTH BENEFITS ......................................................................................................................90

KEY ACCOMPLISHMENTS ................................................................................................................................91

JLOC REPORT OVERVIEW ...............................................................................................................................92

AGENDA .........................................................................................................................................................93

REGIONAL CAPITATED PHP CONTRACTS .........................................................................................................94

Anticipated Distribution

PROPOSED REGIONS ........................................................................................................................................95

APPLICATION OF INSURANCE STATUTES .........................................................................................................96

PHP licensure and applicable Chapter 58 Provisions

BENEFICIARY ENROLLMENT IN PREPAID HEALTH PLANS ................................................................................97

BENEFICIARY ACCESS STANDARDS ................................................................................................................98

FOSTER CARE AND ADOPTIVE PLACEMENT CARE ............................................................................................99

https://ncdhhs.s3.amazonaws.com/s3fs-public/Medicaid-NCHC-JLOC-Report-2016-03-01.pdf

https://ncdhhs.s3.amazonaws.com/s3fs-public/Medicaid-NCHC-JLOC-Report-2016-03-01.pdf

https://ncdhhs.s3.amazonaws.com/s3fs-public/JLOC-Presentation-Report-Waiver-2016-03-01.pdf

PROPOSED INCLUSION OF PROVIDER PROVISIONS .........................................................................................100

PERFORMANCE MEASURES ...........................................................................................................................101

SUSTAINABILITY MEASURES.........................................................................................................................102

NC COMMUNITY CARE NETWORK CONTRACT ..............................................................................................103

TIMELINE FOR PHP CONTRACTING .................................................................................................................104

STATUTORY CHANGES ..................................................................................................................................105

Administrative

NEAR TERM NEXT STEPS ...............................................................................................................................106

RELEVANT LEGISLATION ..................................................................................................................107

SECTION 5(12) OF SESSION LAW 2015-245 ...................................................................................................107

2015 MEDICAID AND NC HEALTH CHOICE REFORM ......................................................................................108 FISCAL RESEARCH DIVISION “2015 MEDICAID AND NC HEALTH CHOICE REFORM,” HEALTH AND HUMAN SERVICES (2016)

http://www.ncleg.net/documentsites/committees/BCCI-6660/2015-

16%20Interim/March%201,%202016/Handouts/2015%20Medicaid%20and%20NC%20Health%20Choice

%20Reform%20Leg.%20Brief_Fiscal%20Research_2016_02_29.pdf

PREPAID HEALTH PLANS (PHP) RECOMMENDED SOLVENCY,

LICENSING AND FEE REQUIREMENTS. ............................................................................................................118 GOODWIN, “HOUSE BILL 372 AN ACT TO TRANSFORM AND REORGANIZE NORTH CAROLINA’S MEDICAID AND NC HEALTH CHOICE

PROGRAMS,” NORTH CAROLINA DEPARTMENT OF INSURANCE (2016)

HTTP://WWW.NCLEG.NET/DOCUMENTSITES/COMMITTEES/BCCI-6660/2015-

16%20INTERIM/MARCH%201,%202016/REPORTS/NCDOI%20REPORT%20ON%20PHPS_2016_03_01.PDF

BENEFITS OF MEDICAID MANAGED CARE ...................................................................................135 MEDICAID HEALTH PLANS OF AMERICA, “BENEFITS OF MEDICAID MANAGED CARE,” (2016) http://www.mhpa.org/_upload/MMC%20Primer%203%20Benefits.pdf

http://www.ncleg.net/documentsites/committees/BCCI-6660/2015-16%20Interim/March%201,%202016/Handouts/2015%20Medicaid%20and%20NC%20Health%20Choice%20Reform%20Leg.%20Brief_Fiscal%20Research_2016_02_29.pdf



http://www.ncleg.net/documentsites/committees/BCCI-6660/2015-16%20Interim/March%201,%202016/Reports/NCDOI%20Report%20on%20PHPs_2016_03_01.pdf

http://www.ncleg.net/documentsites/committees/BCCI-6660/2015-16%20Interim/March%201,%202016/Reports/NCDOI%20Report%20on%20PHPs_2016_03_01.pdf

http://www.mhpa.org/_upload/MMC%20Primer%203%20Benefits.pdf

Greetings to my fellow Health Law Section Members! I am ex-cited and honored to be serving as Chair of the Health Law Sec-tion Council this year. Honored to be serving our membership and working with such a great and tal-ented group of volunteers on the council – and, excited about all of the projects and initiatives on

which the section is working!For those who may not be aware of the section’s orga-

nizational structure, the council serves – essentially – as the “board of directors” of the section. We help to navigate the section’s course and manage our resources all with the goal of providing value for our membership. We strive to pro-vide that value in the form of opportunities for networking, education, and volunteering. And you do not need to be on the council to play an active role in the section’s activities. There are so many ways for you to get involved!

The section regularly publishes newsletters like this one. Please reach out to Michael Murchison if you have an idea for an article or are interested in contributing to a future publication. As the NCBA continues to update its technology platform, keep an eye out for new ways we will be pushing out valuable content to our membership, in-cluding blog posts on timely and relevant topics!

The section also continues to play a leading role in promoting and supporting advanced care planning. Our End-of-Life Subcommittee, born from the efforts of dedi-cated section leaders and volunteers a few years ago, con-tinues to evolve and expand, helping so many in our com-munity as it does so. The subcommittee, in collaboration with the NCBA’s Elder Law Section and the NC Partner-ship for Compassionate Care, has recently introduced its latest project initiative - “A Gift to Your Family.”

The goal of the project is to hold advance health care planning workshops to assist members of the public with completion of Health Care Powers of Attorney and Liv-ing Wills. Ultimately, we would like to hold workshops in all 100 counties across the state twice per year—in April to help promote National Healthcare Decisions Day and in November to promote National Hospice and Palliative Care Month. To accomplish this goal, WE NEED VOLUN-TEERS! This is an incredible opportunity not only to get

Published by the Health Law Section of the North Carolina Bar Association and the North Carolina Society of Healthcare Attorneys • Vol. 32, No. 1 • December 2015

PrognosisNorth Carolina’s Medicaid

Program Transitions to Managed Care

By Shawn Parker

The U.S. Centers for Medicare & Medicaid Services (CMS) recently reported that 58 percent of all Medicaid recipients across the country in 2011 (the latest year for which complete data are available) were enrolled in a risk-based managed care plan through which they obtained some, most or all of their health services. Some estimate that figure will increase to 70 percent by the time data from 2015 is received and made available. What is clear is that managed care has become the dominant means by which Medicaid services are organized, delivered and financed in the U.S., and North Carolina policy makers have decided to join this trend.

On Sept. 23, 2015, Gov. Pat McCrory signed into law House Bill 372, which begins the transition of North Carolina’s Medicaid program to managed care. Once the transition is complete, the vast majority of Medicaid recipients and will receive nearly all of their services from a risk-based health plan. This transformation seeks to modernize the cur-rent Medicaid delivery system, with the goal of ensuring quality health outcomes and improving the beneficiary experience, while also effec-tively managing costs and providing greater budget predictability for the taxpayers of this State.

This article provides a brief overview of Session Law 2015-245 (House Bill 372), An Act to Transform and Reorganize North Caro-lina’s Medicaid and NC Health Choice Programs.

The Chair’s Comments

2 | NCSHCA President’s Report

5 | ‘A Gift to Your Family’ Gains Momentum

6 | Breaching the Bankruptcy Barrier With the Hospital Board

8 | Case Law Updates

Inside this Issue...

Joe Kahn

www.ncbar.org919.677.0561@NCBAorg

Continued on page 3

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Part One of the law addresses the plan for Medicaid transfor-mation. The plan features full-risk capitated contracts with commer-cial insurers and provider-led entities, which would be responsible for the provision of all services to all Medicaid and Health Choice beneficiaries except for individuals dually eligible for both Medicaid and Medicare; behavioral health services covered by area authori-ties known as Local Management Entities/Managed Care Organiza-tions (LME/MCOs) until 4 years after the date capitated contracts begin; and dental services. A newly-created Division of Health Ben-efits (DHB), within the Department of Health and Human Services (DHHS), is responsible for implementing reform and will succeed the duties and responsibilities of Division of Medical Assistance (DMA) when it is eliminated twelve months after capitated contracts begin or earlier as determined by the Secretary. DHHS will remain the single state agency responsible for both programs.

Section 1 outlines the intent and goals of the transformation; that being: “...transform the State’s current Medicaid program to a sys-tem that provides budget predictability for the taxpayers of this State while ensuring quality care to those in need.”

Section 2 provides the roles and responsibilities of the North Caro-lina General Assembly (NCGA) in transformation and governance including:

· Defining the overall goals and structure of the delivery system

· Defining and approving eligibility and income standards for programs and determining which populations are covered by the capitated pre-paid health plans

· Appropriating annual budget for the Medicaid pro-gram and providing legislative oversight through a new standing interim oversight committee the Joint Legisla-tive Oversight Committee on Medicaid and NC Health Choice (JLOCMHC)

· Beginning Jan. 1, 2016, confirming the Director of the Di-vision of Health Benefits

Section 3 provides the timeline for transformation:· Effective when the act becomes law- DHB is created and

must begin developing 1115 waiver application and any additional State Plan Amendments; JLOMHC is also cre-ated.

· March 1, 2016- DHHS to provide progress report to JLOCMHC

· June 1, 2016- DHHS to submit waivers and State Plan amendments to CMS

· 18 months after obtaining federal approval- Capitated PHP contracts to begin with staggered terms. Initial re-cipient enrollment is to be complete by this date.

Section 4 outlines the structure of the delivery system which requires DHHS to enter into capitated contracts with PHPs and includes principles and parameters that include, but are not limited to, the following:

Prepaid Health Plans (PHPs).A PHP is defined to include commercial insurers and provider-

led entities (PLEs). The awarded contracts will be a result of a suc-cessful competitive bid to a DHHS-issued RFP. PHPs will be re-sponsible for all administrative functions for recipients enrolled in their plan including claims processing, care and case management, grievances and appeals. All PHPs must hold a license issued by the Department of Insurance, and PHPs are subject to the require-ments of Chapter 58, the Insurance Law of North Carolina.

Capitated contracts.Capitated contracts will cover all services and program aid cat-

egories including but not limited physical health, prescription drugs, long term care services and supports, and behavioral health services for NC Choice recipients. Exceptions include dental services; behav-ioral health services provided by LME/MCOs (until 4 years from the initial capitated contracts); and dual-eligible populations. (DHB to develop long term strategy for including dual eligibles).

There shall be:· Three contracts to PHPs covering recipients statewide· Up to 10 regional contracts with PLEs to provide services

within six defined regions across the state.· DHHS shall determine the regions comprised

of whole contiguous counties (no population threshold)

· PLE may provide service in more than one re-gion provided the regions are contiguous

Section 5 outlines the role of DHHS in the transformation including: · Submitting all waivers and Medicaid state plan amend-

ments (SPAs) necessary to implement reform· Defining six regional catchment areas that reasonably dis-

tribute covered populations· Monitoring PHP contract performance· Setting rates- capitated rates should be actuarially sound

and risk adjusted. Rates shall include a portion that is at risk to be used for value based payments. Rate floors for PCPs, specialty physicians, and pharmacy dispensing fees. Rates for any remaining fee for service programs.

· Entering into capitated contracts with PHPs, which shall include:

· Risk adjusted cost growth at least 2 percent be-low national Medicaid spending growth

· Adhering to single drug formulary established by DHHS, through DBH

· Minimum medical loss ratio (MLR) of 88 percent · The inclusion of “designated essential providers”

(DEPs) within network and prohibitions on ex-cluding providers that accept network rates and meet objective quality standards. DEPs shall in-clude federally qualified health clinics, rural health centers, free clinics, and local health departments.

· Auto assignment of enrollees who fail to select a primary care physician (PCP)

Medicaid, continued from the front page

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· Requiring consultation with JLOCMHC prior to issuing RFP

· Developing auto assignment criteria for PHP criteria to include recipient’s family unit, quality measures, and pri-mary care physician.

· Defining methods to ensure program integrity against provider fraud, waste and abuse.

· Requiring all PHPs and Medicaid and Health Choice pro-viders to submit data through the NC Health Information Exchange network.

· Establishing an advisory committee to create long range planning on inclusion of dually eligible populations into the capitated system.

· Reporting to JLOCMHC by March 1, 2016 on a number of enumerated criteria.

Section 6 directs the Commissioner of Insurance to establish sol-vency requirements for PHPs and to propose fees to offset the cost of licensure.

Section 7 directs DHHS to renegotiate its contract with Commu-nity Care of North Carolina to reduce the payments for admin-istration and informatics and include performances measures. When PHP contracts begin, any contract with Community Care shall terminate.

Section 8 directs DHHS to submit a program design and budget to create a Medicaid and NC Health Choice Transformation In-novations Center within DHB. The center should support provid-ers through technical assistance and a learning collaborative using Oregon’s Transformation Center as a design model.

Section 9 directs DHHS to attempt to preserve existing levels of funding generated from Medicaid-specific funding streams paid to hospitals, such as assessments, to the extent that the levels of fund-ing may be preserved.

Part Two provides the statutory framework and restructuring of DHHS to implement the act.

Section 10 establishes the Division of Health Benefits (DHB) as a new division of DHHS and provides that DBH will be responsible for implementing Medicaid transformation.

Section 11 provides that DMA shall be eliminated 12 months after capitated programs begin or earlier as determined by the Secretary of DHHS. All positions within DMA shall be eliminated.

Section 12 amends Article 3 of Chapter 143B (Executive Organiza-tion Act of 1973) to add to Part 36 the creation of the Division of Health Benefits and, effective January 1, 2021, to include a section on the appointment and removal of the Director of the Division of Health Benefits. Specifically, the Director will be appointed by the Governor subject to confirmation by the General Assembly.

Section 13 provides the statutory powers and duties of the Secre-tary of DHHS through the DHB including:

· Administering the Medicaid and NC Health Choice pro-grams

· Employing clerical and professional staff including con-sultants and legal counsel.

· Entering and managing contracts for the administration of the program including contracts that are advisory or of a consulting nature

· Adopting rules· Developing and implementing midyear budget correction

plans· Overseeing (approving and disapproving) all expendi-

tures to be charged or allocated to the program by other State departments and agencies

· Presenting yearly to the JLOCMHC· Publishing on its website on a monthly basis

· Enrollment by program aid category by county· PMPM spending by category of service· Spending and receipts by fund along with de-

tailed variance analysis· Limited authority for adopting temporary and perma-

nent rules regarding eligibility so long as they do not con-flict with determinations set by the NCGA

· Exemption from requirements of the state personnel act (referred to as NCHRA) for all DBH employees along with the ability to hire independent counsel

Section 14 provides a cooling off period for vendor re-employment of certain former DHHS employees on contracts entered into on or after Nov. 1, 2015 by requiring the vendor to certify it will not use a former employee of DHHS. A former employee is defined as a person who, within the six months preceding termination, partici-pated in either the award or management of a DHHS contract with the vendor.

Section 15 establishes a Joint Legislative Oversight Committee on Medicaid and NC Health Choice (JLOCMHC) consisting of 14 legislative members charged with examining the budgeting, fi-nancing, administrative, and operational issues related to Medic-aid and NC Health Choice Programs.

Sections 16 and 17 make a conforming change for the newly cre-ated JLOCMHC to amend N.C.G.S. 120-208.1(a)(2)(b) by remov-ing oversight of “Medical Assistance” from the purview of the Joint Legislative Oversight Committee on Health and Human Services.

Section 18 amends N.C.G.S. 108A-54.1A to provide that the DHHS is authorized and required to take any and all necessary ac-tion to amend the Medicaid State Plan and waivers in order to keep the program within the certified budget.

Section 19 repeals N.C.G.S. 108A-54.2(d) imposed limitations on DHHS’s ability to change medical policy unless directed by the General Assembly.

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Section 20 amends N.C.G.S. 126-5 to exempt employees of the DHB from all but Article 6 (Equal Employment and Compensa-tion Opportunity, Assisting in Obtaining State Employment) and Article 7 (Privacy of State Employee Personnel Records) of the State Human Resources Act.

Sections 21 and 22 direct funds appropriated in the 2015 Appro-priations Act (Session Law 2015- 241) to be used to implement the act and repeals the provision discontinuing the State’s primary care case management (PCCM) program as of March 1, 2016. The State’s current PCCM vendor is Community Care of North Carolina.

Session Law 2015-245 provides the instructive provisions to implement Medicaid reform and represents a deliberate commit-ment from the General Assembly and the Department of Health and Human Services for the State to reshape how health care is funded, how it is delivered, and how care and quality is measured and analyzed within the State Medicaid program.

Shawn Parker is a managing partner of The Paratum Group, a public policy consulting firm that serves clients in government agencies and the private sector. Shawn served the North Carolina General Assembly from 2004 through 2012 as a Staff Attorney and Senior Legislative Analyst within the Research Division.

The Health Law and Elder & Special Needs Law Sections of the NCBA, together with the N.C. Partnership for Compassionate Care, are collaborating to hold advance health care planning work-shops to assist the public with completion of health care powers of attorney and living wills. The Health Law Section held pilot work-shops in January in Durham and in Asheville, Gastonia, Manteo, Wilmington, and Winston-Salem in April. Ultimately, the goal is to have workshops in all 100 counties across the state twice per year – in April to help promote National Healthcare Decisions Day and in November to promote National Hospice and Palliative Care Month.

This past spring, the Health Law Section Council formally re-quested the Elder Law Section to form a joint committee to orga-nize the effort among the bar and others. The Elder Law Section accepted the invitation. This is the first year of the joint committee.

The current plan is that a local organization, such as a local hospice organization or a regional chapter of the Partnership for Compassionate Care, will host a local, free clinic for members of the public to learn about advance health care planning and, if they desire, to execute their living will or health care power of attorney. The local entity hosting the event will need attorneys experienced with and knowledgeable of N.C. law governing living wills and health care powers of attorney.

The local host entity will contact the Bar Association, and the Bar Association will then locate a local attorney or attorneys who are willing to volunteer their time for the event. The community organization will be responsible for promoting and planning the event. The attorney will be on hand to answer questions about the documents and possibly serve as a Notary, or have the services of a Notary available. Recently, several counties who had commu-nity organizations wanting to host an advance directives clinic but could not find an attorney to be on hand for the clinic.

The Health Law Section and the Elder Law Sections are seek-ing attorneys in all counties across the state who would be willing to assist with one of these clinics. Interested attorneys can receive training from an online CLE course that is already available, and can receive other materials through the Bar Association. At each event, at least one attorney with experience in the legal area will be on hand to assist local volunteer attorneys.

Interested attorneys should contact Ken Burgess ([email protected]).

Jim Wall is the immediate past chair of the Health Law Section. He practices with the firm Wall Babcock in Winston Salem.

‘A Gift to Your Family’ Gains MomentumBy Jim Wall

Follow us on Twitter: @NCBAorg

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WalshA Prognosis article p. 1 of 9 DRAFT Last Saved 4/1/2016 11:25 AMPrognosis - Medicaid Transformation Article Spring 2016 FINAL 20160401_17400BA

Medicaid Transformation: Expanding Managed Care in North CarolinaBy Andrew M. Walsh

Last summer in the longest session of the North Carolina General Assembly (NCGA) in over a decade,Session Law 2015-245 (House Bill 372) was passed and signed by the Governor effective September 23,2015. This “Act to Transform and Reorganize North Carolina’s Medicaid and NC Health ChoiceProgram” ushers into North Carolina an expansion of Medicaid managed care much like the majority ofother states.1 Medicaid managed care has existed in North Carolina since perhaps 2006, but only forbehavioral healthcare and even that nominal sector was not fully expanded statewide until April 2013.N.C. Session Law 2011-264. While this experiment with non-profit public-authority managed caresuccessfully “bent the cost curve” for Medicaid, improving savings without sacrificing services or closelocal touch in North Carolina communities, it still remained a small part of the high and growingMedicaid budget.2

Thus, the question heavily debated by our legislators last session was not whether to expand managedcare to physical health, but how to do so. The House supported a bill that would build on localhomegrown structures already existing in North Carolina. The Senate preferred to bring in large,experienced health plans already serving other states. Both involved for-profit entities. The finalenactment was a compromise, summarized section by section in the last issue of this newsletter. Parker,“North Carolina’s Medicaid Program Transitions to Managed Care,” 32(1) Prognosis 1 (Dec. 2015). Thisarticle goes the next step, describing what the federal government will expect from managed Medicaid,how the new state law is being implemented and apropos for this newsletter: a prognostication of what toexpect in the near and long-term future.3

A Sneak Peek at the Future

Currently, only behavioral health (mental health, substance abuse and intellectual/developmentaldisabilities) (MH/SA/IDD) is under a Medicaid managed care system in North Carolina. It has eightgeographically exclusive public authorities called Local Management Entities/Managed CareOrganizations (LME/MCOs) with mandatory enrollment within their “catchment areas.” Those eightpublic authorities are a consolidation from over 45 or more LMEs in the past, which was a reduction fromthe 60 plus pre-LME MH/SA/IDD “area authorities.” As of March 17, 2016, the Secretary of the NorthCarolina Department of Health and Human Services (NCDHHS) published his plan for furtherconsolidation to four, requiring each LME/MCO to merge with a specified neighboring LME/MCO, butunder terms and timelines not yet determined.4 The new behavioral health Medicaid map would look asfollows:

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Meanwhile, on March 1, 2016, at a meeting of the NCGA’s Joint Legislative Oversight Committee onMedicaid and NC Health Choice (JLOC Medicaid), the NCDHHS unveiled its proposed map for creatingthe six regions for bidding by provider-led entities (PLEs)5 to manage physical health Medicaid:

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As directed by Session Law 2015-245, the State will issue an RFP for up to ten regional contracts withPLEs for one or more contiguous regions and up to three statewide contracts with large commercial plans.At the March 1st JLOC Medicaid meeting, regulators indicated an intent not to contract with more thanany one region can successfully support. As a result, you might expect two or three statewide contracts,but in some regions maybe only one or two PLEs. Regardless, each Medicaid enrollee will likely havechoices of about four Medicaid healthcare “prepaid health plans” (PHPs) in their county: two or threestatewide commercial plans and one or more regional PLE plans. How this might look is discussedfurther below.

What is Medicaid managed care and why is it preferred?

For years, nationwide Medicaid was operated on a fee-for-services (FSS) basis, which remains the defaultMedicaid delivery system historically and by law. With some exceptions, services were paid on a set feeschedule without prior approval and minimal control by a payer over cost, utilization, and quality of care.There was no “closed provider network,” but rather all eligible healthcare providers and professionalswere enrolled into Medicaid. Your doctor would perform the necessary services and Medicaid would payon a per-visit, per-test, per-procedure or other per-unit basis. In the 1990s, health maintenanceorganizations (HMOs) experimented with managed care, but overall were not well received. The debateabout why continues. However, at least one significant reason was concern that financial andadministrative considerations might and arguably did trump sound medical professional judgment andpatient choice of quality providers.

A problem with the Medicaid FFS delivery model is that it incentivizes volume. While ethical healthcareprofessionals resist the pressure, it is nonetheless there. For regulators, legislators, and taxpayers, thecommon pattern was a never-ending increase in the Medicaid budget from year to year to year. Although

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federal matching participation funding rules had states only paying a small percentage of the total bill,that percentage of Medicaid still remained a significant percentage of the North Carolina budget. Whilearguably the budget overruns North Carolina has experienced in the past were partially due to unrealisticbudget forecasts, there can be no doubt that the North Carolina Medicaid budget is fundamentallyunpredictable, large, and unsustainable.

Medicaid managed care in its simplest form merely requires that Medicaid healthcare services bemonitored and managed. In most instances, that is done a couple of ways. First, generally, prior approvalis required before services can be rendered. For most services, the healthcare provider must request theservice in advance from the state or more often it’s designated managed care organization (MCO) orentity (MCE).6 Under federal law discussed below, there are tight deadlines by which each MCO’sutilization management (UM) qualified clinicians must make “medical necessity” determinations as toeach of the service or treatment authorization requests. While the clinicians are not allowed to havefinancial incentives, and their decisions are subject to a rather robust due process review, see 42 CFR,Part 438, Subpart F, most managed care programs shift some or all of the risk to the MCO. This is doneusually through capitated payments by the state to the MCOs, generally on a “per month, per member”(PMPM) basis, creating an at-risk model for MCOs, including the future NC PHPs.

