The Triad and Triangle will be the first regions in North Carolina to be covered by prepaid health plans for Medicaid recipients, the N.C. Department of Health and Human Services said Monday.

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

The department selected AmeriHealth Caritas N.C., Blue Cross and Blue Shield of N.C., UnitedHealthcare of N.C., and WellCare of N.C. to provide statewide plans. There were five PHP applicants.

People in a 13-county section of the Triad and Northwest N.C., along with a 14-county section of central N.C. that includes Alamance County, will start being served by the new plans in November. The rest of the state will begin services in February 2020.

DHHS called the prepaid health (PHP) plan initiative the largest procurement in its history.

The PHP contracts 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.

Medicaid recipients will be enrolled in prepaid plans starting in July. If a recipient does not choose a PHP 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.

PHPs represent a major reform in how the state pays for Medicaid patients’ care. Currently, health providers are paid under a fee-for-service system.

PHP plans, by contrast, will pay providers a set amount per month for each patient’s costs, and DHHS will reimburse the plans. If a PHP provides the required services for a lower cost, in part by emphasizing wellness and preventive care, the PHP will be able to keep a certain amount of funding as profit.

The plans will assume financial risk in their contracts with providers to provide services for beneficiaries. If the care per individual exceeded the set, or capitated, amount, the PHP absorbs the loss.

Payment floors in place

Dr. Mandy Cohen, the state’s health secretary, said physicians would not receive a lower payment compared with the fee-for-service rate they are getting now, and hospitals also will have a temporary payment floor.

“We are committed to improving the health and well-being of all North Carolinians through an innovative, whole-person centered and well-coordinated system of care that addresses both medical and non-medical drivers of health,” Cohen said.

The plans will oversee behavioral- and physical-health care for individuals considered “mild” to “moderate” for behavioral health-care purposes.

Meanwhile, seven behavioral health managed-care organizations (MCOs) would continue for up to four years to oversee individuals with severe behavioral-health symptoms or episodes. Those managed-care organizations, including Cardinal Innovations, would pick up responsibility for those individuals’ physical well-being.

Cohen said the cost structure had to make sense for groups for a solvency standpoint to apply to operate as a PHP or a provider-led entity.

Each group is required to spend 88 percent of its funding on services and 12 percent on administrative costs that include taxes and potential profits.

“They had to make their own decision to see if they could make the financial risks work,” Cohen said.

Cardinal said in a statement “it has long believed in whole-person care that serves each person’s unique needs.”

Cardinal is the state’s largest behavioral-health MCO covering 20 counties, including Alamance, Davidson, Davie, Forsyth, Rockingham and Stokes counties.

“We’ve had great conversations with many of the organizations, and have formal letters of intent in place with United Healthcare, Blue Cross Blue Shield and Centene/Carolina Complete Health.

“We are excited to continue these conversations and build lasting partnerships to benefit North Carolina’s most vulnerable citizens.”

Trey Sutten, Cardinal's chief executive, said the six regions don't currently match the maps of the state's eight behavioral health MCOs.

"It doesn’t mean that we will be losing or gaining counties as the standard plans go live," Sutten said. "As we continue to prepare to become a tailored pan, the finer details around counties, coverage areas and members will become clearer" by the time the plan launches in July 2021.

"A portion of those we cover will now be covered by standard plans: people with mild to moderate mental health conditions," Sutten said. "We don’t know more specifics beyond that at this point.

"However, the folks that we really support, the ones that we really interact with, the ones that we review most authorization requests for, the ones we coordinate care for, and the ones for whom the vast majority of our care costs are dedicated to, will remain with us. In addition, we will be responsible for their physical health and pharmacy benefits."

Just one provider-led entity

DHHS appears to have chosen only one provider-led entity, Carolina Complete Health, which will serve the Charlotte area and southeast NC.

