The N.C. General Assembly on Thursday cleared a bill that would free up $218 million in start-up funding to revamp the state’s Medicaid program.

House Bill 555 has been the subject of a “gut-and-amend” strategy, starting out as telemedicine legislation, then being remade to include much of the Medicaid-reform language in the vetoed Republican state budget compromise.

According to the office of N.C. Senate leader Phil Berger, R-Rockingham, the initial state funding would go toward patient enrollment-broker contracts, provider credentialing, data analytics and other program-design components.

The bill would serve as an interim funding mechanism for Medicaid transformation. It would be repealed if the state budget that is adopted includes the same funding legislation.

The N.C. House approved concurrence changes by a 57-52 vote along party lines Thursday in Raleigh. On Tuesday, the Senate gave final approval to HB555 by a 25-19 vote.

Neither chamber has approved the bill with enough votes to override a possible veto from Democratic Gov. Roy Cooper. The governor will have 10 days to sign the bill, veto it or let it become law without his signature.

“Gov. Cooper’s administration has been actively involved in efforts to proceed with Medicaid transformation, so he should support funding for that process,” said Mitch Kokai, a senior policy analyst with the John Locke Foundation, a conservative-leaning research group.

“But given the fact that the bill led to a partisan split as it moved through the legislature, it would come as no surprise to see Cooper use his veto stamp once again,” Kokai said.

“He might tie the veto to yet another plea for lawmakers to enact Medicaid expansion,” he said.

State Sen. Harry Brown, the Senate majority leader, said Tuesday he believes Cooper could veto HB555.

Brown, R-Onslow, said if that occurs, the start-up process for Medicaid transformation would be “on life support ... that his own (health secretary) supports and that was included in his own budget proposal.”

On Friday, GOP Sens. Ralph Hise of McDowell and Joyce Krawiec of Forsyth, challenged Cooper to not veto the bill.

"(The governor) can’t be serious about expanding Medicaid if he vetoes a bill modernizing, fully funding and implementing crucial health care reforms to the current Medicaid program.," the senators siad.

"If the governor isn’t serious about properly caring for the lower-income children and mothers served by the existing Medicaid program, how can he ask with a straight face that we add hundreds of thousands of people —  most of them young, single, healthy adults who won’t get jobs — to the Medicaid program?

Medicaid expansion supporters say a significant number of potential beneficiaries are individuals and families who fall in the current coverage gap of making too much in household income to qualify now for Medicaid, but not enough to afford coverage on the federal health exchange.

Changing Medicaid

Republicans said HB555 is a necessary step toward achieving a multiyear goal, and funding needs to be released to honor contracts already committed to by state health regulators.

Meanwhile, Democrats argued that the plan’s infrastructure is not ready and legislators need to take more time to “get the process right,” said state Sen. Mike Woodard, D-Durham.

Democratic state senators brought up the 2013 debut of the controversial NC FAST system.

It was a $484 million expenditure for development, implementation and continuing support for the state’s claims-processing system for food stamps.

It was at the time the biggest information technology project in state government history.

Multiple state audits determined that the N.C. Department of Health and Human Services, under Dr. Aldona Wos, who was the N.C. secretary of health at the time rushed implementation of NC FAST and NCTracks in July 2013 even though a May 2013 audit warned DHHS that it had “failed to fully test the system, and the production testing process had flaws.”

It was 2017 before most of the kinks in the NC FAST network were worked out.

Rollout continues

One of the most ambitious initiatives in the state Medicaid program’s history is underway with the enrollment period for prepaid health plans, or PHPs, in the Triad and Triangle through Sept. 13.

If Medicaid recipients don’t choose a plan by Sept. 30, one will be chosen for them. In most instances, recipients will be able to be seen by the same providers they have now.

Medicaid serves 2.1 million North Carolinians. Of those, 1.6 million will be enrolled in managed care under a federal waiver approved in October 2018.

Managed care is a system under which people agree to see only certain doctors or go to certain hospitals, as in an HMO or a PPO health-insurance plan.

PHP insurer contracts are at the heart of the Medicaid transformation, which will represent a $6 billion expense annually for three years, followed by two one-year options, so the total contract could be worth $30 billion.

Now, health providers are paid under a fee-for-service system.

The new plans, by contrast, will pay providers a set amount per month for each patient’s costs. DHHS will reimburse the plans.

HB555 includes quarterly tax assessments placed on hospitals and prepaid health plans.

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