Medicaid managed care can also provide services beyond the array of Medicaid benefits, most notablycare coordination and quality management. Care coordination is generally performed by payer staff whoassist Medicaid patients and providers through the UM process, facilitate discharge planning byproviders, ensure annual person/patient-centered health plans, and guide or “link” patients to providers,services and more. Quality management involves a number of monitoring tools, including programintegrity to ferret out “credible allegations” of fraud, waste or abuse (FWA) that require action rangingfrom recoupment of overpayments and plans of correction to state and federal prosecution.7

In the end, Medicaid managed care is preferred to FFS because it gets closest to the Triple Aim: the HolyGrail of healthcare policy wonks and academicians. The Triple Aim strikes the optimal balance betweencost, quality and population health. But as with all things, the devil is in the details. Which Medicaidmanaged care delivery system comes closest and how can it be directed to the intended goals withminimal regulation, oversight cost and micromanagement?

How is Medicaid managed care regulated?

There are a number of risks with Medicaid managed care, not the least of which is ensuring that financialconsiderations do not overshadow patients’ true medical needs, the availability of provider choice, andtimely access to quality services.

In 2002, the Centers for Medicare and Medicaid Services (CMS) promulgated Medicaid rules andregulations, including those specifically for managed care, which was perhaps still in its nascent years.See 42 C.F.R., Part 438; 67 FR 40989 (June 14, 2002). Those rules, mostly unchanged to date, containdetailed requirements to avoid such excesses, especially as to the contract terms between states andMCOs, constraints on utilization management, adequacy of provider networks, and availability of dueprocess by enrollees. For example:

MCOs must maintain, monitor and document a network of appropriate, contracted, compliant andculturally competent providers sufficient to provide adequate access to all covered services,including as needed 24/7 services and out-of-network providers. See 42 CFR 438.206 and .207.

Service requests must be approved or denied within 14 days – shorter (3 working days) for urgentmatters, longer (up to 28 days) in special circumstances. See 42 C.F.R. §438.210(d).

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UM staff cannot be compensated in any way to incent denials, limits or discontinuances ofenrollee services. See 42 C.F.R. §438.210(e).

The “amount, duration, or scope” of Medicaid services must be identified and defined withincertain parameters, including that they be no less than FFS Medicaid services and “to reasonablybe expected to achieve the purpose for which the services are furnished.” See 42 C.F.R.§438.210(a)(1)-(3).

The “medical necessity” of Medicaid service must be well-defined consistent with certainauthorities. See 42 C.F.R. §438.210(a)(4). “Medical necessity” in North Carolina is currentlydefined by Clinical Coverage Policies (CCPs) promulgated by the North Carolina Department ofHealth and Human Services (NCDHHS), Division of Medical Assistance (DMA). They areonline at http://dma.ncdhhs.gov/document/clinical-coverage-policy-ccp-index.8

Service request denials or partial denials must be made by qualified clinical professionals. See 42C.F.R. §438.210(b)(3).

Due process must be robust and offered on almost every Medicaid service request denial andpartial approval, even if the same parties and services, just different scopes, durations or servicedates. See 42 C.F.R. Part 438, Subpart F (“Grievance System”) and N.C. Gen. Stat., Chapter108D. Such decisions are “managed care actions,” 42 CFR §438.400(b)(to be renamed “adversebenefit determinations” in pending new federal regulations), subject to strict timelines andcontent requirements for notice and opportunity to appeal within the MCO to an independentclinician (called “reconsideration” in North Carolina), and then if desired via a State fair hearing(called “appeal” in North Carolina), 42 C.F.R. §438.402-.410.

Medicaid service benefits must continue to the disputing Medicaid enrollee during this dueprocess provided certain minimum requirements are timely met and sustained. See 42 C.F.R.§438.420. While the enrollee is at risk of refunding the cost of these continued benefits if theylose the dispute, see 42 C.F.R. §438.424(a), it has rarely if ever been exercised in North Carolina.

In recent years, North Carolina amended its statutes to reflect and align with these same federalrequirements, especially due process, see N.C. Gen. Stat., Chapter 108D and Session Law 2013-397. 9

However, in some instances North Carolina has significantly deviated from federal Medicaid managedcare requirements.10 The prudent attorney would review both federal and state law when facing issues inthis area.

To ensure compliance by MCOs, Medicaid managed care currently in North Carolina is also regulated byextensive auditing from the State, federal government, recovery audit contractors (RACs), mandatoryaccreditation organizations, and others, with sometimes very specific requirements. For example, currentNorth Carolina LME/MCOs must meet certain financial solvency and service-spend requirements. SeeN.C. Gen. Stat. § 122C-124.2. Also, by contract, Medicaid MCOs in North Carolina must meet certain“medical loss ratios (MLRs),” based on a state-created variation of a federal formula. The MLRessentially requires at least 85% of Medicaid funds go to services and quality improvement activities, andno more than 15% goes to administrative and other expenses.

To complicate matters further, last summer, CMS proposed the first major revision of the MedicaidManaged Care rules. See NPRM #CMS-2390-P, 80 FR 31097 (June 1, 2015). Those proposed rulesunderwent public comment, CMS prepared responses not yet disclosed, and sent the rules to OMB. Thefinal rules are expected as early as April or May. Over 201 pages (before comment responses), they areworthy of their own article. In a nutshell, the new rules seek to give states greater guidance on howMedicaid managed care should work, balancing oversight with flexibility. They flesh out and clarifymuch of the confusion in the states over MLRs, program integrity, due process, and more. A key goal is

12


to align Medicaid managed care rules across all the “other major sources of coverage,” including privatehealth insurance, group plans and Medicare Advantage. North Carolina must keep one eye on thesepending federal rules as it makes its own transformation, to avoid mid-course conflicts and changes.

Next Steps for North Carolina Medicaid Managed Care

On March 1st at the JLOC Medicaid hearing, NCDHHS completed the first big deadline created bySession Law 2015-245: present a plan. The next deadline looming is to present by June 1, 2016 aSection 1115 Waiver to CMS for federal approval.11 Approval by CMS could be as fast as six months,but educated prognosticators foresee it taking about 18 months, as it is an iterative process between thestate and federal regulators.12 Assuming CMS waiver approval by January 2018, NCDHHS anticipatesletting contracts between April and September 2018, with “readiness reviews” of those PHPs betweenperhaps October 2018 and June 2019:

Meanwhile LME/MCOs, as noted above, likely will be consolidating into four entities. The session lawstates that Medicaid behavioral health services will continue to be covered by the LME/MCOs until fouryears after the date capitated contracts begin with the PHPs. That would be perhaps some time in 2022 bythese estimates. At that juncture, Medicaid behavioral health service delivery is to be integrated into thePHP contracts and plans covering physical health. By integrating behavioral and physical treatment intothese 13 or less PHPs, it is hoped that “the whole person” enrollees will be better served; perhaps throughsuperior information exchange, perhaps through greater coordination of treatment of both the mind andbody by a single entity, if still by different professionals. Others worry that focus will be on whateverservices and needs are most prevalent and profitable and that MH, SA and IDD needs might not get theattention they do now, nor the local community “touch” and connections.

The law is silent as to what becomes of the LME/MCOs after that 4-year post-PHP contracting deadline.Some foresee LME/MCOs morphing into entities supporting or even part of the PHPs, perhaps well

13


before this deadline, thereby still providing care coordination and/or utilization management expertisedeveloped over many years. Others speculate the LME/MCOs might become Medicaid managed carehealth plans for both behavioral and physical needs, but of smaller, high-need, high-cost specialtypopulations like persons with Serious Mental Illness (SMI), Serious and Persistent Mental Illness (SPMI),and/or Serious Emotional Disturbance (SED).

Who will get those initial PHP contracts and be the main players in the new NC Medicaid world circa2018? Certainly for the statewide contracts, the legislators have invited into North Carolina to bid the bigcommercial plans (CPs), which would include if desired Aetna, Amerigroup, AmeriHealth, Anthem, BlueCross Blue Shield, Centene, Cigna, Humana, Magellan, Meridian, Tenet, UnitedHealth and WellCare, toname a few.

The regional PLEs could effectively be statewide as well, since bidding is allowed for multiple regions, ifcontiguous. In December 2015, eleven of North Carolina’s larger hospital and health care systemsformed the Provider-Led, Patient-Centered Care, LLC (PLPCC), “a collaboration to investigatedevelopment of a provider-led and owned Medicaid only Prepaid Health Plan (PHP) in support of theGeneral Assembly and Governor’s goal to transform the State’s current Medicaid system….”13 In earlyMarch, the joint venture added Presbyterian Health Plan of New Mexico as a partner, ostensibly to serveutilization management, analytical and administrative roles for the planned PHP. News reports suggestabout 600 jobs in a new office in Mexico and another 600 in North Carolina, administering services forPLPCC.

Conclusion

Last summer’s new Medicaid Transformation law at best is a broad stroke attempt to change NorthCarolina’s Medicaid system toward greater budget predictability and eventually more integrated healthcare services. This spring, we saw the plan, with maps. By summer, a waiver undergoing publiccomment will be submitted to CMS for approval, leading to implementation likely in 2018. The playerswill likely be a mix of big, out-of-state, for-profit commercial plans already with a history in other states,and smaller, homegrown provider-led entities including at least one already being formed from this state’s11 largest hospitals and healthcare systems and a New Mexico administrative partner. The competitionbetween the large and local rivals could be fierce and potentially ruinous. Standardization for providersand enrollees could be largely replaced with diverse contracts, provider choice, vigorous marketing, andno small amount of confusion. Where smaller providers will land, in what networks, and what willbecome of the existing public LME/MCOs in local communities remains to be seen. Managed care forboth behavioral and physical Medicaid services is inevitable in this state, as is integrated services andultimately more budget predictability. However, it is a gamble if this newest wide-reaching Medicaidreform, with all its fast moving parts and focus on for-profit, competing entities both regional and out-of-state, will achieve the goals sought, … and what gains might be lost in the process.

Andrew Walsh has worked in North Carolina Medicaid managed care for three of the eight LME/MCOs,starting only a few years after their creation. He is licensed in North Carolina and three other contiguousstates, practicing law for over 25 years. He is currently General Counsel and Chief Legal Officer atPartners Behavioral Health Management, and formerly with Cardinal Innovations Healthcare Solutions(fka PBH) and Smoky Mountain Center. However, the views expressed in this article are those of theauthor only, and not to be attributed to any other person or organization.

ENDNOTES

14


1 According to the Centers for Medicare and Medicaid Services’ (CMS’) 2013 Medicaid Managed Care Report,73% of the 62.5 million Medicaid enrollees in the United States were in some Managed Care Organization (MCO)health plan. Most (27) states had a penetration rate of over 51% for comprehensive MCOs. Seven states had none.North Carolina was among the 17 states with less than 50% penetration by comprehensive MCOs – but onlynegligibly over 0% in North Carolina. This should change dramatically with the new NC Medicaid model.2 In FY15, the NC Medicaid budget was over $13B, of which behavioral health was 21% (under $3B). PaymentPrimer Fiscal Brief (NCGA Fiscal Research Division 3/18/15), at p.4. While North Carolina Medicaid costs aregenerally up (11th highest in the nation in FY14 per Kaiser Family Foundation), not so North Carolina behavioralhealth Medicaid, which has flattened spend and increased services with managed care. According to data to theN.C. General Assembly on March 1, 2016, of $13.8B FY15 Medicaid spend, 60% was federal, 24% was state, andthe remaining 16.7% was miscellaneous receipts or transfers. This is slightly down from the peak $14.2B in 2012,but up from all other years since 2003 ($7.2B). Fiscal Brief (NCGA Fiscal Research Division 2/29/16).3 Some changes are not covered in this article, or only tangentially. E.g., transitioning Medicaid from the Divisionof Medical Assistance (DMA) to a uniquely structured Division of Health Benefits (DHB); and the creation of theJoint Legislative Oversight Committee on Medicaid and NC Health Choice (JLOC Medicaid) in addition to theexisting Joint Legislative Oversight Committee on Health and Human Services (JLOC HHS).4 NCDHHS press release, letter and map issued 3/17/16, available online at https://www.ncdhhs.gov/news/press-releases/state-announces-new-lmemco-service-regions.5 “PLE” could as easily stand for physician/clinician-led entity, as “[a] majority of the entity's governing body iscomposed of physicians, physician assistants, nurse practitioners, or psychologists.” NCSL2015-245, §4, ¶(2)b.2.The law defines qualifying PLEs and commercial plans (CPs) collectively as prepaid health plans (PHPs).6 Technically, federal law distinguishes between MCOs, pre-paid inpatient health plans (PIHPs) and prepaidambulatory health plans (PAHPs). 42 C.F.R. § 438.2. And MCEs cover all of these and more. 42 C.F.R. §455.101(“Managed care entity (MCE) means managed care organizations (MCOs), PIHPs, PAHPs, PCCMs, and HIOs.”)For purposes of this article, the distinctions are generally not important. But beware: they can be very important inlegal analyses for you or your clients, especially as North Carolina again experiments with new Medicaid deliverysystems and entities. In fact, North Carolina has had perhaps five Medicaid “reforms” in the past 15 years,culminating in a collection of confusing, arguably inconsistent statutes, entity names, and entity powers andobligations, including “area authorities,” Local Management Entities (LMEs), and LME/Managed CareOrganizations (LME/MCOs). For definitions, see N.C. Gen. Stat. § 122C-3(1), (20b) and (20c) and -116(a) and §108D-1. For potentially conflicting authority and duties, compare generally N.C. Gen. Statute, Chapters 122C,108A, 108C and 108D. Ironically, in 2001 with the "Mental Health System Reform Act," LMEs were created toseparate the management of mental health services from the delivery of those services, thereby avoiding a perceivedconflict of interest inherent in the old HMO system. Now, North Carolina is merging payment management andservice provision together again in PLEs.7 Medicaid Health Plans of America lauds these managed care benefits over FFS: predictable costs; access and carecoordination; delivery system innovation; fraud and abuse prevention; and quality assurance and improvement.These closely align with the SL 2015-245 goal of “budget predictability for the taxpayers of this State whileensuring quality care to those in need.”8 Under statutory amendments in recent years following McCrann v. N.C. HHS, 209 N.C. App. 241, 704 S.E.2d 899,rev. denied, 365 N.C. 198, 710 S.E.2d 23 (2011), much of what NCDHHS does in the managed care arena,including the CCPs, are expressly exempt from the rulemaking requirements of the NC Administrative ProceduresAct. See N.C. Gen. Stat. § 150B-1(d)(9), (20) and (22). However, public comment periods are still common, if notentirely required, including the current one for the 1115 Waiver application from March 7, 2016 to April 18, 2016pursuant to 42 C.F.R. §431.408.9 Due process has been heavily litigated in North Carolina behavioral health Medicaid managed care, and will likelybe so again when expanded to physical healthcare.10 E.g., federal Medicaid law requires that each participating state have a “single state agency” administering theprogram. See 42 CFR 431.10. By Session Law 2013-397, the NCGA deviated from that rule by moving “State fairhearings” out of DMA and to the North Carolina Office of Administrative Hearings (OAH). This ultimatelyrequired a special exemption by CMS denied or resisted in earlier years.11 A “waiver” in Medicaid parlance is a vehicle states can use to test new or existing ways to deliver and pay forhealth care services in Medicaid and the Children's Health Insurance Program (CHIP), deviating and being “waived”from some of the traditional Medicaid statutory requirements. North Carolina currently has two waivers

15


substantially merged into one: a §1915(b)/(c) waiver. (“§1915” comes from that portion of Title XIX of the SocialSecurity Act.) The “(b) waiver” allows for Medicaid mental health and substance use (MH/SA) services to beprovided in North Carolina via a managed care delivery model. The “(c) waiver” known in North Carolina as theInnovations Waiver, provides home and community based services (HCBS) in lieu of institutionalization, butexclusively for IDD consumers.11 The Innovations Waiver also allows Medicaid managed care delivery bypiggybacking on the (c) waiver. Thus, North Carolina, at least for MH, SU and IDD Medicaid enrollees, has a§1915(b)/(c) concurrent waiver. It grew from a §1115 research and demonstration project waiver in North Carolinaaround 2006. The expansion of Medicaid managed care from behavioral health and into physical health is also to bedone by a §1115 waiver, unveiled on March 1, 2016 at the JLOC Medicaid meeting and posted athttp://www.ncdhhs.gov/nc-medicaid-reform for public comment until April 18, 2016.12 Some experts have worried that CMS might take longer, given North Carolina is among the 19 states that as ofMarch 14, 2016, had not adopted Medicaid expansion under “Obamacare.” See Kaiser Family Foundation,www.kff.org. However, Alabama is another non-expansion state, and its “Regional Care Organization MedicaidTransformation” §1115 waiver (somewhat similar to North Carolina’s proposed waiver) was approved by CMS inFebruary 2016 -- about 20 months.13 PLPCC Press Release dated 12/3/15. At formation, PLPCC members included Cape Fear Valley Health System,Carolinas HealthCare System, Cone Health, Duke University Health System, Mission Health, New HanoverRegional Medical Center, Novant Health, University of North Carolina Health Care System, Vidant Health, WakeForest Baptist Medical Center, and WakeMed Health & Hospital.

16

Proposed regions

JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON MEDICAID AND NC HEALTH CHOICE | NC HEALTHCARE REFORM & DRAFT 1115 WAIVER 17

State announces new LME/MCO service regions Agencies to merge to provide behavioral health, intellectual and developmental disability and

substance use services

State health officials announced today that the state- and Medicaid-funded organizations providing

mental health, intellectual and developmental disability and substance use services to North Carolina

citizens will be consolidating into four service regions across the state. Further consolidation will

improve quality of services, accessibility, accountability and long-term sustainability.

“I’m a strong believer in LME/MCOs,” said Rick Brajer, Secretary of the Department of Health and

Human Services. “This population deserves dedicated management.”

The newly consolidated service areas are:

North Central Region: CenterPoint Human Services and Cardinal Innovations Healthcare

Solutions will be merging

South Central Region: Sandhills Center and Alliance Behavioral Healthcare will be

merging

Eastern Region: Eastpointe and Trillium Health Resources will be merging

Western Region: Partners Behavioral Health Management and Smoky Mountain

LME/MCO will be merging

“We need strong LME/MCOs to achieve our Medicaid reform objectives,” Brajer said. “Now is the right

time to strengthen these organizations for long-term sustainability.”

In addition to their role in the future of Medicaid reform, LME/MCOs will play an important role in

implementing recommendations that come from the Governor’s Task Force on Mental Health and

Substance Use as its members seek innovative ways to streamline systems already in place to address

mental health and substance use needs across the state.

Covering larger regions will allow for more consistent services to be offered to all areas of the state. It

will also foster better coordination of care for people who may temporarily move into different service

areas, such as children in foster care. It is also expected to decrease the administrative burden on

providers who offer services in more than one LME/MCO region.

This consolidation reflects much of what the organizations themselves had proposed when mergers

were first considered in late 2013. Local Management Entities/Managed Care Organizations

(LME/MCOs) proposed regions to serve the east, the west and two to serve central North Carolina.

LME/MCO leaders will work closely with DHHS leadership on implementation plans and timelines

throughout coming months.

###

18

Alamance

Anson

Ashe

Avery

Beaufort

Bertie

Bladen

Brunswick

Buncombe

Burke

Cabarrus

Caldwell

Camden

Carteret

Caswell

Catawba Chatham

Cherokee

Chowan

Clay

Cleveland

Columbus

Craven

Currituck

Dare

Davie

Duplin

DurhamFranklin

Gaston

Gates

Graham

Granville

Greene

Guilford

Halifax

Harnett

Haywood

Henderson

Hertford

Hoke

Hyde

Iredell

Jackson

Johnston

Jones

Lee

Lenoir

Lincoln

Macon

Madison Martin

McDowell

Moore

Nash

NewHanover

Northampton

Onslow

Orange

Pamlico

Pender

Person

Pitt

Polk

Randolph

Richmond

Robeson

Rockingham

Rowan

Rutherford

Sampson

StokesSurry

Swain

Tyrrell

Union

Vance

Wake

Warren

Washington

Watauga

Wayne

Wilkes

Wilson

Yadkin

PasquotankPerquimans

Proposed Local Management Entity - Managed Care Organizations (LME-MCOs)Reflects Proposed Regional Entities As Of 3/17/16

Edgecombe

Scotland

Cumberland

Forsyth

Mecklenburg

Yancey

Transylvania

Alexander

Alleghany

Mitchell

Davidson

Montgomery

Stanly

Western Region:Smoky Mountain CenterPartners Behavioral Health Management

Medicaid Members: 296,658 (21%)

North Central Region:Cardinal Innovations Healthcare SolutionsCenterPoint Human Services

Medicaid Members: 410,065 (29%)

Eastern Region:Trillium Health ResourcesEastpointeMedicaid Members: 351,696 (24%)

South Central Region:Alliance Behavioral HealthcareSandhills CenterMedicaid Members: 378,136 (26%)

Medicaid Members are the number enrolled as of December 2015.

21

LEGISLATIVE REPORT TRANSFORMATION AND REORGANIZATION OF

NORTH CAROLINA’S MEDICAID AND NC HEALTH CHOICE PROGRAMS

SESSION LAW 2015-245, SECTION 5(12)

FINAL REPORT

State of North Carolina

Department of Health and Human Services

March 1, 2016

25

TABLE OF CONTENTS

I. INTRODUCTION.......................................................................................................................... 1

II. PROPOSED WAIVER APPLICATION ..................................................................................... 3

A. Overview of Waiver Application ..................................................................................... 3

B. Summary of Proposed Waiver ......................................................................................... 3

C. State Plan and Other Waiver Amendments ................................................................... 4

D. 1115 Waiver Budget Neutrality ....................................................................................... 5

III. EXPECTED TIMEFRAME FOR SUBMISSION OF THE PROPOSED WAIVER TO CMS ........................................................................................................................ 6

IV. PROPOSED STATUTORY CHANGES ..................................................................................... 7

A. Recommendations Regarding Licensure of Prepaid Health Plans............................... 7

B. Application of Chapter 58 ................................................................................................ 8

C. Proposed Amendments to SL 2015-245 .......................................................................... 9

D. Changes to Other Statutes ............................................................................................. 11

V. STATUS OF DHB STAFFING ................................................................................................... 13

A. Overview and Creation of the Division of Health Benefits ......................................... 13

B. Staffing Plans................................................................................................................... 13

C. Transformation Planning Project Organizational Structure ..................................... 14

D. Approach to Benefits and Compensation ..................................................................... 16

VI. ANTICIPATED DISTRIBUTION OF REGIONAL CAPITATED PHP CONTRACTS .............................................................................................................................. 17

Regions ............................................................................................................................. 17

B. Distribution of PHP Contracts ...................................................................................... 18

26

VII. PLANS FOR BENEFICIARY ENROLLMENT INTO PHPS ................................................ 20

Enrollment Broker .......................................................................................................... 20

B. Auto Assignment Process ............................................................................................... 20

VIII. BENEFICIARY ACCESS STANDARDS ................................................................................. 22

IX. PERFORMANCE MEASURES ................................................................................................. 23

A. Overview .......................................................................................................................... 23

B. Guiding Principles for Measure Selection .................................................................... 23

C. Process for Selecting Performance Measures ............................................................... 24

D. How Performance Measures Will Be Used ................................................................... 24

E. Data and Reporting ........................................................................................................ 24

X. A PLAN FOR THE PROPOSED INCLUSION OF CERTAIN FEATURES ....................... 26

A. Rate Floors....................................................................................................................... 26

B. Essential Providers ......................................................................................................... 27

C. Protections Against the Exclusion of Certain Provider Types ................................... 28

D. Good Faith Negotiations ................................................................................................. 28

E. Antitrust Policies ............................................................................................................. 29

F. Prompt Pay Requirements ............................................................................................. 29

G. Uniform Credentialing Requirements .......................................................................... 30

XI. TIMELINE FOR RFP ISSUANCE ............................................................................................ 33

XII. MEASURES FOR SUSTAINABILITY OF THE TRANSFORMED SYSTEM ................... 34

27

XIII. PLAN FOR TRANSITION OF CERTAIN N3CN CONTRACT FEATURES ..................... 35

A. Overview .......................................................................................................................... 35

B. Transitioning Medical Home to Person-Centered Health Community ..................... 36

C. Practice Supports ............................................................................................................ 36

D. Care Management and Related Activities .................................................................... 36

E. Informatics Center .......................................................................................................... 38

XIV. PLAN TO STABILIZE DMA DURING TRANSITION TO DHB ......................................... 39

XV. PLAN TO ADDRESS CONTINUITY OF CARE FOR INDIVIDUALS IN FOSTER CARE AND ADOPTIVE PLACEMENTS ............................................................... 40

Overview .......................................................................................................................... 40

Extension of Coverage for Parents of Children in Foster Care .................................. 40

Expansion of Fostering Health NC ................................................................................ 41

PHP Contracting Approach ........................................................................................... 41

XVI. OTHER CONSIDERATIONS .................................................................................................... 43

APPENDIX: MAP OF PROPOSED REGIONS .................................................................................... 44

28

I. INTRODUCTION

In September 2015, thanks to the leadership of Governor Pat McCrory and the efforts of the General Assembly, North Carolina enacted legislation for historic reform of its Medicaid program.

