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The complexity of North Carolina’s Medicaid waiver request has led to the state serving as a national pilot, state health officials told legislators Monday.

Federal health regulators on Oct. 15 approved key elements of the request.

The waiver permits the N.C. Department of Health and Human Services to integrate physical and mental health care, along with pharmacy benefits — a strategy that had been sought for several years. The waiver covers Jan. 1, 2019, through Oct. 31, 2024.

The Centers for Medicare and Medicaid Services signed off on North Carolina’s plans to shift to a capitated Medicaid program, which means a flat fee is paid to cover all care services for most Medicaid recipients. The current system operates on a fee-per-service format.

The impetus for the health opportunities pilot is to “identify cost-effective, evidence-based strategies with enrollees’ needs in five priority areas that drive health outcomes and costs: housing, food, transportation, employment and interpersonal safety,” according to the request.

“As part of this demonstration, North Carolina will implement a ground-breaking program ... to pilot evidence-based interventions,” CMS administrator Seema Verma said in a statement.

CMS has authorized up to $650 million in federal and state Medicaid funds for the waiver, primarily for the implementing and capacity building stages.

“To ensure there is accountability for investment in these pilots, rapid-cycle assessments will track enrollees’ health outcomes and costs to determine which interventions are most and least effective,” DHHS said. The assessments will help determine how DHHS shifts funding for pilot initiatives.

DHHS projects launching the pilot in two unidentified regions by Nov. 1, 2019, and another two regions by February 2020.

At last count, North Carolina has 2.07 million Medicaid beneficiaries, or about 20 percent of the state population. About 1.6 million would be enrolled in managed care prepaid health plans (PHP) under the waiver.

The number of beneficiaries could reach up to 2.19 million by June 30, DHHS estimated.

State Medicaid expenditures have been about $14 billion annually in recent years. The program operated under budget for the fourth consecutive fiscal year in 2017-18.

DHHS officials said Monday the program is projected to be $240.3 million under budget for fiscal 2018-19,

Tailored plans

Pivotal to the waiver is the authority for DHHS to create so-called tailored plans to serve people with intellectual/developmental disabilities or higher intensity behavioral health needs.

In June, the legislature approved a Medicaid reform compromise that likely helped get Trump administration approval of the waiver.

The compromise allowed seven behavioral health managed care organizations to continue for up to four years to oversee individuals with severe behavioral health symptoms or episodes. Those MCOs, including Cardinal Innovations in the Triad, would pick up responsibility for those individuals’ physical well being.

Meanwhile, PHPs would oversee whole body care for individuals considered as “mild” to “moderate” for behavioral health care. The PHPs will be assisted by lead pilot entities serving as middle groups with community services providers.

The compromise expanded the number of statewide oversight groups from three to four. The number of regional provider-led entities stayed at 12.

In August, DHHS opened the application process for groups wanting to operate a statewide PHP. As of Oct. 19, there have been eight bidders: Aetna; AmeriHealth Ceritas N.C.; Blue Cross Blue Shield of N.C. (Healthy Blue); Carolina Complete Health; My Health by Health Providers; Optima Health; United Healthcare; and WellCare health Plans.

The four PHPs are expected to be disclosed in February.

The open enrollment schedule for PHPs is projected to occur between July and October, while the transition of care is set for October to January 2020.

Individuals who do not choose a PHP will be assigned one based primarily on where they live and their historic primary care physician relationships.

“This is different than any other Medicaid program across the country,” said Dave Richard, the state’s Medicaid director.

“(Federal officials) are excited as we are to implement these pilots and help make real strides for behavioral health.”

More negotiations

State health officials continue to negotiate with CMS on financial assistance and potential bonuses for Medicaid providers, and providing upfront assistance to help implement a health home care management model.

Richard said DHHS continues to negotiate with hospitals and providers about assessments related to the waiver, as well as how to incentivize independent providers to add or maintain coverage of Medicaid recipients.

N.C. Healthcare Association spokeswoman Julie Henry said the assessment referenced by Richard is the Medicaid reimbursement initiative/gap assessment program put in place in 2011.

“The plan has helped to ensure that hospitals across the state can continue to share the burden of caring for Medicaid and uninsured patients, making North Carolina one of the strongest care access areas in the country for Medicaid and uninsured patients,” Henry said.

Since the program’s inception, Henry said hospitals have provided non-federal funding of about $750 million, or more than 60 percent of the non-federal amount to support care for Medicaid and uninsured patients.

“Our goal is to ensure hospitals can continue serving as the safety net for Medicaid and uninsured patients, as well as a successful transition to Medicaid managed care,” Henry said. 336-727-7376 @rcraverWSJ

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