Carolina Complete is a collaboration between Centene Corp., N.C. Medical Society and N.C. Community Health Center Association

The Medicaid waiver request allowed for up to 12 regional provider-led entities, likely to involve not-for-profit health care systems that could serve multiple contiguous regions. Each of the six regions could have had up to five of these entities providing services.

A DHHS evaluation committee initially did not choose a provider-led entity.

Cohen and Dave Richard, DHHS’ head of Medicaid, opted to add Carolina Complete Health from the three applicants. Carolina Complete also applied as a PHP.

“The addition of a regional PLE will encourage provider-led innovation and allow the state to compare different delivery models within managed care,” Richard said.

Cohen identified the other two PLE candidates as MyHealth by Health Providers and Optima Family Care of N.C. Inc. MyHealth applied in just the PHP category.

In December 2015, most of North Carolina’s largest health care systems announced they were collaborating toward a potential PHP that would be owned and led by providers.

Provider-Led and Patient-Centered Care LLC was the 12 systems’ potential response to the Medicaid reform legislation. Participants included Cone Health, Novant Health Inc. and Wake Forest Baptist Medical Center. All of the state’s main urban areas were covered by the proposal.

That initiative eventually evolved into MyHealth by Health Providers, working in collaboration with Presbyterian Healthcare Services, a New Mexico-based healthcare system.

DHHS did not provide a reason why MyHealth was not selected. MyHealth officials could not be reached for immediate comment on not being chosen, but told The News & Observer it was considering appealing the decision with plans to serve up to all six regions.

Optima applied as both a PHP and a provider-led entity. DHHS said Optima’s “total score did not achieve the threshold to ‘meet expectations’ “ as a provider-led entity.

The N.C. Healthcare Association said it was disappointed that no provider-led PHP applicant got a statewide contract.

“NCHA and our members are committed to working with payers to ensure that healthcare providers are actively involved and adequately reimbursed to ensure a patient-centered Medicaid program that improves the health of our state’s most vulnerable populations,” the association said.

DHHS said a tailored plans element of Medicaid waiver will be procured later. Tailored plans are designed for certain populations with more specialized behavioral health needs.

“Sec. Cohen put a good process in place. I’m confident in the outcome,” said Rep. Verla Insko, D-Orange.

“I was disappointed that we didn’t have more regional plans; but I can understand the applicants’ preference for the statewide plans.

“If the one regional plan awarded is successful, we might see more regional applicants in future rounds.”

DHHS has enforcement tools

Some critics of the Medicaid reform effort have expressed concern that PHP organizers, particularly those located out of state, could stop serving North Carolina if they don’t see enough annual profit.

Cohen said hospitals and health care providers will be encouraged to select multiple PHPs, if not all four, to give recipients more choice and to help drive down costs.

DHHS said the four plans “will be subject to rigorous oversight to ensure strong provider networks, a full range of benefits, accountability for quality and outcomes, a positive beneficiary experience and timely payments to providers among aspects of a successful managed care program.”

“The contracts require that the PHPs do their jobs and do what we have contracted with them to do,” Cohen said. “We have a fair amount of tools in our arsenal ... so that they live up to what they say they will.”

Blue Cross said in a statement that “we’re thrilled for the opportunity to serve our state’s Medicaid population and will be ready to do so on Day One.”

“It is a natural extension of our mission to improve the health and well-being of our customers and communities.”

Rep. Donny Lambeth, R-Forsyth, and the legislature’s leading health care expert, said DHHS “has done a complete and in-depth evaluation of all those who submitted a bid to properly and efficiently manage the Medicaid patients in NC.”

“This is a good next step as the state moves to managing care and measuring outcomes,” he said.

Sen. Joyce Krawiec, R-Forsyth, said DHHS “has done a lot of work, and the selection process was not easy.”

“Several years of planning have gone into this process. I believe the committee has handled the selection process fairly and expeditiously.

“I look forward to working with the department and the providers as we move forward to provide care for our most vulnerable population,” Krawiec said.

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