Medicaid is a state and federal program providing medical coverage for low-income and disabled citizens. It covers more than 1.9 million citizens, or roughly one of every five North Carolinians. More than 55 percent of all births in the State are to mothers receiving Medicaid benefits. The program also provides a variety of additional supports including long term care and behavioral health services.

Session Law 2015-245 (also known as House Bill 372) seeks to transform and reorganize North Carolina’s Medicaid and NC Health Choice programs. This legislation directs the North Carolina Department of Health and Human Services (DHHS) to design Medicaid and NC Health Choice to achieve the following goals:

• Ensure budget predictability through shared risk and accountability

• Ensure balanced quality, patient satisfaction and financial measures

• Ensure efficient and cost-effective administrative systems and structures

• Ensure a sustainable delivery system through the establishment of two types of prepaid health plans (PHPs): provider led-entities (PLEs) and commercial plans (CPs).

This report and the Section 1115 demonstration draft waiver application builds on what works in North Carolina by bringing innovation and new tools into the health system to ensure the system puts people first, and rewards health plans and providers for making beneficiaries healthier while containing costs. It meets the goals of the legislation by creating a North Carolina solution for Medicaid beneficiaries. A draft of the waiver is attached to this report.

In preparation for implementing Medicaid Reform, DHHS has proactively sought input from, and listened to, key stakeholders from across the state – including physicians, beneficiaries, beneficiary advocates, provider associations, hospitals, and many more. In fact, DHHS met with more than 50 stakeholder groups multiple times and collected written feedback for consideration in the development of this report and the Section 1115 draft waiver application.

Session Law 2015-245 requires specific deliverables, as described in Section 5(12), which directs DHHS, through the Division of Health Benefits, to:

Report to the Joint Legislative Oversight Committee on Medicaid and NC Health Choice by March 1, 2016. At a minimum, this report shall include:

a. The proposed waiver application. b. The expected time frame for the submission of the proposed waiver to CMS. c. Proposed statutory changes required. d. Status of staffing of the Division of Health Benefits, including a description of staff’s

key competencies and expertise.

29

e. Anticipated distribution of regional capitated PHP contracts. f. Plans for recipient enrollment. g. Recipient access standards. h. Performance measures. i. A plan for the proposed inclusion of the following features as part of Medicaid and

NC Health Choice transformation: 1. Rate floors in addition to those required by subdivision (5) of Section 5 of this act. 2. Antitrust policies. 3. Protections against the exclusion of certain provider types. 4. Prompt pay requirements. 5. Uniform credentialing requirements. 6. Good-faith negotiations.

j. Time line for issuance of RFP and solicitation of bids. k. Measures for sustainability of the transformed system. l. A plan for transition of features of the contract with the North Carolina Community

Care Network, Inc., (NCCCN) to the new delivery system, including a plan for utilizing, at the appropriate time, the Health Information Exchange Network to perform certain functions presently being performed by NCCCN’s Informatics Center in conjunction with the primary care case management program.

m. A plan to stabilize the Division of Medical Assistance during the transition of the Medicaid and NC Health Choice programs to the Division of Health Benefits.

n. A plan that will ensure continuity of services for individuals in foster care and adoptive placements in the transformed Medicaid and NC Health Choice programs.

The report reflects DHHS’ consideration of, and in some cases, recommendations on how to address each of the above items. While there are a number of decisions yet to be made, DHHS is dedicated to working with diverse stakeholders to develop a balanced, North Carolina-specific approach. DHHS is prepared to meet the timelines and outcomes defined in the legislation and to assure the successful implementation of Medicaid reform.

We look forward to working with the legislature and all stakeholders as we improve health care for North Carolina citizens.

30

II. PROPOSED WAIVER APPLICATION

Section 5(12)(a) of SL 2015-245 requires the report to the JLOC to include the “[p]roposed waiver application.”

A. Overview of Waiver Application

Accompanying this report is a draft of the application that DHHS proposes to submit to CMS for a waiver pursuant to Section 1115 of the Social Security Act. The waiver application includes an overview of transformation goals and the hypotheses to be tested. Consistent with CMS instructions, the waiver application also identifies:

• Individuals eligible for the waiver

• Services included in the waiver

• The proposed payment and delivery system using PHPs

• Demonstration financing and budget neutrality

• An overview of plans for implementation

• An estimate of expenditures and enrollment

• A description of the waiver financing

• The legal authorities being requested to accomplish the goals of the waiver.

The next step DHHS must take with the draft waiver application will be to complete the public notice requirements, including posting the application for public comment, holding public hearings and conducting Native American tribal consultation. These steps are required by CMS rules, before the application may be submitted to CMS for review.

B. Summary of Proposed Waiver

The draft application conveys the DHHS vision for next-generation prepaid health plans supporting advanced, comprehensive medical homes called “person-centered health communities (PCHCs)” and adoption of value-based payment driving improved outcomes. The waiver also indicates future plans to explore models for persons dually eligible for Medicaid and Medicare (“dual eligibles”), and integrating local management entity/managed care organization (LME/MCO) services to achieve this vision. However, proposals for later stage models are not included in the draft application. CMS will expect details on these later stage models to be submitted through an amendment to the waiver once program design features are available.

Section 9 of SL 2015-245 directs DHHS to “work with CMS to attempt to preserve existing levels of funding generated from Medicaid-specific funding streams, such as assessments, to the extent that the levels of funding may be preserved.” Furthermore, “if such Medicaid-specific funding cannot be maintained as currently implemented, then the Division of Health Benefits shall advise the Joint Legislative Oversight Committee on Medicaid and NC Health Choice, created in Section 15 of this act, of any modifications necessary to maintain as much revenue as possible within the context of Medicaid transformation.”

31

DHHS is proposing to CMS a program called Care Transformation through Payment Alignment. This initiative is a blended approach to preserve funding levels, and relies on a combination of continued direct funding to providers1 through uncompensated care payments and a delivery system reform incentive payment (DSRIP) program. DSRIP is a federal-state partnership initiative authorized as part of broader Section 1115 waivers that allows federal matching dollars for project-driven milestones in order to support hospitals and other providers in changing how they provide care to Medicaid beneficiaries.

The waiver also will contemplate the possibility of building portions of the current supplemental payments into the PHP capitation rate to target provider efforts aimed at improving health outcomes and achieving overall Medicaid goals while helping to preserve funding.

Transitioning payments by way of the Care Transformation through Payment Alignment initiative will not only require careful consideration of the impact on providers, but also whether the funding source can be transitioned to the new funding model. DHHS will work closely with the provider community and other financing sources to further develop this proposal, including specific recommendations of funding levels dedicated to each payment arrangement. In addition, DHHS fully expects this proposal to be a primary focus of the waiver negotiations with CMS. If the approach is altered significantly, CMS may require an additional public notice period; for instance, to develop the initiatives under the DSRIP. See the fourth demonstration initiative in the draft waiver application for more description of the DSRIP proposal.

C. State Plan and Other Waiver Amendments

Section 1115 waivers often require amendments to the state plan (SPAs) and existing Section 1915(b) or 1915(c) waivers to fully implement the program goals. However, it is not until further into waiver negotiations when both the state and CMS will determine the changes that will be needed when these amendments are submitted. Based on our current understanding, DHHS will likely need to submit the following amendments to existing authorities:

• Section 2703 SPA for Medicaid Health Homes – terminate this state plan authority upon implementation of PHPs.

• Section 1932(a) SPA – terminate the North Carolina Community Care Network (N3CN) SPA pursuant to SL 2015-245, Section 7.

• Community Alternatives Program for Children (CAP-C) and Community Alternatives Program for Disabled Adults (CAP-DA) Section 1915(c) home- and community-based services (HCBS) waivers – reflect the capitated PHP delivery system.

• Amendment to Title XXI CHIP state plan to reflect changes from enrollment in N3CN to PHPs.

1 Disproportionate Share Hospital (DSH) payments, and hospital graduate medical education payments will remain outside of the waiver.

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D. 1115 Waiver Budget Neutrality

North Carolina must show that the new initiatives under the 1115 waiver will not cost the federal government more than it would without the waiver. DHHS will negotiate a “budget neutrality” agreement with CMS. Some general features of this agreement will be:

• North Carolina will be at risk for the state match if it exceeds expenditure limits established in the waiver. This is new to North Carolina.

• Once agreement is reached with CMS on budget neutrality, it is much more challenging to reopen this agreement than it is in Section 1915(b) and 1915(c) waivers that DHHS has now.

• CMS has its own rules for developing estimates for budget neutrality. They are not the same as those used for the state budget estimates. The state budget estimates and waiver projections are likely to appear different.

DHHS must live within the estimates that it agrees to with CMS. Therefore, it is very important that North Carolina negotiate the most favorable agreement with CMS, and that future spending decisions are considered in light of the budget neutrality agreement.

For the March 1, 2016 draft waiver application for public comment, CMS only requires aggregate historical enrollment and expenditure information, and aggregate annual projected enrollment and expenditure information for the five-year projected waiver period. Once DHHS has received public input, including input on the Care Transformation through Payment Alignment proposal, DHHS will prepare a detailed budget neutrality submission that will accompany the June 1 waiver application to CMS.

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III. EXPECTED TIMEFRAME FOR SUBMISSION OF THE PROPOSED WAIVER TO CMS

Section 5(12)(b) of SL 2015-245 requires the DHHS report to the JLOC on Medicaid and NC Health Choice to include “[t]he expected time frame for the submission of the proposed waiver to CMS.”

DHHS intends to submit the 1115 waiver application to CMS to implement the transformation of Medicaid and NC Health Choice on June 1, 2016 after conducting the federally required public notice and comment period, and 60-day tribal consultation period.

The federal requirements for public notice and comment specify the timing and logistics of the notice and comment process, and require states to summarize and respond to the comments received during the public comment period. To comply with the federal public notice and comment requirements, and meet the statutory deadline of June 1 for submission of the waiver application, DHHS is releasing the draft waiver application for public comment concurrently with the submission of the draft application to the JLOC and will accept public comments starting no later than March 7 and through April 18. The tribal consultation period is expected to occur from March 2 through April 30.

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IV. PROPOSED STATUTORY CHANGES

Section 5(12)(c) of SL 2015-245 requires the report to the JLOC to include “[p]roposed statutory changes required.”

A. Recommendations Regarding Licensure of Prepaid Health Plans

Background

Section 6 of SL 2015-245 adds a new scope of responsibility to the North Carolina Department of Insurance (DOI):

“The transformed Medicaid and NC Health Choice system shall include the licensing of PHPs based on solvency requirements established and implemented by the Department of Insurance. The Commissioner of Insurance, in consultation with the Director of the Division of Health Benefits, shall develop recommended solvency requirements that are similar to the solvency requirements for similarly situated regulated entities and recommended licensing procedures that include an annual review by the Commissioner and reporting of changes in licensure to the Division of Health Benefits. …”

Recommendations

DHHS has reviewed multiple options for licensure of PHPs and consulted with DOI. Staff of the two agencies jointly recommend that:

• PHP solvency requirements be similar to the solvency requirements in the Health Maintenance Organization (HMO) Act (N.C.G.S. §58-67). This includes the existing formula for capital/solvency requirements, which recognizes the amount of risk the PHP assumes – for instance, the number of lives covered – and the degree the PHP retains or limits its risk – such as paying providers by salary or capitation, or by purchasing reinsurance. This allows PHP funding structures to be different, and provides equitable application of reasonable standards intended to protect the interests of those impacted by the actions of the PHPs: enrollees, providers and the taxpayers financing the program.

• PHP licensure and DOI regulatory oversight will focus on solvency and liquidity requirements; DHHS will regulate the non-financial aspects of the PHP (e.g., covered services, provider network, member services, quality improvement) through regulations and the PHP contract. DHHS will also conduct financial monitoring, with DOI as the primary regulator of PHP finances.

• Chapter 58 be amended to specify the licensure requirements for PHPs, the applicable financial requirements, and the regulatory authority of DOI and DHHS with respect to PHPs.

• PHP licensing process build on existing processes and be efficient for both DOI and organizations seeking PHP licensure.

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B. Application of Chapter 58

Background

Section 4 of SL 2015-245 requires that Medicaid and NC Health Choice programs be organized according to certain principles. Section 4(6a) specifies that:

“To the extent allowed by Medicaid federal law and regulations and consistent with the requirements of this act, PHPs shall comply with the requirements of Chapter 58 of the General Statutes. The Department of Health and Human Services, Division of Health Benefits, and the Department of Insurance shall jointly review the applicability of provisions of Chapter 58 of the General Statutes to PHPs, and report to the Joint Legislative Oversight Committee on Medicaid and NC Health Choice by March 1, 2016, on the following:

a. Proposed exceptions to the applicability of Chapter 58 of the General Statutes for PHPs.

b. Recommendations for resolving conflicts between Chapter 58 of the General Statutes and the requirements of Medicaid federal law and regulations.

c. Proposed statutory changes necessary to implement this subdivision.”

Recommendation

DHHS and DOI recommend that, except for the financial requirements specified for PHP licensure, PHPs be exempt from Chapter 58 of the General Statutes. DHHS will instead incorporate key protections from Chapter 58 in its PHP regulations and/or the PHP contract. DHHS and DOI make this recommendation in the interests of administrative efficiency, ensuring compliance with federal Medicaid requirements, and consistency with the recommendation above to have DOI regulate the financial attributes of PHPs and DHHS regulate the non-financial components of PHPs.

Rationale

A review of Chapter 58 identified a few dozen non-financial provisions setting forth member or provider protections. These provisions are primarily outlined in the following articles: Article 3, General Regulations for Insurance; Article 50, General Accident and Health Insurance Regulations; and Article 51, Nature of Policies. However, many of these provisions are related to coverage (e.g., coverage for hearing aids), which are not applicable to PHPs because Medicaid coverage is governed by North Carolina’s Medicaid state plan and Section 1915(c) waivers for home- and community-based services (HCBS).

Some other provisions (e.g., treatment discussions not limited, prohibition on managed care provider incentives, provider directories, direct access to obstetrician-gynecologists, grievance procedures) are not applicable to the PHPs because they are controlled by federal Medicaid law and regulation. The federal government requires its Medicaid-specific provisions to be included

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in contracts with managed care organizations (MCOs).2 Since the PHPs will be required to comply with the federal terms, the corresponding provisions in Chapter 58 do not apply to PHPs.

Other provisions (e.g., notice of claim denied, selection of a specialist as a primary care provider, identification card) are not controlled by federal Medicaid law but are typically addressed in Medicaid managed care contracts, and DHHS intends to include similar provisions in the PHP contract. Additionally, DHHS proposes to include any remaining provisions in Chapter 58 that might be applicable to PHPs (e.g., health plan fee schedules, direct access to pediatricians for minors) in the PHP contract, as long as they are not inconsistent with federal Medicaid requirements.

C. Proposed Amendments to SL 2015-245

Amendments Related to Eligibility and Services

While developing the waiver, DHHS identified proposed amendments to SL 2015-245 related to eligibility and services, and a few areas for clarification. Section 4(5) of SL 2015-245 provides that all program aid categories, except beneficiaries who are dually eligible for Medicaid and Medicare (“dual eligibles” or “duals”), be enrolled in a PHP. DHHS interprets the statutory language regarding exclusion of dual eligibles from PHP enrollment to mean all dual eligibles, including beneficiaries with disabilities who also have Medicare and those who are “partial duals” – beneficiaries eligible only for assistance with their Medicare cost-sharing.

Based on careful consideration during program design discussions, DHHS recommends that the statute be amended to exclude from PHP enrollment these additional Medicaid beneficiary categories:

• Medically needy beneficiaries

• Beneficiaries who are eligible only for emergency services

• Members of federally recognized tribes, including the Eastern Band of Cherokee Indians, who could opt to enroll voluntarily in PHPs.

Nationwide, medically needy individuals are generally excluded from capitated contracts (for example, in Florida and Virginia). These beneficiaries are enrolled in Medicaid for only short periods, which limits the plan’s ability to effectively manage the beneficiaries’ care. In state fiscal year 2015, there were 20,000 beneficiaries who were classified as medically needy, but most of these beneficiaries (approximately 85 percent) were eligible only for three to four months of coverage. The remaining beneficiaries had an average duration of 5.6 to six months.

Similarly, DHHS proposes to exclude a small number of beneficiaries who are eligible only for emergency services. These beneficiaries also are enrolled in Medicaid for short periods, and PHPs will not be able to directly manage their activity or costs.

2 CMS uses the term “managed care organization (MCO)” in reference to entities that the North Carolina General Assembly has elected to call prepaid health plans, or PHPs.

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Based on initial conversations with the Eastern Band of Cherokee Indians (EBCI), DHHS recommends that members of the federally-recognized tribes be permitted to enroll in PHPs on an opt-in basis, but not be required to enroll in a PHP. EBCI members who voluntarily enroll may disenroll without cause at any time.

The EBCI has also expressed an interest in developing a sub-regional specialty PLE for the Cherokee community in North Carolina. DHHS will work with the EBCI to explore this option during and after the tribal consultation period.

While DHHS does not believe that an amendment to the statute is required, it proposes to exclude the following from PHP enrollment:

• Individuals who are presumptively eligible for Medicaid. These individuals are only presumptively eligible for a short time and must apply to continue Medicaid eligibility beyond the presumptive eligibility period.

• Months when a beneficiary is retroactively eligible for Medicaid. Since costs during retroactive eligibility occur before enrollment with a PHP, the PHP will have no opportunity to manage those costs; therefore, periods of retroactive eligibility are typically excluded from capitated managed care.

• Refugees. While refugees receive the Medicaid package of services, they are 100% federally funded, and are eligible for only up to eight months of coverage.

Section 4(4) of SL 2015-245 provides that PHPs shall cover all Medicaid and NC Health Choice services excluding LME/MCO services (applicable to Medicaid but not NC Health Choice beneficiaries) and dental services. However, DHHS recommends that the statute be amended to exclude Program for All-Inclusive Care for the Elderly (PACE). There are approximately 1,200 beneficiaries in PACE, and approximately 3% of PACE beneficiaries are not dual eligibles. In addition, PACE beneficiaries are in a separately capitated program.

DHHS recommends the exclusion of, services provided by local education agencies (LEAs),3 and services provided by Children’s Developmental Services Agencies (CDSAs). 4 These services are provided in accordance with the Individuals with Disabilities Education Act (IDEA), and the state share of these services comes primarily from certified public expenditures (CPE), making the transition to capitated PHPs difficult and potentially disruptive to the delivery of these services.

3 Local Education Agencies (LEAs) enrolled with Medicaid provide treatment and assessment services to Medicaid-eligible children through a child’s Individualized Education Program (IEP) pursuant to Part B of the Individuals with Disabilities Education Act (IDEA). Services include audiology, speech/language therapy, occupational therapy, physical therapy, nursing services and psychological/counseling services.

4 There are 16 regional Children’s Developmental Services Agencies (CDSAs) located across the state that are available to help families, caregivers and professionals serve children with special needs through the Infant Toddler Program. The program offers early intervention services for children from birth through 36 months of age with a developmental delay or disorder. Services include evaluation, treatment, service coordination and consultation services. Administered by the NC Division of Public Health, this program delivers services as outlined in federal law under Part C of the IDEA.

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In addition, based on initial conversations with the Eastern Band of Cherokee Indians (EBCI), DHHS proposes to permit Indian health care providers (IHCPs) to choose whether or not to participate in a PHP’s provider network and to allow IHCPs to continue to be reimbursed on a fee-for-service (FFS) basis for services they provide as a non-participating provider.

Other Amendments to SL 2015-245

Section 4(6)(b) of SL 2015-245 provides that DHHS can have up to 10 regional contracts with provider-led entities (PLEs). Thus, if DHHS contracts with one PLE in each of the six regions, there will be only four contracts remaining. Some regions may have enough population to support more than four contracts. DHHS would therefore like the flexibility to contract with additional qualified PLEs where appropriate. Specifically, DHHS requests an amendment to allow up to 12 regional contracts with PLEs.

The legislative intent is clear that DHHS is the single state agency and DMA continues to manage the Medicaid program until DHB assumes operations. In several places, however, the legislation requires DHHS to act through DHB prior to the change taking place. For example, Part 1 section 3[3] indicates that DHHS, through DHB, shall submit the waiver application. Since DHHS is the single state agency and DMA is listed in the state plan as the operational agency for Medicaid under DHHS; submitting the waiver through DHB would conflict with the state plan. DHHS recommends making changes to SL 2015-245 to clarify that until DHB is in place – through a SPA – DHHS is the entity named to take action. These clarifications will not change legislative intent relating to the transition to the new DHB.

SL 2015-245 Section 14(a) requires a six-month cooling off period for certain DHHS employees. Some of these individuals will not become DHB employees, but have skill sets that will be in great demand by PHPs. This could have the unintended consequence of key staff leaving DMA early to avoid the cooling off period. DHHS legal counsel is preparing proposed language that will meet legislative intent and the needs of the Medicaid program.

D. Changes to Other Statutes

With respect to existing statutes relevant to Medicaid, DHHS has identified at least 21 provisions in Chapters 108A and 108C that will need clarifying language to reflect the system changes made by SL 2015-245. They are: NCGS §§ 108A-55, 108A-57, 108A-59, 108A-64.1, 108A-65, 108A-68, 108A-70, 108A-70.5, 108A-70.9A, 108A-70.9B, 108A-70.9C, 108A-70.11, 108A-70.12, 108A-70.18, 108A-70.21, 108A-70.27, 108A-70.29, 108C-2, 108C-3, 108C-4 and 108C-14.

As an example, GS 108A-55 speaks to provider reimbursement and states that the “Department shall establish the methods by which reimbursement amounts are determined in accordance with Chapter 150B of the General Statutes.” While this would be true for rates for services in the remaining fee-for-service programs, the reimbursement framework will change under the PHP structure.

Other potential changes may include clarity to GS 108A-57, which sets out the state’s subrogation rights. While DHHS will remain the single state agency, and collection of third-

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party resources may, in theory, be dealt with in contract, it will be beneficial to revise certain language within the statute to facilitate collection of third-party resources by PHPs. As currently written, GS 108A-57 sets out notification requirements and payment requirements solely related to DHHS, with no reference to DHHS vendors, contractors or agents. A revision clarifying the rights of PHPs to pursue third-party resources in the transformed system will be helpful to ensure maximum recovery of third-party funds. In addition, statutory changes may be required to implement the recommendation in Section XV of this report to allow parents to retain their Medicaid eligibility while their children are being served temporarily by the foster care program.

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V. STATUS OF DHB STAFFING

Section 5(12)(d) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice to include “[s]tatus of staffing of the Division of Health Benefits, including a description of staff’s key competencies and expertise.”

A. Overview and Creation of the Division of Health Benefits

DHHS is taking a tactical approach to planning for and hiring the Medicaid transformation project team. This team will work with internal and external stakeholders, along with appropriate and necessary third-party assistance, to plan, design and implement Medicaid reform in North Carolina. Through the Medicaid Leadership Institute sponsored by the National Governors Association and the nonprofit Center for Health Care Strategies, DHHS has access to change management and leadership development support until September 2016.

Part II of SL 2015-245 reorganizes the Medicaid and NC Health Choice programs in the following manner (at a high level):

• Division of Medical Assistance will manage the state Medicaid and NC Health Choice programs until 12 months after the capitated PHP contracts begin (or earlier, as determined by the DHHS Secretary).

• Division of Health Benefits is created within DHHS to plan the transformation and ultimately manage the state’s Medicaid and NC Health Choice programs.

B. Staffing Plans

DHB has begun hiring key staff and contractors to support organizational start-up, 1115 waiver development and transformation planning. As of March 1, DHB has five full-time employees and one full-time contractor. Additional hires are expected over the coming months (see organizational structure in section V.C). Key skill sets for members of the initial team include:

• Finance

• Analytics/actuarial

• Technical

• Operations/organization leadership

• Project management

• Contract management

• Program knowledge (Medicaid, managed care and health care)

• Legal and regulatory

• Clinical and quality measurement

These skill sets are specific to each job and outlined in a job description, and will evolve for future roles needed to fulfill agency functions.

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DHB intends to contract with a consultant later in 2016 to assist DHB in developing a long-term staffing and transition plan.

To ensure that DHB has the appropriate staff to manage the new capitated managed care programs and remaining FFS programs, DHB will focus on:

• Balancing requirements of state and federal partners (see below).

• Building key skillsets to support the planning, design and development of the Medicaid reform program.

• Developing policies and procedures.

C. Transformation Planning Project Organizational Structure

The transformation planning project team organization structure is a functional structure that enables development of expertise in each area. Based on discussions with another state that went through a similar transition, this was determined to be an effective structure.

The organization chart below depicts the anticipated structure and staffing level for the first one to two years. Positions requiring full-time workloads will be filled with full-time individuals, employed by DHHS and located within DHB. One-time or seasonal tasks will be performed by contractors or consultants.

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Transformation Planning Project Organizational Structure

HUMAN RESOURCES DIRECTOR

JENNIFER COX PROGRAM

MANAGEMENT FINANCE &

ACCOUNTING

BUSINESS RESEARCH ANALYST

IT & HEALTH ANALYTICS

HEALTH BENEFITS ATTORNEY

HEALTH BENEFITS POLICY OPERATIONS

CHIEF OPERATING OFFICER

DEE JONES

EXECUTIVE COORDINATOR

NATASHA ADAMS

HUMAN RESOURCES GENERALIST

ADMINISTRATIVE SUPPORT (TEMP)

POSTED FINANCIAL ANALYST

PROGRAM DIRECTOR (CONTRACT)

POSTED

CONTRACT ADMINISTRATOR

POLICY COORDINATOR

COMMUNICATIONS LEADER

PROGRAM MGR

PROGRAM MGR

ACTUARIAL SR PROGRAM MGR

JULIA LERCHE

BUSINESS OPERATIONS

SR PROGRAM MGR JAMAL JONES

ACCOUNTANT BUSINESS ANALYST

PROJECT MANAGER (CONTRACT)

DONALD BROWNING

POLICY COORDINATOR

POLICY ANALYST

POLICY ANALYST

TIME FRAME FTEs Oct. 2015 - June 2016 22 July 2016 - June 2017 6

Total DHB Project Staff 28

COMMUNICATIONS COORDINATOR

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D. Approach to Benefits and Compensation

Per Section 13.G of SL 2015-245, employees of the Division of Health Benefits shall not be subject to the North Carolina Human Resources Act, except as provided in NCGS 126-5(c1)(31). The exemption from the Human Resources Act enables DHB to retain current, highly skilled talent, and attract new skill sets to the state.

Given this exemption, DHB has prepared an employment agreement for current hires until employment policies are developed. Following is a general comparison of the provisions of the DHB short-term employment agreement with the state Human Resources Act.

Similarities with NCGS Section 126 Differences with NCGS Section 126

• Frequency of salary payments • Paid time off • Retirement plan • Benefits

• At-will employment • Recruitment • Performance-based pay • No longevity pay

After the initial DHB start-up phase, there will be a review and further discussion of benefit plan opportunities and options. At this time, participation in the State Retirement system (6 percent contribution) is required by NCGS Chapter 135.

CMS Expectations

As indicated earlier, in developing employment policies for DHB employees, DHHS must find a balance between state and federal expectations. CMS has specific tenets related to defining merit-based employment that must be met to claim administrative match on employee salaries. With the exemption from the North Carolina Human Resources Act, and the requirement that DHB policies become effective for staff hired on or after October 1, 2015, DHHS must ensure that CMS understands and accepts its policies around merit-based employment requirements.

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VI. ANTICIPATED DISTRIBUTION OF REGIONAL CAPITATED PHP CONTRACTS

Section 5(12)(e) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice include “[a]nticipated distribution of regional capitated PHP contracts.”

Regions

Section 5(2) of SL 2015-245 requires DHHS to define regions in which provider-led entities (PLEs) may operate. DHHS shall “define six regions comprised of whole contiguous counties that reasonably distribute covered populations across the State…” and include all counties. Section 4(6)(b) provides that “[e]ach regional contract shall provide coverage throughout the entire region….”

DHHS used the following guiding principles to design the proposed regions:

• Minimize traffic between regions based on existing beneficiary utilization and provider referral patterns.

• Match (when possible) with existing provider networks and health care systems to ensure access to quality, coordinated health care within the region.

• Consider geographic limitations and boundaries to ensure physical access to providers.

• Promote beneficiary choice of PHP models by ensuring that each region can support at least one regional PLE in addition to the three statewide PHPs.

• Align (where possible) with various state-based regional maps (e.g., State Medical Facilities Plan, Public Health Department regions).

A map of the proposed regions may be found in the Appendix.

DHHS will ensure the defined regions assure beneficiaries of access to quality health care and that each region represents a competitive environment that encourages efficiency, quality and innovation. Beneficiary access to quality health care includes ensuring that beneficiaries have a choice of multiple PHPs and each region is composed of counties that contain a sufficient number of quality health care providers that can deliver the full array of covered services in a nearby setting and in a coordinated manner. It is important for PHPs to have adequate membership to be financially viable and for each region to be able to sustain PLEs participating in the region.

DHHS gathered analyses and input on potential regions from stakeholders with an emphasis on the intersection of beneficiary location and the location of providers used by the beneficiaries as a key consideration of region formation. This approach acknowledges there is some natural migration of beneficiaries to distant places for care, but looks to cluster counties in such a way that migration outside of the region is minimized. Such an approach contributes to efficient, consumer- and provider-friendly construction of regional provider networks.

One county, Alamance County, shows alignment with two regions, because the county is served by several major health systems. DHHS proposes that beneficiaries in Alamance County have the option of selecting PHPs in either Region II or Region IV.

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Although there are considerations related to differing costs within or across regions, DHHS can address these considerations through the rate structure and rate setting methodology. The rate structure will consider the historical cost and utilization for the counties within a region to develop an actuarially sound reimbursement approach. Thus, geographic per capita cost variation has not been a focus of the current regional analysis. Rather, the focus has been on traditional care consumption patterns to ensure beneficiaries have access to an appropriate choice of providers within the geographic area.

DHHS plans to post the proposed regional map to its website and will solicit public comment to ensure that the region designations best meet the needs of beneficiaries. The timing will coincide with the public comment period for the draft 1115 waiver application. DHHS will consider adjusting the proposed regions based on the feedback provided.

B. Distribution of PHP Contracts

Section 5(12)(e) of SL 2015-245 requires that the report to the JLOC include the “anticipated distribution of regional capitated PHP contracts.” DHHS interprets this section as requesting the anticipated number of PHP contracts – both commercial plans (CPs) and PLEs – per region, understanding that the three CPs called for in the law will be statewide, not regional.

The number of PHPs in a region requires balance. Too few or too many PHPs will pose problems. For instance, if there are only two PHPs in a region and one fails or terminates its contract, then according to federal Medicaid law requiring beneficiary choice of plans, DHHS will no longer be able to require beneficiaries to enroll in a PHP.

Conversely, too many PHPs in a region may leave each plan with too few enrollees. That will require paying higher capitation rates to sustain the higher per capita fixed administrative costs, and cover the contingencies of high-risk variability in a small enrollee base. Having too many PHPs also may reduce the state’s ability to effectively monitor the PHPs. Many states place a cap on the number of health plans that can participate in a region to ensure there is sufficient enrollment to support the number of plans awarded and to allow the state to perform effective oversight within available resources.

When issuing the PHP contract solicitation, DHHS plans to specify the maximum number of PHPs with which it intends to contract in each region. This limit will be determined based on the number of eligible Medicaid beneficiaries in the region and an estimate of enrollees needed to make each PHP financially viable. While the number of Medicaid enrollees needed to make a PHP financially viable depends on many factors – including the characteristics of the population, covered services and payment rates – DHHS proposes a minimum of approximately 50,000 eligible beneficiaries per regional PLE, and 33,000 to 40,000 beneficiaries per region for each statewide CP. Therefore, DHHS estimates a minimum base of 150,000 to 170,000 eligible beneficiaries per region to support four PHPs in a region (three statewide CPs and one regional PLE).

While it is possible that, based on region development, a couple of the regions will lack sufficient enrollment to support more than one regional PLE (in addition to three statewide CPs),

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others may support two or more PLEs. However, Section 4(6)(b) of SL 2015-245 specifies a maximum of 10 contracts with PLEs. As indicated in Section IV, DHHS is requesting the flexibility to have up to 12 regional PLE contracts.

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VII. PLANS FOR BENEFICIARY ENROLLMENT INTO PHPs

Section 5(12)(f) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice to include “[p]lans for recipient enrollment.”

DHHS plans to use an enrollment broker and an auto-assignment process to support beneficiary selection and enrollment in PHPs. This is separate from the Medicaid eligibility determination and Medicaid enrollment process, which will continue to be a function of the county DSS.

Enrollment Broker

As most states do to support the successful transition to capitated health plans, DHHS will contract with a neutral, experienced enrollment broker to provide education, outreach and enrollment activities to help beneficiaries first select a primary care provider/practice – if they do not already have one – and then choose and enroll in a PHP with consideration for current provider relationships. The enrollment broker will be selected through a competitive procurement, and will be required to meet the independence and conflict of interest requirements in federal regulations (42 CFR 438.10).

The enrollment broker will conduct choice counseling, including helping beneficiaries select a primary care provider/practice if they do not have an existing one, answering questions and providing information – in an unbiased manner – on available PHPs, and advising on the factors to consider when choosing among the PHPs. The enrollment broker also will distribute and process enrollment materials, and enroll beneficiaries in a PHP.

The EBCI has expressed an interest in being able to assist tribal members who elect to voluntarily enroll in a PHP with their evaluation of PHPs. DHHS will explore this concept further with the EBCI during the tribal consultation period.

DHHS recognizes the importance of ensuring that beneficiaries, particularly beneficiaries in need of long-term services and supports (LTSS) through the PHPs, receive conflict-free education, enrollment/disenrollment assistance, and advocacy. DHHS plans to leverage its enrollment broker and engage with stakeholders to ensure that this support is highly visible, accessible, uniform, meaningful and beneficiary-friendly.

Proposed federal regulations would require DHHS to provide a beneficiary support system that includes assistance to beneficiaries in understanding managed care, choice counseling, training for network providers on community-based resources and supports that can be linked with covered benefits, and functions specific to LTSS. DHHS will further define its plans for enrollment support when the proposed federal rules are made final.

B. Auto Assignment Process

Section 5(8) of SL 2015-245 requires DHHS to:

“[d]evelop and implement a process for recipient assignment to PHPs. Criteria for assignment shall include at least the recipient’s family unit, including foster family and adoptive placement, quality measures, and primary care physician.”

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While DHHS, through the enrollment broker, will emphasize and support beneficiary selection of a PHP, there will be beneficiaries who do not select a PHP within the specified period for selection. Consistent with federal requirements, beneficiaries who are required to enroll but do not choose a PHP will be assigned to one. Current federal regulations on assignment apply only to managed care programs authorized under a 1932(a) state plan.

In June 2015, CMS issued a proposed Medicaid rule (which may be made final as early as May 2016) that includes requirements for assignment to a health plan (enrollment by default) that apply to all mandatory managed care programs. The proposed rule provides that to be qualified for default assignment, the health plan must not be subject to suspended enrollment and must have capacity to enroll beneficiaries. As in the current federal rule, the process must seek to preserve existing provider-beneficiary relationships and relationships with providers that have traditionally served Medicaid beneficiaries. If this is not possible, the state must distribute the beneficiaries equitably among the plans available to enroll them. Consistent with the practice of many states, the rule also provides that the state “may consider additional criteria to conduct the default enrollment process, including the enrollment preferences of family members, previous plan assignment of the beneficiary, quality assurance and improvement performance, procurement evaluation elements, and other reasonable criteria related to a beneficiary’s experience with the Medicaid program.”

DHHS proposes that the process for beneficiary assignment to PHPs first consider beneficiary factors, with a focus on preserving existing primary care provider relationships. These factors will include whether the beneficiary’s current or historical primary care provider is participating with a PHP, whether another of the beneficiary’s providers (including LTSS providers) is participating with a PHP, whether a family member is enrolled with a PHP, and, after implementation, previous history of enrollment with a PHP. After consideration of beneficiary factors, DHHS will consider other program goals, such as balancing PHP enrollment. In particular, at least during the first year, DHHS intends to assign beneficiaries to help PHPs each achieve a minimum enrollment as needed to ensure financial viability.

As described in Section XV of this report, DHHS also is proposing to designate one of the statewide PHPs to provide specialized services to children and youth in the foster care program. This will be considered in the auto-assignment process.

DHHS proposes to review the assignment process after the first year to determine whether the assignment process should consider PHP quality; for example, to reflect the results of selected performance measures. DHHS proposes that PHP quality performance be considered secondarily, after beneficiary factors. Thus, if beneficiary factors result in two or more PHPs being rated similarly, the beneficiary will be assigned based on PHP performance. The highest-rated PHP will receive more auto-assignments than the next rated plan, and so on. By rewarding higher-rated PHPs with more enrollees, DHHS expects quality overall to rise.

It is important to note that, pursuant to federal Medicaid regulations, whether beneficiaries choose a PHP or are assigned to a PHP, they may change PHPs for any reason within 90 days after the date of enrollment.

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VIII. BENEFICIARY ACCESS STANDARDS

Section 5(12)(g) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice to include “[r]ecipient access standards.”

The CMS proposed Medicaid managed care rule issued in June 2015 included prescriptive access standards for Medicaid managed care plans. DHHS expects these provisions to appear in the final rule. The proposed standards below reflect this expectation.

DHHS will ensure that all PHP covered services are available and accessible to PHP enrollees in a timely manner. DHHS will do this by specifying, monitoring, and enforcing access and availability standards for PHPs. DHHS anticipates that standards will include, at a minimum, time and distance standards for specified provider types (e.g., primary care, specialty care, hospitals, pharmacies and LTSS).

Additional standards may include appointment availability and office waiting time. For example, the current LME/MCO contract specifies a travel/distance time of 30 miles or 30 minutes, or 45 miles or 45 minutes in rural areas; appointment availability times for emergency, urgent and routine care; and office wait times for scheduled visits, walk-ins and emergencies. DHHS will consider adopting similar requirements for PHPs.

Development of access and availability standards is a key design component of the PHP program, and the ability of a PHP to meet those access standards will be a critical milestone in the state’s determination that a PHP is ready to enroll beneficiaries. Post-implementation, DHHS will monitor and evaluate access and availability, and will revise the standards as necessary to ensure that beneficiaries have timely access to covered services.

The access and availability standards may vary for rural versus metropolitan/urban areas, and will reflect findings from the development of the access monitoring review plan (AMRP) required by the federal Medicaid FFS access rule, which became effective January 4, 2016. When developing North Carolina’s standards, DHHS will also consider model network requirements, including CMS requirements for Medicare Advantage and qualified health plans (QHPs), requirements from other states, and recommendations from Medicaid advisory groups.

Given the rural nature of certain areas of the state, North Carolina has already implemented telemedicine and telepsychiatry solutions to address unmet needs. DHHS is interested in exploring the continued role of telemedicine and telepsychiatry in closing access gaps and ensuring availability in geographic regions where results of the AMRP determine certain provider types or specialty capacity are not as robust as they could be.

When establishing the beneficiary access standards, DHHS will take into consideration potential competition between PLEs and commercial plans to ensure all players are properly incented to build viable networks aligned with the state’s transformational goals. Some of these related issues around rate floors, antitrust and good faith negotiations are discussed in Section X. DHHS also will designate certain providers as “essential providers” for PHP networks. Additional information on essential providers is provided in Section X.B.

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IX. PERFORMANCE MEASURES

Section 5(12)(h) of SL 2015-245 requires the report to the JLOC to include “[p]erformance measures.”

A. Overview

As discussed in Section I of this report, DHHS intends to move beyond the triple aim – better experience of care, better health in our communities and per capita cost containment – by adding a fourth aim: improved provider engagement and support. This fourth aim recognizes the provider community as a crucial partner in driving the success of our state’s Medicaid transformation efforts and aligns with the medical home philosophy that it the foundation of the care delivery system. DHHS will identify performance measures to assess whether the quadruple aim is being met at all levels – including the overall system, PHPs and providers – and to hold PHPs and providers accountable for their performance.

B. Guiding Principles for Measure Selection

Guiding principles that will govern performance measure selection include:

• Importance: Measures will be specifically relevant to the Medicaid and NC Health Choice population, with regard to prevalence of the condition being addressed; impact on health outcomes, costs or beneficiary experience; and opportunity for improvement.

• Soundness: Measures will have clear technical specifications to ensure validity and reliability of results, and will be evidence-based, consensus-built measures, such as those defined by the National Committee on Quality Assurance (NCQA) Healthcare Effectiveness Data and Information Set (HEDIS) and the NCQA Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey. Measures will ensure applicability to specialized populations and that optimal performance on the measure can be expected to improve the outcome.

• Alignment: Measures will support federal Medicaid reporting guidance for Adult and Pediatric Measurement sets and performance measures established by Medicare and other payers. For example, DHHS will consider the core set of quality measures recently released by CMS and America’s Health Insurance Plans (AHIP), which were developed to achieve standardization across programs, thus minimizing the administrative burden on providers. When possible, DHHS will align measures with LME/MCO performance metrics.

• Usability: Ability to link measures to improved health outcomes, including looking at the result of a test, not just whether a test was performed, and information will facilitate the quality improvement process.

• Feasibility: Consideration of the ease, accuracy, cost and complexity of collecting and reporting performance data; striking the right balance between administrative (claims-based data) and medical record information (including data collected from electronic health records).

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• Reliability: Standardized clinical and financial measures and reporting requirements routinely tracked and validated against other sources as available and appropriate. Measures will track PHP financial health and performance, and identification of quality/utilization/cost outliers for the PHPs.

C. Process for Selecting Performance Measures

The process of selecting measures for assessing the system, PHPs and providers will include:

• Application of the guiding principles

• Identification of performance standards and benchmarks

• A transparent process

• Being relevant to Medicaid and NC Health Choice programs

• Active stakeholder engagement (e.g., providers, members, advocates).

DHHS has done extensive work identifying clinical performance measures – for the enhanced PCCM program, previously proposed Medicaid accountable care organizations, LME/MCOs and integrated care measures and intends to leverage that work to identify the clinical measures for the transformed program. DHHS also will identify clinical measures for services included in the PHPs for which it has not previously identified measures (e.g., pharmacy and LTSS). Clinical measures will be used to assess the system, PHPs and providers. DHHS also will identify non-clinical measures for assessing system performance (e.g., member and provider satisfaction, claims payment and network adequacy). Performance measures are expected to evolve as the program matures and new initiatives are identified.

D. How Performance Measures Will Be Used

DHHS will use performance measures to better understand and improve the performance of PHPs, providers, and the system as a whole. These measures also will hold PHPs and providers accountable for their performance. At the system level, performance measures will be used for monitoring and evaluation: quality assessment and performance improvements. Performance measurement also will be used for monitoring and evaluation of PHPs, including comparisons among PHPs. In addition, some performance measures will be tied to rewards for exceeding benchmarks and contract sanctions for PHPs that fail to meet minimum thresholds. Rewards for PHPs may include additional payments and receiving a higher share of beneficiaries who do not choose PHPs (through the auto-assignment process).

For providers, performance measures will be used for monitoring and evaluation, and to support value-based payments. To ease the administrative burden on providers, DHHS proposes that providers be held accountable for meeting a common, simple set of measures.

E. Data and Reporting

A hallmark of a strong performance measurement system is the consistency with which the results can be calculated and the robustness of the data used to calculate the measures. N3CN’s Informatics Center plays a significant role in performance measurement today, and DHHS will

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ensure that this functionality is continued and expanded into a statewide system that applies to all of Medicaid. This will include leveraging the statewide health information exchange (HIE), a secure, standardized electronic system in which providers can share important beneficiary health information, and developing a robust data analytics capability.

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X. A PLAN FOR THE PROPOSED INCLUSION OF CERTAIN FEATURES

Section 5(12)(i) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice to include:

A plan for the proposed inclusion of the following features as part of Medicaid and NC Health Choice transformation:

1. Rate floors in addition to those required by subdivision (5) of Section 5 of this act. 2. Antitrust policies. 3. Protections against the exclusion of certain provider types. 4. Prompt pay requirements. 5. Uniform credentialing requirements. 6. Good-faith negotiations.

A. Rate Floors

Section 5(5)(b) of SL 2015-245 requires DHHS to establish “appropriate rate floors” for in-network primary care physicians, specialist physicians, and pharmacy dispensing fees.

Capitated health plans typically pay network providers based on mutually negotiated payment terms. Negotiations are governed by market dynamics and influenced by the state’s programmatic policies, such as the designation of essential providers, network adequacy standards and other policies that may encourage value-based purchasing arrangements. Even within a single type of provider, such as primary care physicians, a plan may choose to contract at different payment levels or use different compensation methodologies among its network providers. An established rate floor will require a PHP to pay no less than the amount that the rate floor will have produced.

Rate floors, by their nature, have the potential to constrain PHPs from negotiating the most cost-effective provider payment while still ensuring the Medicaid beneficiaries have acceptable levels of access to high quality care, as measured through contractual access and quality standards. While rate floors do not necessarily require PHPs to use a payment method that mirrors the floor structure, compliance with the rate floors may discourage the use of innovative, value-based payment methodologies. Thus, DHHS intends to limit the use of rate floors to those circumstances where they are critical to achieve transformation goals, and establish levels no higher than required to ensure that smaller providers with less negotiating leverage can be reasonably competitive.

DHHS does not anticipate establishing rate floors for providers other than those itemized in SL 2015-245. This decision may require revisiting, depending on the outcome of negotiations with CMS regarding retention of funding historically provided through supplemental payments. Programmatic changes arising from the recommendations of the Dual Eligibles Advisory Committee may also produce the need to include rate floors for other provider types in the future (e.g., nursing facilities).

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DHHS expects to establish primary care and specialist physician rate floors that are expressed as a percentage of the effective Medicaid fee schedule. Use of the Medicaid fee schedule as the benchmark has the advantage of being logical, within control of DHHS and reasonably straightforward to operationalize. DHHS expects to continue to publish fee schedules for all provider types even after capitated payment is implemented, as some claims will continue to be paid FFS for populations excluded from enrollment with a PHP or newly eligible prior to enrolling in a PHP.

In determining the appropriate percentage of the Medicaid fee schedule to use for rate floors, DHHS expects to consider historical patterns of care, proposed network adequacy standards and the capitation rate setting approach. DHHS also will consult with stakeholders to identify the percentage that balances cost effectiveness goals with quality, access and provider inclusiveness.

DHHS is continuing to study options with respect to the requirement to establish a rate floor for pharmacy dispensing fees. Dispensing fees are the component of a prescription drug cost designed to cover the professional expense of filling a prescription. In a capitated environment, plans typically contract with pharmacy benefit managers (PBMs) to manage their outpatient pharmacy benefits, which includes negotiating pharmacy ingredient costs and dispensing fees. A requirement in the PHP contract establishing a dispensing fee rate floor will insert a new element into that negotiation. The requirement is further complicated by the way dispensing fees relate to the methodology for generating the ingredient cost component of the prescription.

DHHS recently received approval from CMS for a state plan amendment to implement an Actual Acquisition Cost Reimbursement using CMS-determined National Average Drug Acquisition Cost plus a dispensing fee based on a Cost-of-Dispensing Study. This new cost-based payment structure is estimated to save the state approximately $29 million in state fiscal year 2017. Evaluation is necessary to determine whether, if the rate floor is established at or near current Medicaid FFS levels and applies to all prescriptions, PHPs will pay higher prescription drug prices than the market demands.

DHHS is reviewing options that establish rate floors that ensure Medicaid beneficiaries have access to prescription drugs, which is vital to the success of the program. DHHS will work with key stakeholders to explore options and develop rate floor criteria.

B. Essential Providers

Designating certain providers as “essential” and requiring PHPs to contract with them is a policy mechanism to preserve the role of, and beneficiary access to, providers that have traditionally been crucial to low-income, underserved populations. When network adequacy standards are carefully crafted, the essential provider designation is not required to ensure that a particular service is available, but rather that a particular type of provider is available even when other network providers might be able to render the service. Often, these are providers that have more difficulty competing on price, and serve disproportionate numbers of uninsured North Carolinians and Medicaid beneficiaries. An essential provider designation helps these providers maintain sufficient volume of insured beneficiaries to sustain service availability.

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Section 5(13) of SL 2015-245 specifies that at a minimum, federally qualified health centers (FQHCs), rural health centers (RHCs), free clinics and local health departments be designated as essential, and prohibits designation of physicians as essential. DHHS is provided authority to designate additional types of essential providers as long as they meet certain criteria. In addition to the statutorily designated essential providers, DHHS proposes to designate state veterans’ homes as essential providers.

DHHS also will consider adopting an essential provider policy that requires PHPs to make at least a good faith effort (see below) to contract with all essential providers in their regions; however, an essential provider will not be required to participate with all – or even any – PHPs in its region. DHHS also expects to prohibit a PHP from having an exclusivity clause in a contract with an essential provider.

C. Protections Against the Exclusion of Certain Provider Types

Federal regulations (42 CFR 438.214(c)) prohibit discrimination against particular providers that serve high-risk populations or that specialize in conditions that require costly treatment. This language must be included in the DHHS PHP contracts.

Section 5(6)(d) of SL 2015-245 incorporates a policy limiting exclusion of providers “except for failure to meet objective quality standards or refusal to accept network rates.” DHHS will work with PHPs and the provider community to identify the quality standards that may be used as a network exclusion, and will include appropriate language in the PHP contracts to carry out this requirement. To the greatest extent possible, the metrics and standards will be aligned with the program’s performance measures.

D. Good Faith Negotiations

When state policies are an advantage to certain providers or provider types, such as with designated essential providers, it is appropriate to consider whether other policies are required to provide equitable opportunities or to prevent unintended consequences that work counter to programmatic goals. For example, if PHPs are required to contract with all essential providers in their regions, but essential providers are not required to do so, an essential provider declining to contract may cause a PHP to be non-compliant with its DHHS contract or unable to bring its program up in a region.

DHHS has determined that it is not appropriate to require essential providers to contract with all PHPs, although many may do so to maintain their beneficiary levels. DHHS is continuing to evaluate options and will work with the provider community and potential PHPs to develop specific policies that balance the need to support safety net providers through this transition with the need to avoid skewing negotiation leverage in a manner harmful to the program. Options under consideration include 1) establishing the concept of “good faith negotiations” by PHPs, paired with demonstrations of alternate solutions to beneficiary access in cases where essential providers decline to participate, and 2) establishing rate ceilings that will apply when non-participating essential providers provide services to PHP enrollees after declining a good faith offer.

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Some elements of one or both of these options may be incorporated to establish the appropriate incentives while allowing providers the freedom to participate with fewer than all plans. For example, consistent with an approach used successfully in other states to balance interests, if a PHP demonstrates a good faith effort to contract with an essential provider, but the provider declines to participate in the PHP’s network and is necessary for network adequacy, payment for out-of-network services furnished to that PHP’s enrollees may be capped at Medicaid fee levels, or some discount to Medicaid fee levels. However, this approach is likely to be less effective with provider types that DHHS proposes to cost-settle outside the prepaid plan arrangement.

E. Antitrust Policies

The new capitated program is most likely to succeed when beneficiaries have a selection of PHPs from which to choose, and providers also have a choice of PHPs with which to contract. DHHS is considering whether policies are required to ensure that PLEs and commercial plans (CPs) do not exert undue influence over the others’ ability to compete and succeed in the program. Specifically, there may be circumstances or locations where providers affiliated with a PLE may be able to undermine a CP’s ability to compete successfully by charging significantly higher than market rates or declining to participate in the CP’s network, leading the CP to fail to meet network adequacy requirements. Alternatively, CPs may attempt to undermine a PLE’s network formation by using a combination of high rates and exclusivity contracts to keep key providers from contracting with a PLE.

DHHS is evaluating the use of policies that mitigate these undesirable actions, such as prohibiting exclusivity clauses, requiring providers affiliated with PLEs to charge CPs no more than the PLE pays for the same service, and evaluating PHP network adequacy compliance at a sub-statewide level. The latter option will allow a CP with a statewide contract, but regional network deficiencies, to operate in the areas where it may demonstrate an adequate network.

None of these policy options is sufficient to prevent a regional monopoly if a PLE controls scarce provider specialties that produce network adequacy deficits for competing PHPs.

DHHS will continue to work with stakeholders to define antitrust policies that support the objectives of reform. Additionally, in recognition that PHP network standards and contracting is pivotal to the program’s success, DHHS will dedicate staff to monitor and enforce program requirements in these areas.

F. Prompt Pay Requirements

Background

Pursuant to federal regulations (42 CFR 447.45 and 447.46), PHPs must:

• Pay 90 percent of all clean claims from practitioners within 30 days of the date of receipt.

• Pay 99 percent of all clean claims from practitioners within 90 days of the date of receipt.

• Pay all other claims within 12 months of the date of receipt, except in certain circumstances (e.g., provider under investigation for fraud or abuse, court order).

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Pursuant to North Carolina’s current insurance statute, 58-3-225, prompt claim payments under health benefit plans:

(b) An insurer shall, within 30 calendar days after receipt of a claim, send by electronic or paper mail to the claimant:

(1) Payment of the claim. (2) Notice of denial of the claim. (3) Notice that the proof of loss is inadequate or incomplete. (4) Notice that the claim is not submitted on the form required by the health benefit plan,

by the contract between the insurer and health care provider or health care facility, or by applicable law.

(5) Notice that coordination of benefits information is needed in order to pay the claim. (6) Notice that the claim is pending based on nonpayment of fees or premiums.

For purposes of this section, an insurer is presumed to have received a written claim five business days after the claim has been placed first-class postage prepaid in the United States mail addressed to the insurer or an electronic claim transmitted to the insurer or a designated clearinghouse on the day the claim is electronically transmitted. …

(e) Health benefit plan claim payments that are not made in accordance with this section shall bear interest at the annual percentage rate of eighteen percent (18%) beginning on the date following the day on which the claim should have been paid. …

Recommendation

Since the federal Medicaid timeframes and Chapter 58 timeframes are not the same, DHHS proposes to require PHPs, through regulation or PHP contract, to process 100 percent of clean claims (pay, deny or provide notice consistent with 58-3-225) within 30 calendar days of the day of receipt. Consistent with 58-3-225, claim payments that are not made according to this requirement shall bear interest at the annual percentage rate of 18 percent beginning on the date following the 30th calendar day of receipt. However, to account for potential issues during initial implementation, DHHS will not require interest payments during the first six months after PHP implementation.

G. Uniform Credentialing Requirements

Background

Credentialing refers to the process health plans use to ensure that providers are qualified to render services to enrollees. Each health plan completes the credentialing process for its providers, even if they are already enrolled with Medicaid or contracted with other health plans. The credentialing process is detailed, but generally includes the following key steps:

• Completion of an application (credentialing form) by the provider.

• Primary source verification to ensure the provider has the legal authority to practice, and the relevant training and experience.

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• Review of appropriate databases for sanctions, debarment and evidence of malpractice.

• Entry of the provider’s credentialing information into the PHP’s credentialing database.

• Decision by the credentialing committee to accept or reject the provider’s application.

• Ongoing monitoring of sanctions, complaints and quality issues, including site visits.

• Re-credentialing every five years.

Credentialing is the front line of quality assurance and also is a tool to mitigate risk. Yet, the credentialing process is generally considered an administrative burden for providers and is costly for health plans since it requires significant labor, systems investment and file storage.

To ease the burden on providers to complete multiple applications, many states, like North Carolina, have established uniform health care practitioner credentialing applications for use by commercial health plans through the Department of Insurance. Many health plans also use the universal provider data source available through the national Council for Affordable Quality Healthcare (CAQH) to obtain all necessary credentialing information from a central location and require that providers have a complete and up-to-date profile in the CAQH system as part of the enrollment process, as a way to reduce its burden and the burden on providers. In addition, many health plans delegate primary source verification to a credentials verification organization.

The recognized accrediting bodies NCQA, Joint Commission and URAC have established strong credentialing and re-credentialing standards. DHHS will use these standards as the foundation for the PHP credentialing requirements. However, the commercial standards do not address all Medicaid provider types, particularly those that are not licensed by the State. Examples from North Carolina Medicaid include Section 1915(c) HCBS waiver providers, such as adult day health care and personal care aides.

The lack of commercial credentialing standards means DHHS must define the requirements for those providers, which generally mirror the state’s Medicaid provider requirements. For example, adult day health care providers must be certified as adult day facilities by the North Carolina Division of Aging and Adult Services.

In addition to the health plan credentialing process, according to federal law, the state must screen and enroll Medicaid providers and revalidate provider qualifications at least every five years. In general, DHHS must verify that a provider meets applicable federal and state requirements, conduct licensing verifications, and conduct federal database checks, including confirming that the provider is not excluded from participating in Medicaid. If the provider type is categorized as a “moderate” or “high” risk of fraud, waste or abuse to the Medicaid program, DHHS is required to conduct site visits and/or criminal background checks as part of the screening process.

Currently, in states with capitated health plans, these processes often occur separately. However, according to the CMS proposed Medicaid managed care rule, DHHS will need to screen and enroll providers before a PHP can contract with the provider. DHHS also will need to revalidate provider qualifications of PHP network providers at least every five years.

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The requirement for the State to conduct its screening and enrollment process prior to the PHP contracting with a provider has the potential to slow down the provider contracting process. Also, given the overlap in activities conducted by the State for provider screening and enrollment and the PHP credentialing process (e.g., licensure verification and database checks), having both entities perform these functions is inefficient.

Recommendation

DHHS proposes to devise a uniform credentialing approach that meets the following objectives:

• Comply with federal Medicaid requirements, including the final Medicaid managed care rule when issued.

• Minimize the burden on providers (all types).

• Minimize the burden on PHPs.

• Streamline the process.

• Ensure a timely process.

• Leverage existing data and tools.

• Allow PHPs some flexibility in establishing and verifying credentials for their providers.

To meet these objectives, DHHS is considering an approach where the state will screen and enroll providers, but also will conduct primary source verification and database checks (potentially through a contactor) needed for the PHP credentialing process. Information from the state’s activities will be available to the PHPs through an online system, and the PHPs will use the information from the state and any other information collected by the PHP to make credentialing decisions.

This approach will meet the objectives, including minimizing the burden on providers and PHPs. However, DHHS will be assuming credentialing responsibilities and will need to ensure the accuracy and timeliness of this process. The State also will need to identify a funding source for these activities, potentially a fee paid by the PHPs.

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XI. TIMELINE FOR RFP ISSUANCE

Section 5(12)(j) of SL 2015-245 requires the report to the JLOC to include “[t]imeline for issuance of RFP and solicitation of bids.”

Based on DHHS’s understanding of the CMS review process and timeline, CMS approval will occur Jan. 1, 2018, which is approximately 18 months following the June 1, 2016, waiver application submission. Additionally, SL 2015-245 requires that capitation begin and beneficiary enrollment be complete within 18 months following CMS approval. Based on these key milestones, DHHS has developed a proposed timeline.

DHHS will begin preparing the PHP solicitation and contract later in 2016. The process will rely on feedback from key stakeholders in the state as well as CMS. The process will begin with a competitive procurement to identify experienced consultants to assist with requirements specification and stakeholder engagement. Work streams will run concurrently with the CMS review of the 1115 waiver application.

Key Activity Proposed Date Assuming 1115 Waiver

Approved Jan. 1, 2018

1115 waiver submission June 1, 2016

DOI starts accepting applications for PHP licensure TBD

Implementation Consultant(s) procured March 2016 to October 2016

Draft PHP RFP (including contract) October 2016 to January 2018

CMS approval of the 1115 waiver (assumed) January 1, 2018

Consult with JLOC on terms and conditions of the RFP February 2018

PHP RFP issued March 2018

PHP proposals due June 2018

PHP awards September 2018

PHP readiness reviews by DHHS November 2018 to June 2019

PHP go live July 1, 2019

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XII. MEASURES FOR SUSTAINABILITY OF THE TRANSFORMED SYSTEM

Section 5(12)(k) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice to include “[m]easures of sustainability for the transformed system.”

The transformation process offers a unique opportunity to optimize the efficiency and effectiveness of the Medicaid delivery system, but it also presents risks. Such risks include declining rates of provider participation that impact access and availability; decreases in beneficiary and advocate satisfaction and engagement; disruption in beneficiary-provider relationships; stagnation of clinical quality improvements; disruption in payment and funding mechanisms; and ineffectiveness of program operations, which hinders the continued transformation of North Carolina’s health care delivery system.

One of the four primary goals of SL 2015-245 is to ensure a sustainable delivery system over time. From a high-level perspective, delivery system optimization and system sustainability are synonymous, but the meaning of those terms will vary substantially depending on the audience. While many of the system design decisions will impact the final selection of measures, the general framework for measures of sustainability is proposed below:

• Financial sustainability. Measures in this domain will capture budgetary impacts, including federal funding, non-federal funding sources, and PHP financial performance. Tracking cost growth as compared to national averages, as required in SL 2015-245, will be part of the financial sustainability metrics, as will be PHP financial performance.

• Stakeholder engagement sustainability. Measures in this domain include whether the voices of beneficiaries, advocates, individual providers and other key stakeholders are being heard. Measures under consideration include enrollee and individual provider satisfaction, network composition, individual provider retention, access standards, and timeliness and accuracy of credentialing and claims payment.

• Clinical quality sustainability. Measures in this domain include delivery of preventive services, diagnosis and management of chronic disease, and over- and under-utilization. Attention must be given to key measures by age group and for special populations, such as pregnant women and persons with behavioral health diagnoses and I/DD.

• Organizational sustainability. These measures will focus on assessing the State’s ability to implement, monitor and drive steady advancement within the Medicaid and NC Health Choice programs, as envisioned in SL 2015-245. This will include staff recruitment and retention, ongoing staff training and skills development, and robust data and data analytics capabilities. Adequacy of funding for these activities, including those of contractors and the Innovations Center, will be included in this domain.

Collectively, the measures in these domains will define and monitor whether the program is accountable to its stakeholders for delivering efficient and effective care. Sustainability comes from the ability to monitor the right measures at the right frequency so that issues can be identified early and corrective actions are timely. DHHS anticipates that some of the measures for sustainability will be drawn from the general performance measures discussed in Section IX.

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XIII. PLAN FOR TRANSITION OF CERTAIN N3CN CONTRACT FEATURES

Section 5(12)(l) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice to include:

“A plan for transition of features of the contract with the North Carolina Community Care Network, Inc., (NCCCN) to the new delivery system, including a plan for utilizing, at the appropriate time, the Health Information Exchange Network to perform certain functions presently being performed by NCCCN’s Informatics Center in conjunction with the primary care case management program.”

A. Overview

NCCCN (also referred to as “N3CN”) has played an important role in North Carolina’s Medicaid/NC Health Choice programs and has assisted the State in carrying out a member-centric, provider-friendly medical home transformation effort.

To comply with Section 5(12) of SL 2015-245 and meet the goals of the waiver, DHHS recognizes that certain key features of N3CN will need to continue. The accomplishments of N3CN’s efforts on behalf of the State must continue to evolve into the next generation of medical home. This next generation of medical home, known as the “Person-Centered Health Community” (PCHC) will build upon the existing medical home foundation and will seek to integrate a more holistic view of beneficiary care and more fully integrate all provider types across the different settings and continuum of care. To smooth the transition process, DHHS has developed the following guiding principles:

• Ensure continuity of care for beneficiaries: DHHS will determine how to ensure beneficiaries receive effective care management during and after transition to the new delivery system.

• Minimize disruption to individual providers and practices: Providers currently interface with one Medicaid body, N3CN, for practice supports, care management and data/reporting. Under the new PHP model, providers may interface with multiple PHPs. To ensure high levels of continued provider engagement – plus access and availability – administrative burden and process standardization must be key considerations during and after transition to the new delivery system.

• Promote behavioral health integration: DHHS, LME/MCOs and N3CN have taken steps toward “whole person” care delivery. Transition efforts must continue to support behavioral-physical health integration, including data sharing.

• Continued emphasis on data analytics and reporting: N3CN currently provides the data analytic and reporting engine that powers the enhanced PCCM program. Data analytics must continue in the new PHP environment as they deliver necessary information to providers, care managers and DHHS, to sustain care management activities, continuous quality improvement efforts and required reporting.

• Continue other key clinical initiatives that improve health outcomes including pregnancy medical homes, pharmacy programs, initiatives to integrate behavioral health

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services into primary care, chronic pain management and proper opioid prescribing, and appropriate emergency department utilization.

B. Transitioning Medical Home to Person-Centered Health Community

DHHS will build upon the successful medical home model in place today, which emphasizes the provider-beneficiary connection. This next generation medical home, referred to as the Person-Centered Health Care Community (PCHC), will use the current medical infrastructure and proven population management performance as a foundation, and extend care management activities beyond the current enhanced PCCM program.

The PCHC model will advance the approaches of successful care management programs, such as Transitional Care and the Pregnancy Medical Home, and include provider and PHP incentives and value-based payments. The clinical scope of care management will grow to include care management for other beneficiaries, including individuals receiving home- and community-based services, non-waiver behavioral health and substance abuse care, and children in foster care.

Delivery system reform is not sustainable without payment reform, and DHHS will leverage value-based payment models. DHHS will provide incentives to PHPs to support PCHCs, and will require the PHPs to provide funding, including value-based payments, to support the PCHC care delivery model.

N3CN has historically provided tools to support enhanced PCCM as practice supports, care management activities and information systems. The new PCHC care delivery model will require similar infrastructure, and DHHS is defining how to supply this infrastructure, including the role of the future Innovations Center. DHHS will make determinations about transition activities based on the guiding principles outlined above.

C. Practice Supports

Practice supports bolster a medical home model of care and will help expand medical homes to the new PCHC model of care. N3CN’s practice supports to medical homes included helping medical homes become recognized by NCQA as Patient-Centered Medical Homes; development, distribution and use of population management tools and clinical toolkits; quality measure reporting with peer comparison; quality improvement coaching; behavioral health integration; and workflow analysis. N3CN also provides some practice supports to pharmacies and hospitals.

DHHS values these activities as pivotal to the success of medical homes, and they will continue under the new program as part of the responsibilities of the State and/or PHPs. In general, the DHHS philosophy is to standardize the approach used to provide practice supports while advocating innovation and excellence at the PHP and practice level.

D. Care Management and Related Activities

N3CN provides data-driven, community-based care management activities statewide through its existing NCQA-recognized community networks or through contracts with local case management entities. These activities include intensive care management provided by an inter-

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disciplinary team for beneficiaries at risk for future cost and higher utilization, transitional support for beneficiaries being discharged from inpatient care, disease management, and population management.

DHHS will require, as part of the procurement and subsequent contracts, that PHPs support community-based care management and related activities consistent with those provided by N3CN. This includes engagement with local health departments and other programs similar to Care Coordination for Children (CC4C)5 and Pregnancy Care Management.6

Regarding the DHHS focus on improving specialty care and integration, North Carolina has had several initiatives funded by CMS that include specialty care. DHHS views this as a clear opportunity to continue promoting CMS priorities while enhancing the medical home delivery model. These grants include:

• Child Health Accountable Care Collaborative. A Center for Medicare and Medicaid Innovation (CMMI) grant for a pilot program to improve the health and life quality of children with complex medical conditions through better care coordination.

• Community Pharmacy Enhanced Services Network. A CMMI grant to CCNC to develop a network of pharmacies that provide enhanced services, such as synchronization of a beneficiary’s chronic medication fill dates, adherence monitoring and coaching, compliance packaging, and home delivery.

• CMS Medicare Shared Savings Program (MSSP). Many of North Carolina’s MSSPs have specialty management initiatives for conditions that require specialty care; e.g., cardiovascular services, gastroenterology, and hip and knee replacements.

• Practice Transformation Network. A CMMI multi-organizational grant to help primary and specialty clinicians achieve large-scale health transformation through peer supported comprehensive quality improvement strategies.

To support ongoing care management activities, promote integration of behavioral health and facilitate information exchange, N3CN has developed the Case Management Information System (CMIS), a web-based application used for centralized care management activities and capture of the member’s individualized plan of care. Expanding access to the CMIS for appropriate staff at the LME/MCOs and community care management entities has resulted in stronger integration across physical and behavioral health care managers, and has facilitated information exchange across the system. Continuing this type of system integration and information exchange is an

5 CC4C is a focused care management program for children from birth to 5 years of age with special needs or otherwise in need of care management. The CC4C program is administered as a partnership between N3CN and DHHS. CC4C employs care managers through local health departments.

6 Pregnancy care management (also called ObCM) is a care management model for pregnant beneficiaries who receive care in a pregnancy medical home and are identified as being at high risk for poor pregnancy outcomes, such as low birth weight or preterm birth. Pregnancy care management is delivered primarily by local health departments, as stated in the NC State Plan.

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area of interest for DHHS when developing the new model of care management. DHHS is exploring options such as:

• Creation of a standardized beneficiary profile to be made available through the HIE or other HIPAA-compliant portal.

• State development of a “CMIS-like” interface, either through the Innovations Center or a contractual relationship to provide a uniform care management record.

E. Informatics Center

The N3CN Informatics Center supports today’s enhanced PCCM operations, supplying data mining and analytics capabilities along with reporting mechanisms to DHHS, participating providers and, to a more limited extent, LME/MCOs. DHHS recognizes the key role of data and reporting in the success of PCHC. Data and reporting is used to improve medical decision-making and coordination of care, which improves health outcomes and helps control costs.

To successfully transition this essential feature, DHHS will need access to data from the PHPs and the data analytic capacity to translate the data into actionable information. This will include a key role for the North Carolina HIE and potentially the Innovations Center. DHHS understands that transitioning these functions and building the necessary capacity and functionality will require significant planning, and must be coordinated with the transition of other N3CN functions.

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XIV. PLAN TO STABILIZE DMA DURING TRANSITION TO DHB

Section 5(12)(m) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice to include: “A plan to stabilize the Division of Medical Assistance during the transition of the Medicaid and NC Health Choice programs to the Division of Health Benefits.”

DHB and the DMA are working together to identify the optimal way to ensure continuity of services at DMA along with continued improvement initiatives.

Through the Medicaid Leadership Institute sponsored by the National Governors Association and the Center for Health Care Strategies, DHHS has access to change management and leadership development support until September 2016. This support will target DHHS and DMA leadership during the initial phase of transition. The DHHS Human Resources team is working with DMA leadership to develop plans for DMA support during the transition.

DHHS anticipates engaging a consultant in late summer 2016 to assist in the design, development and implementation of the new organizational structure, and to plan for the transition from DMA to DHB. This effort will include a substantial emphasis on change management, timing, training/retraining, retention of key staff and transition planning.

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XV. PLAN TO ADDRESS CONTINUITY OF CARE FOR INDIVIDUALS IN FOSTER CARE AND ADOPTIVE PLACEMENTS

Section 5(12)(n) of SL 2015-245 requires the report to the JLOC on Medicaid and NC Health Choice to include: “A plan that will ensure continuity of services for individuals in foster care and adoptive placements in the transformed Medicaid and NC Health Choice programs.”

Overview

DHHS has begun to develop a plan specifically to ensure continuity of care for children and youth in foster care and adoptive placement as they transition to PHPs, and to address the State’s legal responsibility for children and youth in foster care and their special health care needs. The plan recognizes and addresses the complexity of this population’s health care needs, the challenges to providing coordinated care and their high health care costs.

In partnership with county DSS offices, DHHS has identified several opportunities for enhancing outcomes for the children and families served by the child welfare system. North Carolina plans to implement the following strategic initiatives focused on improved outcomes for children and families in the child welfare system:

• Extension of coverage to parents of children in foster care • Expansion of Fostering Health NC • Designation of a statewide PHP for children in foster care

DHHS will work with stakeholders to further define these initiatives and specify requirements in the PHP contract that focus on strengthening continuity of care, promote appropriate training and support to providers.

Extension of Coverage for Parents of Children in Foster Care

When child maltreatment has been identified, but does not necessitate the removal of the child from the home, Medicaid services are provided to ameliorate the behaviors and conditions that may have led to the maltreatment. Often this includes the provision of comprehensive health services. When efforts to prevent removal are unsuccessful or unsafe, the child(ren)/youth may require foster care services, and parents may lose Medicaid eligibility. Foster care is a temporary living arrangement and, in most cases, the plan is to reunify the child(ren) to preserve the family unit. When efforts to prevent removal are unsuccessful or unsafe, children may require foster care services. Foster care is a temporary living arrangement. In most cases, the plan is to reunify children to preserve the family unit.

DHHS is proposing to the NC General Assembly and CMS (through the waiver) to allow parents to retain their Medicaid eligibility while their child is being served temporarily by the foster care program. DHHS seeks to ensure that parents are provided with appropriate and effective comprehensive health services, including behavioral health and substance use disorder (SUD) services, to increase the likelihood of successful reunification of the child and family. This will promote the overall health of our children and families and our communities, and potentially avert long-term costs to Medicaid.

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Expansion of Fostering Health NC

Fostering Health NC began as one pilot under a CMS Children’s Health Insurance Program Reauthorization Act (CHIPRA) Demonstration that was awarded to DMA. Fostering Health NC is transitioning to a statewide program and is currently jointly funded by DHHS and the Duke Endowment. It is focused on improving health outcomes for children and youth in foster care. This effort, which is led by the North Carolina Pediatric Society, is working to ensure every child in foster care has a medical home and that they receive services in accordance with standards recommended by the American Academy of Pediatrics (AAP) and the Child Welfare League of America (CWLA) for health care for children in foster care and standards developed by Fostering Health NC such as “Best Practice for Medication Management.”

Fostering Health NC is focused on building and strengthening medical homes for children and youth in foster care through integrated communications and coordination of care through a partnership among local DSS office, the primary care practice’s team, N3CN care manager, the school, the child, and the child’s family.

Having a medical home is particularly important to foster and adopted youth because the health care provided prior to and during their time in care is often fragmented, which exacerbates their already high health care needs. Frequent check-ups help identify and treat issues early, mitigating the negative effects of their trauma. A medical home is also important when these children and youth experience a change in placement as it can further assist caregivers to take action to prevent a medical or behavioral health crisis. DHHS will work with Fostering Health NC and its partners to identify methods to maintain and expand this program with the PHPs and PCHCs.

An important component of Fostering Health NC is the ability of county directors of social service to access Medicaid claims data. DHHS across multiple divisions addressed privacy laws to facilitate the exchange of information which is operationalized via Technology Enabled Care Coordination Agreement (TECCA). This provides the care team contact information, office visit and hospital stay histories, current and past medications (along with information on whether/where prescriptions were filled), and immunization records. County DSS use this information to fill information gaps, coordinate care, and identify potential problems early. DHHS plans to maintain county DSS access to this type of data and will address this feature as part of the transition of N3CN, as addressed in Section XIII.

PHP Contracting Approach

DHHS has considered three potential alternative contracting approaches for PHP enrollment of foster children:

1. Contract with all PHPs to provide services to this population.

2. Contract with a subset of PHPs that meet enhanced standards specific to this population (e.g., medical homes, care coordination and quality).

3. Contract with one statewide PHP to offer a plan to provide services tailored to this population.

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Under all three options, all PHPs will continue to be available to this population.

DHHS supports the third option, to contract with one of the statewide PHPs to provide specialized services to foster care children, but continue to offer a choice of PHPs to this population. Under this option, DHHS would:

• Develop requirements for a PHP for children served by the foster care program

• Select the statewide PHP that is most qualified to provide services to children and youth in foster care

• Require the selected PHP to comply with specialized requirements for this population, including provider network and training requirements

• Hold that PHP accountable for providing high-quality, coordinated care specifically tailored to this population.

Parents or county DSS would be able to select from among all PHPs serving the applicable region, but there would be one plan tailored to this population. Thus, a county DSS could choose the designated plan for all or most of the children in its custody, which would reduce the county DSS’s administrative burden. Significantly, children and youth enrolled in the designated plan would not need to change PHPs in the not-infrequent instances when they move across regions. This will greatly enhance the continuity of their care. DHHS is considering whether to also include children in adoptive placement and children receiving in-home services as part of this option.

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XVI. OTHER CONSIDERATIONS

When a state Medicaid program converts from fee-for-service to capitation, there is a period when capitation prepayments are made at the same time providers are being paid for services rendered before the capitation effective date. This generates a one-time budget impact, which is largest in the first three months of capitation and typically diminishes over one year.

Assuming that PHPs launch July 1, 2019, DHHS roughly estimates that most of this isolated budget impact will occur in state fiscal year 2020.

Given the extent of the populations and services in the Medicaid and NC Health Choice programs, the fiscal impact will be significant. In the 2015 session, the General Assembly allocated non-recurring appropriations of $75 million for state fiscal year 2016 and $150 million for state fiscal year 2017 to be deposited into the Medicaid Transformation Fund.

As program details are developed and capitation estimates refined accordingly, DHHS will perform modeling to assess the available funding and, if applicable, request additional funds.

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APPENDIX: Map of Proposed Regions

72

Department of Health and Human ServicesReview of Medicaid Reform Report and

Section 1115 Waiver Application

Joint Legislative Oversight Committeeon Medicaid and NC Health Choice

March 1, 2016

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• Ensure budget predictability through shared risk and

accountability;

• Ensure balanced quality, patient satisfaction, and

financial measures;

• Ensure efficient and cost-effective administrative

systems and structures; and

• Ensure a sustainable delivery system through the

establishment of two types of prepaid health plans

(PHPs): provider-led entities (PLEs) and commercial

plans (CPs).

Legislation provided the frameSession Law 2015-245 directives


Significant external stakeholder engagement

A process built on collaboration

JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON MEDICAID AND NC HEALTH CHOICE | NC HEALTHCARE REFORM & DRAFT 1115 WAIVER

Continue to LISTEN & ENGAGE stakeholders

75

Improve access to, quality of and cost effectiveness of

health care for our 1.9 million Medicaid and NC Health

Choice (Children’s Health Insurance Program, or CHIP)

beneficiaries by:

• Restructuring care delivery using accountable, next-

generation prepaid health plans

• Redesigning payment to reward value rather than volume

• Planning toward true “person-centered” care grounded in

increasingly robust patient-centered medical homes and

wrap-around community support and informatics services

Vision builds on the uniqueness of North Carolina


• Secretary of Health and Human Services authority to

waive provisions of major health and welfare programs

authorized under the Act, including certain Medicaid

requirements, and to allow a state to use federal

Medicaid funds in ways that are not otherwise allowed

under federal rules.

• Section 1115 Medicaid waivers can allow for broad

changes in eligibility, benefits, cost sharing, and provider

payments.

• Section 1115 waivers are intended to be research and

demonstration projects to test and learn about new

approaches to program design and administration.

Overview of 1115 demonstration waiversSection 1115 waivers provide states an avenue to test and implement coverage approaches that do not meet federal program rules


4

3

2

1This reform is historic and brings innovation and

new tools to meet the unique needs of North

Carolina. A North Carolina solution.

Meets the goals set forth by the Governor and

General Assembly.

Provides broad-based, system-wide innovation for

beneficiaries, communities and providers while

promoting budget stability.

Stakeholder input has been and will continue to

be crucial to this waiver process.

Key Takeaways


• Draft waiver review

–Quadruple Aim (Dr. Warren Newton & Dave Richard)

–Legislative Changes (Dave Richard)

–Financing (Trey Sutten)

–Next Steps (Rick Brajer)

• Report to the Joint Legislative Oversight

Committee on Medicaid and NC Health Choice

–Section 5(12) of SL 2015-245/HB 372 (Dee Jones)

–Next steps (Dee Jones)

Agenda


The Triple Aim


Better patient experience

Better health

Lower cost

80

1115 Demonstration Waiver Rationale

BETTER EXPERIENCE OF

CARE

PER CAPITA

COST

CONTAINMENT

IMPROVED CLINICIAN

ENGAGEMENT & SUPPORT

BETTER

HEALTH

IN OUR

COMMUNITY


The waiver provides

broad-based, system-wide

innovation for beneficiaries,

communities and providers

while promoting budget

stability.

Our waiver proposals will

support the goals of the

Quadruple Aim.

North Carolina’s Quadruple Aim

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• North Carolina priorities, aligned with national measures

• Transparency to legislature, clinicians and the public

• Accountability for performance

• Used to drive improvement

Performance measures


• Exclude from waiver

–Populations with short eligibility spans (e.g., medically

needy and populations with emergency only coverage)

–PACE

–Local Education Agency (LEA) services

–Child Development Service Agencies (CDSAs)

• DHHS is exploring alternative solutions for the Eastern

Band of Cherokee Indians (EBCI) and members of other

federally recognized tribes

• Maintain eligibility for parents of children placed in foster

care system

Legislative changes to support program


• NC providers receive approximately $2 billion annually in

payments through a complex and vital set of funding

streams

• Transitioning to prepaid health plans presents risks to

these funds

• Redesigning them requires a thorough and deliberate

process in partnership with impacted providers

–Public, Private, and Teaching Hospitals

–State Schools of Medicine

–Local Health Departments

–Public Ambulance Providers

–Local Education Agencies

–Others

Supplemental payments


Supplemental funding under reform is preliminarily

envisioned to be structured in five ways:

• Uncompensated Care Pools

• Delivery System Incentive Reform Payments (DSRIP)

• Direct Payments to certain providers

• Directed Value Based Payments

• Base Rates

Some of the existing funding will remain intact and outside

of the waiver:

• Disproportionate Share Hospital Payments

• Graduate Medical Education

Supplemental funding under reform


• Waiver must cost the federal government no more than

what would have been spent otherwise

• Budget neutrality proposal will be based on historical and

projected aggregate expenditures and enrollment

–Without Waiver (WOW): Projection of what the federal

government would theoretically pay absence the demonstration.

–With Waiver (WW): Costs of the demonstration initiatives. For

initial applications, these are projections.

–Budget neutrality means that WW expenditures ≤ WOW

expenditures

• Budget neutrality is not a calculation that reflects state

budget impact

Budget neutrality


• Continue engaging clinicians and providers on structure

of incentive program

• Develop initial set of goals and associated measures for

incentive payments

• Engage providers and legislators on funding amounts for

supplemental payments

• Refine projections for budget neutrality section of the

waiver

• Begin planning for PHP rate setting methodology

Looking aheadDHHS finance team has a number of priorities before the June 1 waiver submission to CMS


• Building Person-Centered Health Communities will

improve patient experience, care, and efficiency

• Measuring outcomes and paying for them appropriately

will improve care and the experience of clinicians and

beneficiaries

• Our hybrid model will create a learning network to

develop and evaluate innovations in the context of the

quadruple aim

• Improving supports for children in foster care will reduce

unnecessary heath care spending and shorten the length

of out-of-home placement

Hypotheses


• Planning for 12 listening sessions across the State

• 30+ day public comment period (early March to April 18)

–Comments can be submitted via Medicaid Reform website

www.ncdhhs.gov/nc-medicaid-reform

• 60-day Tribal consultation

• Recommend language for statutory changes

• Continued engagement with stakeholders

• Finalize and submit draft to CMS on June 1

1115 draft waiverNext Steps


Dee Jones, Division of Health Benefits


• Established design and draft waiver team

• Proactively engaged stakeholder community

• Identified and secured expertise to support development

of the 1115 waiver and JLOC report

• Established Division of Health Benefits per S.L. 2015-24

• Delivered JLOC Report and draft 1115 waiver on

schedule

Key accomplishments


JLOC report overview

Waiver application

Time frame for waiver submission to

CMS

Proposed statutory changes required

Status of staffing of the Division of

Health Benefits

Anticipated distribution of regional

PHP contracts

Plans for recipient enrollment

Recipient access standards


Plan for the proposed inclusion of

provider provisions

Timeline for issuance of PHP RFP

Measures for sustainability of the

transformed system

Plan for transition of CCNC / N3CN

features

Plan to stabilize Division of Medical

Assistance

Plan to ensure continuity of services for

individuals in child welfare system


• Core programmatic activities

• Administrative activities

• Next steps

Agenda


• DHHS focused on:

–Reflecting existing beneficiary utilization and provider referral

patterns

–Sufficient enrollment to support at least one PLE per region

• DHHS requests flexibility to allow up to 12 regional PLE

contracts

• Maximum number of PHPs per region based on number

of eligible Medicaid beneficiaries in the region

Regional capitated PHP contractsAnticipated distribution


Proposed regions


• PHP Licensure

–Required by S.L. 2015-245

–Requirements under development with DHHS and DOI

• Solvency standards

–Recognize levels of risk assumed by PHP

• Other consumer and provider protections

–Chapter 58 will apply to PHPs through DHHS regulations or PHP

contract

Application of Insurance StatutesPHP licensure and applicable Chapter 58 provisions


• Contract with enrollment broker to provide:

–Beneficiary education, outreach and enrollment

–Assistance with plan selection and primary care provider

selection, if necessary

• Auto-assignment (for those who do not select a PHP)

–Preserve existing PCP, other provider relationships and family

linkages

–Will consider overall program goals, such as plan quality and

balancing PHP enrollment

• Other

–Modified process for Eastern Band of Cherokee Indians

–Designated statewide PHP for foster care children

Beneficiary enrollment in prepaid health plans


• DHHS will establish and enforce access and availability

standards for PHPs

–Must comply with pending Medicaid managed care rule

–Will consider:

•Time and distance standards

•Appointment availability and office waiting time

•Variation for rural versus metropolitan/urban areas

•Findings from the development of the access monitoring

review plan (AMRP)

• Expect additional stakeholder engagement

Beneficiary access standards


Foster care and adoptive placements careGoal: Enhance outcomes for children and families in the child welfare system


• Proposal #1: Designation of statewide PHP tailored

to the needs of foster care children

• Proposal #2: Expansion of Fostering Health NC

• Proposal #3: Maintenance of coverage for parents

of foster care children

99

• Rate Floors

• Essential Providers

• Good Faith Negotiations

• Protections against exclusion of certain provider types

• Anti-trust policies

• Prompt pay requirements

• Uniform credentialing requirements

Proposed inclusion of provider provisions


• Continuous performance improvement at multiple levels

(including program, PHP and provider levels)

• Align PHP and LME-MCO performance measures

• Common set of measures for provider accountability

• Leverages extensive work already completed

• Data and strong data analytics capacity are key



• General framework for sustainability measures includes:

–Financial sustainability

–Stakeholder engagement

–Clinical quality

–Organizational sustainability

• Issues can be identified early and corrections

implemented in a timely manner

• Ensure programs are accountable to stakeholders for

delivering efficient and effective care

Sustainability measures


• New contract will define a transition plan

• Transition plan will depend on waiver concepts under

development and consistent with S.L. 2015-245

• DHHS and N3CN are collaborating to ensure a smooth

transition

NC Community Care Network contract


Timeline for PHP Contracting

Draft waiver

3/1/16

Public comment

Early March to April 18

Submit waiver

6/1/16

CMS approval

TBD

Capitation begins

+18 mos.

Transition complete

+12 mos.

PHP Contracting

MARCH 2016 - OCT 2016

Establish Team with RFP Expertise

NOV 2016 – MARCH 2018

RFP Preparationand Issuance

APRIL 2018 – SEPT 2018

PHP Submissions and Awards

OCT 2018 – JUNE 2019

PHP ReadinessReviews


• Complex, time critical processes

• Substantial planning required to build Statement of Work

• PHP contracts timeline assumes CMS approval in January 2018

104

• Recognize DHHS has operational authority for Medicaid,

rather than through Division of Health Benefits

• Ease cooling off period requirements for staff without

leadership role or contract decision making authority

Statutory changesAdministrative


• Begin public comment period and conduct listening

sessions

• Recommend language for statutory changes

• Finalize Innovations Center report by May 1

• Submit 1115 waiver by June 1

• Continue building the Division of Health Benefits team

Near term next steps


Section 5(12) of Session Law 2015-245:

(12) Report to the Joint Legislative Oversight Committee on Medicaid and NC

Health Choice by March 1, 2016. At a minimum, this report shall include: a. The proposed waiver application. b. The expected time frame for the submission of the proposed waiver to

CMS. c. Proposed statutory changes required. d. Status of staffing of the Division of Health Benefits, including a

description of staff's key competencies and expertise. e. Anticipated distribution of regional capitated PHP contracts. f. Plans for recipient enrollment. g. Recipient access standards. h. Performance measures. i. A plan for the proposed inclusion of the following features as part of

Medicaid and NC Health Choice transformation: 1. Rate floors in addition to those required by subdivision (5) of

Section 5 of this act. 2. Antitrust policies. 3. Protections against the exclusion of certain provider types. 4. Prompt pay requirements. 5. Uniform credentialing requirements. 6. Good-faith negotiations.

j. Time line for issuance of RFP and solicitation of bids. k. Measures for sustainability of the transformed system. l. A plan for transition of features of the contract with the North Carolina

Community Care Network, Inc., (NCCCN) to the new delivery system, including a plan for utilizing, at the appropriate time, the Health Information Exchange Network to perform certain functions presently being performed by NCCCN's Informatics Center in conjunction with the primary care case management program.



Agenda Item V – Relevant Legislation

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Fiscal Research Division

Legislative Brief

Health and Human Services

2015 Medicaid and NC Health Choice Reform

February 29, 2016

EXECUTIVE SUMMARY

Session Law 2015-245, An Act to Transform and Reorganize North Carolina’s Medicaid and NC Health Choice Program, became law on September 23, 2015. The legislation requires transformation of the Medicaid and Health Choice programs in the following ways:

• Requires transition of the current Medicaid and NC Health Choice service delivery system to capitated contracts with Prepaid Health Plans (PHPs).

• Creates a new Division of Health Benefits within the Department of Health and Human Services (DHHS) to plan and implement reform of the programs.

• Creates a new Joint Legislative Oversight Committee on Medicaid and NC Health Choice (Medicaid Oversight Committee) to oversee the programs and the transformation process and outlines specific dates for DHHS to report to the Committee.

Key components of the transition to capitated contracts with PHPs include the following:

• The entities eligible for a PHP contract are provider-led entities (PLEs) and commercial plans (CPs). Both PLEs and CPs must meet solvency criteria developed by the Department of Insurance to be eligible for a capitated PHP contract.

• PHPs will receive capitated per-member per-month payments to provide all covered services for their enrolled beneficiaries. In a capitated payment system, a health care provider or managed care organization is paid a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. In a fee-for-service payment system, the provider receives payment for each service provided to an enrollee.

• Geographical coverage of PHPs will include three statewide plans and up to 10 regional PLE plans operating in 6 regions, which will be defined by the Division of Health Benefits and cover the entire State.

• Populations covered by the PHPs will include all Medicaid and Health Choice beneficiaries, except beneficiaries who are dually eligible for Medicare and Medicaid.

• All services will be covered by the PHPs, except for dental services, and except that local management entities/managed care organizations (LME/MCO) services will be provided through existing arrangements during the first 4 years of capitated PHP contracts. The primary care case management function provided by North Carolina Community Care Networks, Inc. (NCCCN) will transition to PHPs.

• The timeline for implementation requires that capitated payments under PHP contracts will begin 18 months after approval of the plan by the federal government, with submission of documents to the federal government required by June 1, 2016.

This legislation became effective September 23, 2015, except that the new law requiring a reemployment cooling-off period for certain DHHS employees became effective November 1, 2015 and the new law pertaining to the appointment process and term of office for the Director of the Division of Health Benefits becomes effective January 1, 2021.

The General Assembly appropriated $5,000,000 in both years of the biennium to fund the cost of reforming the Medicaid and NC Health Choice programs during FY 2015-17. The General Assembly also established a Medicaid Transformation Fund in order to reserve $75,000,000 nonrecurring in FY 2015-16 and $150,000,000 nonrecurring in FY 2016-17 to be used for funding the cash flow transition from a fee-for-service payment system to a capitated payment system.

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2015 Medicaid and NC Health Choice Reform

This brief summarizes the 2015 Medicaid reform legislation and provides a brief history of prior Medicaid and NC Health Choice reform initiatives in North Carolina. All reform efforts focused primarily on the Medicaid program and subsequently applied the same policy decisions to the NC Health Choice program; therefore, detailed information on the NC Health Choice program will not be provided in this brief. Section I of this brief provides program background, and Section II summarizes the 2015 Medicaid reform legislation.

I. Program Background Medicaid is a federal entitlement program created in 1965 as Title XIX of the Social Security Act for the purpose of providing health coverage to certain individuals and families with low income or resources. The program is a cooperative venture funded jointly by the federal and state governments. While federal law sets the parameters of the program, states administer individual programs and set the eligibility standards, covered services, and payment rates for their state program.

Program Spending The major drivers of Medicaid expenditures include; the number of people enrolled in the program, the mix of services and recipient eligibility categories, the utilization of services, and price. The chart below demonstrates the relationship between enrollment and cost. The Aged, Blind and Disabled (ABD) category represented only 22% of the average monthly enrollment in FY 2014, but accounted for approximately 61% of the expenditures. Although children represent the largest enrollment category at 59%, they are responsible for only 26% percent of the average monthly Medicaid expenditures.

399,272

$550,537,792

1,057,695

$234,818,718

351,015 $120,212,522

Average Enrollment Average Claims Spending

% of Total Medicaid Monthly Enrollment

% of Medicaid Monthly Claims Spending

Comparison of Enrollment and Spending FY 2014-15

ABD Children Other

19%

59%

22%

13%

26%

61%

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The legislative debate related to reform frequently centered on the growth in the overall Medicaid budget. The federal government funds the majority of the Medicaid program. In FY 2015 the State paid approximately 23.6% of total Medicaid expenditures, the federal government covered 59.7%, and the remaining 16.7% in spending was covered by drug manufacturer rebates, intergovernmental transfers, provider assessments and other receipts or transfers. The following chart represents the trend in total Medicaid expenditures since 2003.

$2.0 $2.0 $2.4 $2.5 $2.6

$2.9 $2.8 $2.3 $2.5

$3.0 $3.1 $3.4 $3.7

$0.4 $0.4 $0.4 $0.5 $0.5

$0.4 $0.2

$0.7 $1.0

$0.8 $0.3

$0.6 $0.5 $0.5

$4.8 $5.9

$6.6 $6.6

$8.1

$8.3 $8.9

$9.2 $9.5 $9.5

$8.5 $8.3

$8.7

$1.2

$0.5 $1.6 $1.4

$-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historical Medicaid Expenditures

Appropriations County Share ARRA Shortfall Receipts UPL/GAP Plans

Payments did not cover 12 months each year:

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Historical Budget Issues Budget writers were confronted with significant budget gaps in the State's Medicaid budget for several years, as shown in the following chart. State Fiscal Year Amount of the Shortfall

(Net State Appropriation) Key Considerations:

2009-10 $335 million 2010-11 $601 million $222 million was associated with an unknown federal

match rate at the time the budget bill passed. The budget bill included a contingency plan to cover a portion of the shortfall.

2011-12 $507 million $132 million was associated with shifting a liability one month into the next fiscal year.

2012-13 $488 million *Details on next page. In FY 2013 the shortfall was due to increased enrollment and utilization, a one-time State reimbursement of federal drug rebate payments, and a miscalculation of federal receipts. To ensure adequate funding through July 2013, the General Assembly passed S.L. 2013-56, Medicaid/2012-13 Additional Appropriations (H.B. 980), authorizing $451 million, and S.L. 2013-184, Continuing Budget Authority (H.B. 336) authorizing $45 million, for a total of $496 million in additional Medicaid funding. The total amount of the shortfall was $488 million for FY 2012-13.

Additional budget issues that contributed to Medicaid budget gaps included unachieved budget reductions. The Appropriations Act of 2013, S.L. 2013-360, reduced the Medicaid budget by $147.3 million and the Health Choice budget by $15.6 million. The Fiscal Research Division estimated that the Division of Medical Assistance would not achieve $63.6 million of those reduction items by the end of FY 2013-14.

Based on continued budget issues, difficulty in projecting base budget requirements and the projected impact of the Medicaid budget on other areas of the State’s budget, the General Assembly began addressing program reform in 2013.

Early Reform Initiatives

2011 Session Law 2011-264, Statewide Expansion of 1915(b)/(c) Waiver, introduced statewide capitated payments for Medicaid behavioral health services. The legislation transitioned local management entities to Local Management Entity/Managed Care Organizations (LME/MCOs) and converted the payment structure for individuals with mental illness, intellectual and developmental disabilities, and substance abuse disorders from fee-for-service to a single capitated payment. Under the LME/MCO model, all Medicaid behavioral health services expenditures, except for pharmaceuticals are paid on a capitated basis.

2013 Session Law 2013-360, Appropriations Act of 2013, Section 12H.1, required DHHS, in consultation with a Medicaid Reform Advisory Group, to create a detailed plan to reform the Medicaid program. DHHS was prohibited from implementing Medicaid Reform without legislative approval. The plan was required to accomplish the following goals:

(1) Create a predictable and sustainable Medicaid program; (2) Increase administrative ease and efficiency for Medicaid providers; and (3) Provide care for the whole person by uniting physical and behavioral health care.

DHHS's plan was presented to the General Assembly for consideration in a report dated March 17, 2014.

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2014 Session Law 2014-100, Appropriations Act of 2014, Section 12H.1, continued the legislature’s reform efforts and stated the intent of the General Assembly to develop a detailed Medicaid reform plan during a special session in November 2014. However, on August 20, 2014 the General Assembly adjourned sine die and did not return in November for a special session.

S.L. 2014-100 required DHHS to continue to consult with stakeholder groups, study, and recommend options for a Medicaid reform plan intended to provide greater budget predictability until the enactment of Medicaid reform legislation. S.L. 2014-100 specifically prohibited DHHS from:

Implementing initiatives that would commit the State to any particular Medicaid reform plan;

Submitting any reform-related State plan, amendments, waivers, or grant applications; and,

Entering into contracts related to implementing Medicaid reform.

Also during the 2014 Session, the House and the Senate each passed versions of H.B. 1181, North Carolina Medicaid Modernization, containing a Medicaid reform plan; however, a final version of the legislation was not enacted.

2015 H.B. 372 was introduced during the 2015 Session, continuing Medicaid reform efforts. The bill was enacted on September 23, 2015 as S.L. 2015-245.

II. S.L. 2015-245 Reform and Reorganization of the NC Medicaid Program

Role of the General Assembly

The role of the General Assembly in the reform and operation of the Medicaid and NC Health Choice programs is to:

(1) Define the overall goals of transformation and the structure of the delivery system. (2) Monitor the development of transformation plans and implementation of reform. (3) Define and approve eligibility and income standards for the programs. (4) Appropriate the annual budget for the Medicaid and NC Health Choice programs. (5) Confirm the Director of the Division of Health Benefits.

Timeline for Medicaid Reform The timeline for key benchmark activities defined in S.L. 2015-245 are:

When act became law (September 23, 2015)

• Division of Health Benefits in DHHS created • Joint Legislative Oversight Committee on Medicaid and NC Health Choice

(Medicaid Oversight Committee) created • Division of Health Benefits to begin development of the 1115 waiver and any

other State Plan amendments and waivers necessary

March 1, 2016 Report due to Medicaid Oversight Committee on plans and progress of reform

On or before June 1, 2016 DHHS submission of waivers and State Plan amendments for federal approval

18 months after federal approval Beginning of capitated contracts and completion of initial beneficiary enrollment

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Structure of the Reformed Delivery System The following are key components of the reformed Medicaid delivery system:

Eligible Entities

• Contracts will be awarded to Prepaid Health Plans (PHPs), which may be either a provider-led entity (PLE), or a commercial plan (CP).

• A PLE is an entity whose majority ownership interest is held by Medicaid providers and who has physicians, physician assistants, nurse practitioners, or psychologists as a majority of the entity's governing board.

• A CP is any entity that undertakes to provide or arrange for the delivery of health care services to enrollees on a prepaid basis.

• Both types of PHPs must meet solvency standards established by the Department of Insurance that are similar to the solvency standards for similarly situated regulated entities.

Geographical Coverage

• There will be 3 statewide contracts with PHPs.

• There may be up to 10 regional contracts in 6 regions determined by the Division of Health Benefits with PLEs.

• The six regions must be composed of whole contiguous counties. Together, the six regions must cover the entire State.

Capitated Payments

• PHPs will receive capitated per-member per-month payments for their enrolled beneficiaries.

• Capitated rates will be risk-adjusted based on the category of enrolled beneficiary (e.g., aged, child, pregnant women, etc.)

Populations Covered

• All Medicaid and Health Choice beneficiaries, except beneficiaries who are dually eligible for Medicare and Medicaid, will enroll with a PHP.

Services Covered

• PHPs will provide coverage for all current Medicaid and NC Health Choice services except as specifically excluded.

• PHPs will not cover dental services.

• PHPs will not cover LME/MCO services during the first 4 years of capitated PHP contracts. LME/MCO services will be provided through existing arrangements during that period.

• The primary care case management function provided by NCCCN will transition to PHPs effective on the date of the new capitated contract.

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Contract Requirements

• Performance Measures and Goals – The new delivery system and capitated PHP contracts shall be built on defined measures and goals for risk-adjusted health outcomes, quality of care, patient satisfaction, access, and cost. Each component shall be subject to specific accountability measures, including penalties.

• Administrative Functions – PHPs shall be responsible for all administrative functions for recipients enrolled in their plan, including, but not limited to, claims processing, care and case management, grievances and appeals, and other necessary administrative services.

• Managing Medicaid Spending Growth – PHPs shall be responsible to keep risk-adjusted cost growth for its enrollees at least two percentage (2%) points below national Medicaid spending.

• Medical Loss Ratios – Until final federal regulations are promulgated governing medical loss ratio, a minimum medical loss ratio of eighty-eight percent (88%) for health care services will be required, with the components of the numerator and denominator to be defined by the Division of Health Benefits.

• Provider Networks - PHPs must develop and maintain provider networks that meet access to care requirements for their enrollees. PHPs may not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates. PHPs must include all providers in their geographical coverage area that are designated essential providers by DHHS.

• Rate Floors – PHPs must establish appropriate rate floors for in-network primary care physicians, specialist physicians, and pharmacy dispensing fees to ensure the achievement of transformation goals.

• Drug Spending – DHHS will develop a single drug formulary and ensure that there is a requirement that PHP spending for prescribed drugs, net of rebates, represents a net savings for the State.

Planning and Reporting

• By March 1, 2016 the Division of Health Benefits must submit a report to the Joint Legislative Oversight Committee on Medicaid and Health Choice that includes the proposed waiver, required statutory changes, the timeline for issuing requests for proposals (RFPs) for PHPs, and a plan for the transition of service features of the contract with North Carolina Community Care Networks, Inc. (NCCCN) to the new delivery system. Complete details of the reporting requirements contained in the legislation can be found in Attachment A - Medicaid Reform Reporting Requirements.

• All PHPs and Medicaid and NC Health Choice providers shall be required to submit data through the Health Information Exchange Network, as part of the Medicaid reform plan.

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Reorganization

• The Division of Health Benefits is created within DHHS to plan and implement reform of the Medicaid and NC Health Choice programs.

• The Division of Medical Assistance will operate the current Medicaid and NC Health Choice programs until the transition to PHPs is completed.

• The Division of Medical Assistance and all positions remaining in DMA will be eliminated 12 months after capitated PHP contracts begin or at an earlier time upon notice to the Office of State Budget and Management.

• Beginning in 2021, the Director of the Division of Health Benefits will be appointed by the Governor and confirmed by the General Assembly to serve a four-year term.

• The new Division of Health Benefits has increased responsibility to keep program spending within the budget set by the General Assembly, to engage in budget forecasting, and to publish data.

• DHHS is given full authority to administer and operate the programs within their budget and set all program components except for eligibility categories and income thresholds.

Legislative Oversight

• A new Joint Legislative Oversight Committee on Medicaid and NC Health Choice is created to oversee the planning and implementation of the Medicaid reform process.

• The existing Joint Legislative Oversight Committee on Health and Human Services will no longer oversee issues related to Medicaid and Health Choice except that they will continue to oversee the LME/MCOs and mental health matters.

• Both oversight committees will oversee mental health issues.

For additional information, please contact:

Health and Human Services Team

Susan Jacobs [email protected] Jennifer Hillman [email protected]

Steve Owen [email protected]

Fiscal Research Division NC General Assembly

300 N. Salisbury St., Room 619 Raleigh, North Carolina 27603-5925

(919) 733-4910 http://www.ncleg.net/fiscalresearch

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mailto:[email protected]



Attachment A – Medicaid Reform Reporting Requirements Reports due to the Joint Legislative Oversight Committee on Medicaid and NC Health Choice, as required by S.L. 2015-245, include the following:

Due date Agency

Reporting Authority for Report

Content of Report

3/1/16 DHB §5(12) Plans and progress of Medicaid reform, including: a. The proposed waiver application. b. The expected time frame for the submission of the proposed waiver to

CMS. c. Proposed statutory changes required. d. Status of staffing of the Division of Health Benefits, including a

description of staff's key competencies and expertise. e. Anticipated distribution of regional capitated PHP contracts. f. Plans for recipient enrollment. g. Recipient access standards. h. Performance measures. i. A plan for the proposed inclusion of the following features as part of

Medicaid and NC Health Choice transformation: 1. Rate floors in addition to those required by subdivision (5) of Section 5

of this act. 2. Antitrust policies. 3. Protections against the exclusion of certain provider types. 4. Prompt pay requirements. 5. Uniform credentialing requirements. 6. Good-faith negotiations.

j. Time line for issuance of RFP and solicitation of bids. k. Measures for sustainability of the transformed system. l. A plan for transition of features of the contract with the North Carolina

Community Care Network, Inc., (NCCCN) to the new delivery system, including a plan for utilizing, at the appropriate time, the Health Information Exchange Network to perform certain functions presently being performed by NCCCN's Informatics Center in conjunction with the primary care case management program.



3/1/16 DHB

and

DOI

§4(6a) Review the applicability of Chapter 58 of the General Statutes to PHPs and report on:

a. Proposed exceptions to the applicability of Chapter 58 of the General Statutes for PHPs.

b. Recommendations for resolving conflicts between Chapter 58 of the General Statutes and the requirements of Medicaid federal law and regulations.

c. Proposed statutory changes necessary to implement this subdivision.

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3/1/16 DOI §6 • Recommended solvency requirements that are similar to the solvency requirements for similarly situated regulated entities and recommended licensing procedures that include an annual review by the Commissioner and reporting of changes in licensure to the DHB, developed in consultation with the Director of the DHB.

• Proposed fees to offset the cost of licensure. • Any necessary statutory changes.

5/1/16 DHHS §8 Program design and budget proposal for creating a Medicaid and NC Health Choice Transformation Innovations Center within the DHB with the purpose of assisting Medicaid and NC Health Choice providers in achieving the ultimate goals of better health, better care, and lower costs for North Carolinians. The center should be designed to support providers through technical assistance and learning collaboratives that foster peer-to-peer sharing of best practices. DHHS shall use the Oregon Health Authority's Transformation Center as a design model and shall consider at least the following features:

(1) Learning collaboratives, peer-to-peer networks. (2) Clinical standards and supports. (3) Innovator agents. (4) Council of Clinical Innovators. (5) Community and stakeholder engagement. (6) Conferences and workshops. (7) Technical assistance. (8) Infrastructure support.

1/31/17 DHB §5(11) Recommend a long-term strategy to cover dual eligibles through capitated PHP contracts, developed upon the advice of the Dual Eligibles Advisory Committee of the DHB.

DHB = Division of Health Benefits of the Department of Health and Human Services DHHS = Department of Health and Human Services DOI = Department of Insurance

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Prepaid Health Plans (PHP) Recommended Solvency, Licensing and Fee Requirements

House Bill 372

An Act to Transform and Reorganize North Carolina’s Medicaid

and NC Health Choice Programs

March 1, 2016

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North Carolina Department of Insurance 1 | P a g e

Prepaid Health Plans (PHP)

Recommended Solvency, Licensing and Fee Requirements

House Bill 372

HB 372:

Section 6. Role of the Department of Insurance. – The transformed Medicaid and NC Health

Choice system shall include the licensing of PHPs based on solvency requirements established

and implemented by the Department of Insurance. The Commissioner of Insurance, in

consultation with the Director of the Division of Health Benefits, shall develop recommended

solvency requirements that are similar to the solvency requirements for similarly situated

regulated entities and recommended licensing procedures that include an annual review by the

Commissioner and reporting of changes in licensure to the Division of Health Benefits. The

Commissioner shall report the recommendations as well as proposed fees to offset the cost of

licensure and any necessary statutory changes to the Joint Legislative Oversight Committee on

Medicaid and NC Health Choice by March 1, 2016.

The North Carolina Department of Insurance’s (Department) recommended solvency and licensing

requirements for PHPs are based on the solvency and licensing requirements for North Carolina Health

Maintenance Organizations (HMOs). HMOs are considered by the Department to be the most similarly

situated regulated organization. HMOs are regulated under Article 67 of Chapter 58 of the North

Carolina General Statutes.

Note: These proposed requirements are intended to apply only to PHPs that are not already licensed as

health organizations under Chapter 58 of the North Carolina General Statutes.

Financial Requirements

Capital Standards

Each PHP will be required to maintain a minimum capital and surplus equal to the greater of one million dollars ($1,000,000) or the amount required pursuant to the risk based capital (RBC) standards of Article 12 of Chapter 58 of the North Carolina General Statutes.

Capital and surplus provide a cushion against unexpected increases in liabilities or decreases in assets.

By utilizing RBC standards the capital and surplus requirement for a PHP may increase or decrease as a PHP increases or decreases its risk.

The five major categories of risks involved in RBC are asset risk – affiliates, asset risk – other, underwriting risk, credit risk and business risk.

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The RBC calculation uses a standardized formula to establish a de facto minimum capital level (authorized control level or ACL) that is then compared to a company’s actual capital level. There are five ratio levels that are used by the Department to determine what action, if any, should be taken against a company.

Utilizing a fixed minimum capital standard rather than RBC is not considered adequate by the Department.

Fixed minimum capital standards are generally intended to make sure that there is adequate capital to initiate operations and to fund receivership expenses in the event of insolvency.

Reserve Requirements

Each PHP will be required, when determining liability, to include an amount estimated in the

aggregate to provide for any unearned premium and for the payment of all claims for health

care expenditures that have been incurred, whether reported or unreported, that are unpaid

and for which the PHP may be liable and to provide for the expense of adjustment or settlement

of such claims.

Reserves have to be actuarially determined.

Investment Restrictions

The funds of a PHP can only be invested or maintained in securities, other investments, or assets permitted by the laws of North Carolina for the investment of assets constituting the legal reserves of life insurance companies or such other securities or investments as the Commissioner may permit.

The Commissioner will not allow any investment if in his opinion such investment would

substantially and adversely affect the financial soundness of the PHP and endanger its ability to

meet its obligations.

Deposits

The Commissioner will require a minimum deposit of five hundred thousand dollars ($500,000) or such higher amount as he deems necessary.

All deposits will be kept on deposit in accordance with the provisions of Article 5 of Chapter 58 of the North Carolina General Statutes.

Working Capital

At the time of licensing a PHP must have working capital of at least $1,500,000.

Working capital must be sufficient to cover all start-up costs and operating expenses for a reasonable period of time from the date of issuance of the license.

Going forward, the amount of working capital shall be enough to reasonably expect the PHP to meet its obligations.

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Financial Reporting Requirements

Each PHP will be subject to G.S. 58-2-165 which will require each PHP to submit financial information consistent with that required for other insurers, including HMOs. These standardized reports will be utilized by Department analysts in order to determine a PHP’s financial condition.

As with other insurers, PHPs will report utilizing statutory accounting principles (SAP).

PHPs will file financial statements utilizing the NAIC Model Financial Statement Blank.

The PHP annual filing will include an actuarial certification of unpaid claim reserves and a calculation of risk based capital.

Each PHP will be required to file audited financial statements with the Department on or before June 1 of each year.

PHP’s will be subject to Article 19 of Chapter 58 of the North Carolina General Statutes (Insurance Holding Company Act) in order to monitor transactions between a PHP and its affiliates.

All financial filings will be treated as public documents.

Examinations

The Commissioner will be allowed to make an examination of the affairs of any PHP as often as the Commissioner deems necessary but not less frequently than once every five years.

Examinations will be conducted under G.S. 58-2-131 through 58-2-134 (Examination Law).

Protection against Insolvency

In addition to the $500,000 deposit and the capital and surplus requirement, each PHP will be required to have and maintain at all times an adequate plan for protection against insolvency. Such a plan may involve procuring a reinsurance agreement covering excess loss, stop loss, or catastrophes.

Department Intervention

When a PHP has been identified as troubled or potentially troubled, the Department will have the

regulatory obligation to take preventive and corrective measures that are timely, suitable and necessary

to reduce the impact of risks identified during on-site and off-site solvency monitoring.

Hazardous Financial Condition

Whenever the condition of a PHP indicates that the continued operation of a PHP might be hazardous to its enrollees, creditors, or the general public, then the Commissioner may order the PHP to take such action as may be reasonably necessary to rectify the condition.

The Commissioner may consider any or all of the standards in G.S. 58-30-60(b) when determining whether the continued operation of a PHP is hazardous to its enrollees, creditors or the general public.

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The Commissioner will notify the Division of Health Benefits prior to taking any action against a PHP.

Suspension or Revocation of License

The Commissioner may suspend or revoke a PHP license for various reasons including:

The PHP is operating significantly in contravention of its basic organizational document, or in a manner contrary to that described in and reasonably inferred from any other information submitted at the time of application, unless amendments to such submissions have been filed with and approved by the Commissioner.

The PHP is no longer financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees.

The PHP is operating in a manner that would be hazardous to its enrollees.

The PHP knowingly or repeatedly fails or refuses to comply with any law or rule applicable to the PHP or with any order issued by the Commissioner after notice and opportunity for a hearing.

The PHP has knowingly published or made to the Department or to the public any false statement or report, including any report or any data that serves as the basis for any report, required to be submitted by the PHP.

The Commissioner will notify the Division of Health Benefits prior to suspending or revoking a

PHP license.

Rehabilitation and Liquidation

The Commissioner may apply for an order directing him to rehabilitate or liquidate a PHP upon one or more grounds set out in Article 30 of Chapter 58 of the North Carolina General Statutes or when in his opinion the continued operation of the PHP would be hazardous either to the enrollees, creditors or to the general public.

Any rehabilitation or liquidation of a PHP will be deemed to be the rehabilitation or liquidation of an insurance company and will be conducted under the supervision of the Commissioner pursuant to Article 30 of Chapter 58 of the North Carolina General Statutes.

The provisions of Articles 48 and 62 of Chapter 58 of the North Carolina General Statutes don’t apply to PHPs (no guaranty association coverage).

Priority will be given to the Department of Health and Human Services over all other claims in G.S. 58-30-220 except for claims in G.S. 58-30-220(1) (cost of the receiver’s administrative expenses).

LICENSING

A new license type will be created for PHPs that are not already licensed as a health organization

in North Carolina.

The application process is substantially similar to the application process for HMOs.

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The application will require an applicant to provide certain information to the Department

including:

o A list of the names, addresses, official positions and biographical affidavit of the persons

who are to be responsible for the conduct of the affairs of the applicant, including, but

not limited to all members of the board of directors, executive committee, and the

principal officers accompanied by a completed release of information for each of these

individuals.

o A detailed plan of operation.

o A description of the nature and extent of any reinsurance program to be implemented.

o Disclosure identifying all affiliates, including a description of any management, service

or cost sharing arrangements.

o Financial statements showing the applicant's assets, liabilities, and sources of financial

support.

o A financial feasibility study which includes:

Detailed enrollment projections

A projection of balance sheets

A projection of cash flow statements showing:

Capital expenditures

Purchase and sale of investments

Deposits with the State

Income and expense statements anticipated from the start of operations until the

organization has net income for at least one year.

A statement as to the sources of working capital as well as any other sources of

funding.

o A description of the procedures to be implemented to meet the protection against

insolvency requirements.

The Department will issue a license to the applicant upon the payment of the application fee

and upon being satisfied of the following:

o The amounts provided as working capital are repayable only out of earned income in

excess of amounts paid and payable for operating expenses and expenses of providing

services and such reserve as the Department of Insurance deems adequate.

o That the amount of money actually available for working capital is sufficient to carry all

acquisition costs and operating expenses for a reasonable period of time from the date

of the issuance of the license.

o The adequacy of the expertise, experience, and character of the person or persons who

will manage the PHP.

After licensure a PHP will be required to, in addition to all financial reporting requirements:

o Submit to the Commissioner for approval any material change in the information

submitted at the time of licensure.

o Report to the Division of Health Benefits any change in licensing status.

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FEES

The amount of fees necessary to offset the cost of licensing, including ongoing solvency monitoring, will

vary based on the number of PHPs licensed:

# PHPs 3 4 5 6 7 8

Estimated Salary & Benefits

$536,718 $640,376 $725,606 $725,606 $725,606 $1,018,152

Estimated Other Expenses

40,621 47,605 54,446 54,446 54,446 75,256

Estimated Total $577,339 $687,981 $780,052 $780,052 $780,052 $1,093,408

# PHPs 9 10 11 12 13

Estimated Salary & Benefits

$1,018,152 $1,158,666 $1,158,665 $1,158,665 $1,158,665

Estimated Other Expenses

75,256 82,240 82,240 82,240 82,240

Total $1,093,408 $1,240,905 $1,240,905 $1,240,905 $1,240,905

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Proposed Statutory Changes for the Licensing of Prepaid Health Plans

Article xx.

Prepaid Health Plan Licensing.

§ 58-xx-1. Short title. This Article may be cited as the Prepaid Health Plan Licensing Act.

§ 58-xx-5. Definitions.

(a) "Commissioner" means the Commissioner of Insurance. (b) "Enrollee" means an individual who is covered by and receives health care services

through a PHP. (c) "Health care services" means services provided by a PHP under a capitated contract

with the North Carolina Department of Health and Human Services through the Division of Health Benefits.

(d) "Person" has the same meaning as in G.S. 58-1-5(9). (e) “Prepaid Health Plan” or “PHP” means a person that has entered into a capitated

contract with the North Carolina Department of Health and Human Services through the Division of Health Benefits to deliver Medicaid and NC Health Choice services.

(f) "Working capital" means the excess of current assets over current liabilities; provided that the only borrowed funds that may be included in working capital must be those borrowed funds that are repayable only from net earned income and must be repayable only with the advance permission of the Commissioner.

(g) "Insolvent" or "insolvency" means that the PHP has been declared insolvent and is placed under an order of liquidation by a court of competent jurisdiction. § 58-xx-10. Licensing.

(a) Notwithstanding any law of this State to the contrary, only those persons authorized by the Department of Health and Human Services, through the Division of Health Benefits, may apply to the Commissioner for a license to operate a PHP in compliance with this Article.

(b) Any person that is already a licensed health organization in this State under this Chapter shall not be subject to this Article provided that the solvency requirements for such organization are equal to or greater than the requirements of this Article.

(c) Each license application shall be verified by an officer or authorized representative of the applicant, shall be in a form prescribed by the Commissioner, and shall be set forth or be accompanied by the following:

(1) A copy of the organizational documents, if any, of the applicant such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents, and all amendments thereto;

(2) A copy of the bylaws, rules and regulations, or similar document, if any, regulating the conduct of the internal affairs of the applicant;

(3) A list of the names, addresses, official positions and biographical affidavit of the persons who are to be responsible for the conduct of the affairs of the applicant, including all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers in the case of a corporation, and the partners or members in the case

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of a partnership or association, accompanied by a completed release of information for each of these individuals, on forms acceptable to the Commissioner;

(4) A disclosure identifying all affiliates, including a description of any management, service, or cost sharing arrangements;

(5) Name and address of registered agent; (6) A detailed plan of operation; (7) The names and addresses of the applicant’s qualified actuary and external

auditors; (8) Financial statements showing the applicant's assets, liabilities, and sources of

financial support. If the applicant's financial affairs are audited by independent certified public accountants, a copy of the applicant's most recent regular certified financial statement shall be deemed to satisfy this requirement unless the Commissioner directs that additional or more recent financial information is required for the proper administration of this Article;

(9) A financial feasibility study, which includes detailed enrollment projections, a projection of balance sheets, cash flow statements, showing any capital expenditures, purchase and sale of investments and deposits with the State, and income and expense statements anticipated from the start of operations until the PHP has had net income for at least one year; and a statement as to the sources of working capital as well as any other sources of funding;

(10) A power of attorney duly executed by such applicant, if not domiciled in this State, appointing the Commissioner and his successors in office, and duly authorized deputies, as the true and lawful attorney of such applicant in and for this State upon whom all lawful process in any legal action or proceeding against the PHP on a cause of action arising in this State may be served;

(11) A description of the procedures to be implemented to meet the protection against insolvency requirements of G.S. 58-xx-110;

(12) Such other information as the Commissioner may require to make the determinations required in G.S. 58-xx-20.

(d) A PHP shall file a notice describing any significant modification of the operation set out in the information required by subsection (b) of this section. Such notice shall be filed with the Commissioner prior to the modification. If the Commissioner does not disapprove within 90 days after the filing, such modification shall be deemed to be approved. Every PHP shall file with the Commissioner all subsequent changes in the information or forms that are required by this Article to be filed with the Commissioner. § 58-xx-15. Commissioner use of consultants and other professionals.

The Commissioner may contract with consultants and other professionals to expedite and complete the application process, examinations, and other regulatory activities required pursuant to this Article, the costs of which shall be reimbursed by the applicant or licensee. Such contracts for financial, legal, examination and other services shall not be subject to any of the following:

(1) G.S. 114-2.3. (2) G.S. 147-17.

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(3) Articles 3, 3C, and 8 of Chapter 143 of the General Statutes, together with rules and procedures adopted under those Articles concerning procurement, contracting, and contract review.

§ 58-xx-20. Issuance and continuation of license.

(a) Before issuing or continuing any such license, the Commissioner of Insurance may make such an examination as he deems expedient. The Commissioner of Insurance shall issue a license upon the payment of the application fee prescribed in G.S. 58-xx-160 and upon being satisfied on the following points:

(1) The applicant, other than acquiring a license under this Article, has been approved by the North Carolina Department of Health and Human Services, through the Division of Health Benefits, to enter into a capitated contract for the delivery of Medicaid and NC Health Choice services;

(2) The applicant has a minimum capital and surplus equal to or greater than that required by G.S. 58-xx-110(b);

(3) The amounts provided as working capital are repayable only out of earned income in excess of amounts paid and payable for operating expenses and expenses of providing services and such reserve as the Department of Insurance deems adequate, as provided hereinafter;

(4) That the amount of money actually available for working capital be sufficient to carry all acquisition costs and operating expenses for a reasonable period of time from the date of the issuance of the license and that the PHP is financially responsible and may reasonably be expected to meet its obligations to enrollees and prospective enrollees. Such working capital shall initially be a minimum of one million five hundred thousand dollars ($1,500,000) or such higher amount as the Commissioner shall determine to be adequate.

(5) The adequacy of the expertise, experience, and character of the person or persons who will manage the PHP.

(b) A license shall be denied only after compliance with the requirements of G.S. 58-xx-155. § 58-xx-25. Deposits.

(a) The Commissioner shall require a minimum deposit of five hundred thousand dollars ($500,000) or such higher amount as he deems necessary for the protection of enrollees.

(b) All deposits required by this section shall be administered in accordance with the provisions of Article 5 of this Chapter.

§ 58-67-30. Management and exclusive agreements; custodial agreements.

(a) No PHP shall enter into an exclusive management or custodial agreement unless the agreement is first filed with the Commissioner and approved under this section within 45 days after filing or such reasonable extended period as the Commissioner shall specify by notice that is given within the 45 day period.

(b) The Commissioner shall disapprove an agreement submitted under subsection (a) of this section if the Commissioner determines that the agreement:

(1) Subjects the PHP to excessive charges; (2) Extends for an unreasonable period of time;

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(3) Does not contain fair and adequate standards of performance; (4) Enables persons under the contract to manage the PHP who are not

sufficiently trustworthy, competent, experienced, and free from conflict of interest to manage the PHP with due regard for the interests of its enrollees, creditors, or the public; or

(5) Contains provisions that impair the interests of the PHP’s enrollees, creditors, or the public.

§ 58-xx-45. Fiduciary responsibilities.

Any director, officer or partner of a PHP who receives, collects, disburses, or invests funds in connection with the activities of such PHP shall be responsible for such funds in a fiduciary relationship to the enrollees. § 58-xx-55. Statements filed with Commissioner.

Every PHP subject to this Article is subject to G.S. 58-2-165. § 58-xx-60. Investments.

(a) With the exception of investments made in accordance with subsection (b), the funds of a PHP shall be invested or maintained only in securities, other investments, or other assets permitted by the laws of this State for the investment of assets constituting the legal reserves of life insurance companies or such other securities or investments as the Commissioner may permit.

(b) A PHP may, with the Commissioner's prior approval: (1) Invest its funds to purchase, lease, construct, renovate, operate or maintain

hospitals, medical facilities, or both, and their ancillary equipment, and such property as may reasonably be required for its principal office or for such other purposes as may be necessary in the transaction of the business of the PHP.

(2) Make loans to a medical group under contract with it in furtherance of its program or the making of loans to a corporation or corporations under its control for the purpose of acquiring or constructing medical facilities and hospitals or in furtherance of a program providing health care services to enrollees.

(c) The Commissioner will not allow any investment if in his opinion such investment would substantially and adversely affect the financial soundness of the PHP and endanger its ability to meet its obligations.

§ 58-xx-100. Examinations.

The Commissioner may make an examination of the affairs of any PHP as often as the Commissioner deems it necessary for the protection of the interests of the people of this State but not less frequently than once every five years. Examinations shall otherwise be conducted under G.S. 58-2-131 through G.S. 58-2-134. § 58-xx-105. Hazardous financial condition.

(a) Whenever the financial condition of any PHP indicates a condition such that the continued operation of the PHP might be hazardous to its enrollees, creditors, or the general

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public, then the Commissioner may order the PHP to take such action as may be reasonably necessary to rectify the existing condition, including but not limited to one or more of the following steps:

(1) To reduce the total amount of present and potential liability for benefits by reinsurance;

(2) To reduce the volume of new business being accepted; (3) To reduce the expenses by specified methods; (4) To suspend or limit the writing of new business for a period of time; or (5) To require an increase to the PHP’s capital and surplus by contribution.

(b) The Commissioner may consider any or all of the standards in G.S. 58-30-60(b) when determining whether the continued operation of a PHP is hazardous to its enrollees, creditors or the general public.

(c) The remedies listed above are in addition to, and not in lieu of, the remedies and measures available to the Commissioner under the provisions of Article 30 of this Chapter.

(d) The Commissioner shall notify the Division of Health Benefits of the North Carolina Department of Health and Human Services prior to taking any action against a PHP under this section. § 58-xx-110. Protection against insolvency.

(a) The Commissioner shall require deposits in accordance with the provisions of G.S. 58-xx-25.

(b) Each PHP shall maintain a minimum capital and surplus equal to the greater of one million dollars ($1,000,000) or the amount required pursuant to the risk-based capital provisions of Article 12 of this Chapter.

(c) Every PHP shall have and maintain at all times an adequate plan for protection against insolvency acceptable to the Commissioner. In determining the adequacy of such a plan, the Commissioner may consider:

(1) A reinsurance agreement preapproved by the Commissioner covering excess loss, stop loss, or catastrophes. The agreement must provide that the Commissioner will be notified no less than 60 days prior to cancellation or reduction of coverage.

(2) Any other arrangements offering protection against insolvency that the Commissioner may require.

§ 58-xx-120. Continuation of benefits.

(a) The Commissioner shall require that each PHP have a plan for handling insolvency, which plan allows for continuation of benefits for the duration of the contract period for which premiums have been paid and continuation of benefits to enrollees who are confined in an inpatient facility until their discharge or expiration of benefits. In considering such a plan, the Commissioner may require:

(1) Insurance to cover the expenses to be paid for benefits after an insolvency; (2) Provisions in provider contracts that obligate the provider to provide services

for the duration of the period after the PHP’s insolvency for which premium payment has been made and until the enrollees' discharge from inpatient facilities;

(3) Insolvency reserves such as the Commissioner may require;

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(4) Letters of credit acceptable to the Commissioner; (5) Any other arrangements to assure that benefits are continued as specified

above. § 58-xx-135. Incurred but not reported claims.

(a) Every PHP shall, when determining liability, include an amount estimated in the aggregate to provide for any unearned premium and for the payment of all claims for health care expenditures that have been incurred, whether reported or unreported, that are unpaid and for which such PHP is or may be liable; and to provide for the expense of adjustment or settlement of such claims.

(b) Such liabilities shall be computed in accordance with rules adopted by the Commissioner for HMOs upon reasonable consideration of the ascertained experience and character of the PHP. § 58-xx-140. Suspension or revocation of license.

(a) The Commissioner may suspend or revoke a PHP license if the Commissioner finds that the PHP:

(1) Is operating significantly in contravention of its organizational document, or in a manner contrary to that described in and reasonably inferred from any other information submitted under G.S. 58-xx-10, unless amendments to such submissions have been filed with and approved by the Commissioner.

(2) Is no longer financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees.

(3) Is operating in a manner that would be hazardous to its enrollees. (4) Knowingly or repeatedly fails or refuses to comply with any law or rule

applicable to the PHP or with any order issued by the Commissioner after notice and opportunity for a hearing.

(5) Has knowingly published or made to the Department or to the public any false statement or report.

(b) A license shall be suspended or revoked only after compliance with G.S. 58-xx-155. (c) When a PHP license is suspended, the PHP shall not, during the suspension, enroll

any additional enrollees except newborn children or other newly acquired dependents of existing enrollees, and shall not engage in any advertising or solicitation.

(d) When a PHP license is revoked, the PHP shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs, and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the PHP. The PHP shall engage in no advertising or solicitation. The Commissioner may, by written order, permit such further operation of the PHP as the Commissioner may find to be in the best interest of enrollees and the State of North Carolina.

(e) The Commissioner shall notify the Division of Health Benefits of the North Carolina Department of Health and Human Services prior to taking any action against a PHP under this section. § 58-xx-145. Rehabilitation or liquidation of PHP.

Any rehabilitation or liquidation of a PHP shall be deemed to be the rehabilitation or liquidation of an insurance company and shall be conducted under the supervision of the

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Commissioner pursuant to Article 30 of this Chapter. The Commissioner may apply for an order directing him to rehabilitate or liquidate a PHP upon one or more grounds set out in Article 30 of this Chapter or when in his opinion the continued operation of the PHP would be hazardous either to the enrollees or to the people of this State. Priority shall be given to the North Carolina Department of Health and Human Services over all other claims in G.S. 58-30-220 except for claims in G.S. 58-30-220(1). § 58-xx-150. Regulations.

The Commissioner may, after notice and hearing, promulgate reasonable rules and regulations as are necessary or proper to carry out the provisions of this Article. Such rules and regulations shall be subject to review in accordance with G.S. 58-xx-155. § 58-xx-155. Administrative procedures.

(a) When the Commissioner has cause to believe that grounds for the denial of an application for a license exist, or that grounds for the suspension or revocation of a license exist, he shall notify the PHP in writing specifically stating the grounds for denial, suspension, or revocation and fixing a time of at least 30 days thereafter for a hearing on the matter.

(b) After such hearing, or upon the failure of the PHP to appear at such hearing, the Commissioner shall take action as is deemed advisable or written findings which shall be mailed to the PHP. The action of the Commissioner shall be subject to review by the Superior Court of Wake County. The court may, in disposing of the issue before it, modify, affirm, or reverse the order of the Commissioner in whole or in part.

(c) The provisions of Chapter 150B of the General Statutes of this State shall apply to proceedings under this section to the extent that they are not in conflict with subsections (a) and (b). § 58-xx-160. Fees.

Every PHP subject to this Article shall pay to the Commissioner a fee of _______________dollars ($_____.00) for filing an application for a license and an annual license continuation fee of _______________ dollars ($______) for each license. The license shall continue in full force and effect, subject to timely payment of the annual license continuation fee in accordance with G.S. 58-6-7 and subject to any other applicable provisions of the insurance laws of this State. § 58-xx-165. Penalties and enforcement.

(a) The Commissioner may, in addition to or in lieu of suspending or revoking a license under G.S. 58-xx-140, proceed under G.S. 58-2-70, provided that the PHP has a reasonable time within which to remedy the defect in its operations that gave rise to the procedure under G.S. 58-2-70.

(b) Any person who violates this Article or any other provision of this Chapter that expressly applies to PHPs shall be guilty of a Class 1 misdemeanor.

(c) (1) If the Commissioner shall for any reason have cause to believe that any violation of this Article or any other provision of this Chapter that expressly applies to PHPs has occurred or is threatened, the Commissioner may give notice to the PHP and to the representatives or other persons who appear to be involved in such suspected violation to arrange a conference with the alleged

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violators or their authorized representatives for the purpose of attempting to ascertain the facts relating to such suspected violation, and, in the event it appears that any violation has occurred or is threatened, to arrive at an adequate and effective means of correcting or preventing such violation.

(2) Proceedings under this subsection shall not be governed by any formal procedural requirements, and may be conducted in such manner as the Commissioner may deem appropriate under the circumstances.

(d) (1) The Commissioner may issue an order directing a PHP or a representative of a PHP to cease and desist from engaging in any act or practice in violation of the provisions of this Article or any other provision of this Chapter that expressly applies to PHPs.

(2) Within 30 days after service of the cease and desist order, the respondent may request a hearing on the question of whether acts or practices have occurred that are in violation of this Article or any other provision of this Chapter that expressly applies to PHPs. The hearing shall be conducted under Article 3A of Chapter 150B of the General Statutes, and judicial review shall be available as provided by Article 4 of Chapter 150B of the General Statutes.

(e) In the case of any violation of the provisions of this Article or any other provision of this Chapter that expressly applies to PHPs, if the Commissioner elects not to issue a cease and desist order, or in the event of noncompliance with a cease and desist order issued under subsection (d) of this section, the Commissioner may institute a proceeding to obtain injunctive relief, or seeking other appropriate relief, in the Superior Court of Wake County. § 58-xx-170. Statutory construction and relationship to other laws.

Except as otherwise provided in this Chapter, provisions of the insurance laws and service corporation laws do not apply to any PHP licensed under this Article. This section does not apply to an insurer or service corporation licensed and regulated under the insurance laws or the service corporation laws of this State except with respect to its PHP activities authorized and regulated under this Article or any other provision of this Chapter that expressly applies to PHPs. § 58-xx-171. Other laws applicable to PHPs.

The following provisions of this Chapter are applicable to PHPs that are subject to this Article:

G.S. 58-2-125. Authority over all insurance companies; no exemptions from license.

G.S. 58-2-131 - G.S. 58-2-134. Examination Law. G.S. 58-2-150. Oath required for compliance with law. G.S. 58-2-155. Investigation of charges. G.S. 58-2-160. Reporting and investigation of insurance and reinsurance

fraud and the financial condition of licensees; immunity from liability.

G.S. 58-2-162. Embezzlement by insurance agents, brokers, or administrators.

G.S. 58-2-165. Annual, semiannual, monthly, or quarterly statements to be filed with Commissioner.

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G.S. 58-2-185. Record of business kept by companies and agents; Commissioner may inspect.

G.S. 58-2-190. Commissioner may require special reports. G.S. 58-2-195. Commissioner may require records, reports, etc., for agencies,

agents, and others. G.S. 58-2-200. Books and papers required to be exhibited. G.S. 58-2-205. CPA audits of financial statements. G.S. 58-7-21. Credit allowed a domestic ceding insurer. G.S. 58-7-26. Asset or reduction from liability for reinsurance ceded by a

domestic insurer to an assuming insurer not meeting the requirements of G.S. 58-7-121.

G.S. 58-7-30. Insolvent ceding insurer. G.S. 58-7-31. Life and health reinsurance agreements. G.S. 58-7-46. Notification to Commissioner for president or chief executive

officer changes. G.S. 58-7-73. Dissolution of insurers. G.S. 58-7-160. Investments unlawfully acquired. G.S. 58-7-162. Allowed or admitted assets. G.S. 58-7-163. Assets not allowed. G.S. 58-7-165. Eligible investments. G.S. 58-7-167. General qualifications. G.S. 58-7-168. Authorization of investment. G.S. 58-7-170. Diversification. G.S. 58-7-172. Cash and deposits. G.S. 58-7-173. Permitted insurer investments. G.S. 58-7-179. Mortgage loans. G.S. 58-7-180. Chattel mortgages. G.S. 58-7-183. Special consent investments. G.S. 58-7-185. Prohibited investments and investment underwriting. G.S. 58-7-188. Time limit for disposal of ineligible property and securities;

effect of failure to dispose. G.S. 58-7-190. Valuation of securities and investments. G.S. 58-7-193. Valuation of property. G.S. 58-7-197. Replacing certain assets; reporting certain liabilities. G.S. 58-7-200. Investment transactions. G.S. 58-7-205. Derivative transactions. Part 7 of Article 10. Annual Financial Reporting. Article 12. Risk-Based Capital Requirements. Article 13. Asset Protection Act. Article 19. Insurance Holding Company System Regulatory Act.

§ 58-xx-175. Filings and reports as public documents.

All applications, filings and reports required under this Article shall be treated as public documents. § 58-xx-185. Severability.

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If any section, term, or provision of this Article shall be adjudged invalid for any reason, such judgments shall not affect, impair, or invalidate any other section, term, or provision of this Article, but the remaining sections, terms, and provisions shall be and remain in full force and effect.

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Benefits of Medicaid Managed Care States and enrollees have enjoyed numerous benefits of Medicaid managed care over fee-for-service including…

Predictable costs Access and care coordination Delivery system innovation Fraud and abuse prevention Quality assurance and improvement

Predictable Costs

One of the largest factors that drive states to Medicaid health plans is the potential cost savings. By transferring financial risk to health plans through capitation, state budgets are not subjected to as much variability experienced with fee-for-service. States have reported cost savings under Medicaid managed care models. For example, according to a report by the Lewin Group, Medicaid health plans saved Pennsylvania $2.7 billion over a 5-year period.i Access and Care Coordination

Medicaid health plans negotiate payment rates with providers that are typically well above fee-for-service provider payments, therefore Medicaid health plan enrollees often enjoy better access to providers than those in traditional Medicaid. Medicaid health plans coordinate care for Medicaid populations with special needs, including those with multiple chronic conditions and 8 million dual eligibles, through primary care coordination and disease management programs. The capitation arrangement provides different financial incentives to providers versus fee-for-service. Medicaid health plans work with their physician networks to support practice management systems that emphasize prevention, early diagnosis and treatment, and coordinated management of patient care. This “medical home” approach to providing care is not feasible under fee-for-service.

Innovation in delivery system reform

Collaborating with Medicaid programs and state stakeholders, Medicaid health plans have been able to implement innovative delivery system reforms like patient-centered medical homes, coordinating benefits for dual-eligibles, and state health care coverage expansions. In addition, Medicaid health plans and states partner on disease-specific quality improvement projects and implement best practices. Preventing fraud and abuse

Medicaid managed care has also experienced significantly less fraud and abuse than traditional Medicaid fee-for-service. CMS reported that in FY 2008 payment error rates for Medicaid managed care were 0.1% compared to 2.6% for Medicaid fee-for-service.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

FY 2008 Medicaid Payment Error Rates

Managed Care

FFS

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Quality assurance and improvement One of the most significant benefits of Medicaid health plans is quality measurement and improvement. Federal regulations require annual quality reviews of Medicaid health plans and specify state oversight expectations. Most states conduct additional reviews of Medicaid health plans to ensure that they meet state rules and regulations in areas such as utilization review and grievances and appeals. The state and federal rules provide additional consumer protections for Medicaid health plans, such as network adequacy and the provision of culturally and linguistically appropriate services, that are unique from commercial health insurance plans. Medicaid health plans are required to report performance measures, such as HEDIS, to the state. Performance measures provide valuable data to health plans, states, researchers and policymakers for demonstrating the quality of care in Medicaid programs, identifying gaps in care, and creating quality improvement projects. Through performance measurement, the quality of care in Medicaid health plans has improved. Many states also field the Consumer Assessment of Health Plans Survey (CAHPS) that assesses patient satisfaction with their experience of care. Studies have shown that Medicaid enrollees are more satisfied with the quality and experience of care received through managed care than in fee-for-service.ii About 25% of Medicaid health plans have achieved accreditation by the National Committee for Quality Assurance, meeting a nationally recognized standard for demonstrating the delivery of high quality care. Additional Medicaid health plans are accredited by other organizations.

Medicaid Health Plans vs. Primary Care Case Management and Fee-for-Service

i Comparative Evaluation of Pennsylvania’s HealthChoices Program and Fee-for-Service Program. The Lewin Group. May 2005. ii Evaluation of Medicaid Managed Care: Satisfaction, Access, and Use. Jane E. Sisk, PhD; Sheila A. Gorman, PhD; Anne Lenhard Reisinger, PhD; Sherry A. Glied,

PhD; William H. DuMouchel, PhD; Margaret M. Hynes, PhD. JAMA. 1996;276(1):50-55. Medicaid beneficiaries under managed care: provider choice and satisfaction. H Temkin-Greener and M Winchell. Health Serv Res. 1991 October; 26(4): 509–529.

Identification card proving coverage

Claims analysis

Cost predictability

Using lower cost service where available

Improved generic utilization

Utilization review

Cost Containment

National accreditation

Quality standards and continuous quality improvement programs

Comprehensive case management

Disease management

Case management of primary care services

A designated primary care physician

Benefits to Members

FFSPCCMHMO

Identification card proving coverage

Claims analysis

Cost predictability

Using lower cost service where available

Improved generic utilization

Utilization review

Cost Containment

National accreditation

Quality standards and continuous quality improvement programs

Comprehensive case management

Disease management

Case management of primary care services

A designated primary care physician

Benefits to Members

FFSPCCMHMOHealth Plan PCCM FFS

136

A

2016 Health Law Section Annual MeetingApril 29,2016

NCBA Health Law Section

Medicaid Reform in North Carolina -Forecasting Structure and

Preparing for the Transition

Representative Nelson Dollar:NC General Assembly, House District 36

Cody R. Hand:VP & Deputy General Counsel,North Carolina Hospital Association

Lou Patalano IV:VP & Deputy General Counsel,Blue Cross Blue Shield NC

Andrew Walsh:Chief Legal Officer & General Counsel,Partners Behavioral Health Management

4/27/2016 2

Panel

I. Materials & Highlights of New LawII. Perspectives & Prognostications Legislative (Rep. Nelson Dollar) Hospital & Healthcare Systems (Cody Hand) Insurers and Commercial Plans (Lou

Patalano) Behavioral Health--LME/MCOs (Andrew

Walsh)III. Q&A

4/27/2016 3

Overview

1. Seminar PDF -- Table of Contents (p.2) Mostly Articles and Legislative Reports (moving target)

2. Online Resources www.ncleg.net http://www.ncdhhs.gov/nc-medicaid-reform

3. Highlights of New Law (SL 2015-245) Integrated Medicaid Managed Care (PDF, pp. 4-16) PHPs (CPs and PLEs) Capitated Contracts Waivers, SPAs & Federal Approval DHB v DMA (+ DOI) JLOC Medicaid & JLOC HHS Timelines and Deadlines

4/27/2016 4

Materials & Highlights

4/27/2016 5

4/27/2016 6

Physical Health

4/27/2016 7

Behavioral Health

Legislative (Rep. Nelson Dollar) Hospital & Healthcare Systems (Cody Hand) Insurers and Commercial Plans (Lou

Patalano) Behavioral Health & LME/MCOs (Andrew

Walsh)

4/27/2016 8

Perspectives & Prognostications

MCE Population MedicaidMembers

Counties

Partners 909,394 296,658 8Smoky 1,074,157 23Cardinal 2,411,453 410,065 16CenterPoint 542,516 4Alliance 1,766,635 378,136 4Sandhills 1,079,786 9Eastpoint 829,229 351,696 12Trillium 1,260,778 24

TOTALS 9,873,948 1,436,555 100

4/27/2016 9

Questions?

4/27/2016 10

Contact Information

4/27/2016 11

Andrew M. Walsh,[email protected], 704-884-2634

Other Panelists: On Request

Ch. 4 - Medicaid Reform in North Carolina (149 pages)

Documents

Transcript of Ch. 4 - Medicaid Reform in North Carolina (149 pages)