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N.C.’s path to Medicaid managed care gets complicated

By Sarah Ovaska-Few

Shifting North Carolina’s massive Medicaid program to a managed care system was bound to get messy. And so, it has.

The ambitious plan – to pay managed care companies $30 billion over five years to handle the health-care needs of 1.6 million low-income North Carolinians – is expected to go live in November for 27 counties  in the state’s Piedmont and Research Triangle regions.

But four of the eight managed care groups that bid for the Medicaid managed care contracts have filed protests with the N.C. Department of Health and Human Services. Three of those groups – Aetna Better Health, Optima Family Care and My Health by Health Providers – were rejected while the fourth, the N.C. Medical Society-affiliated Carolina Complete Health, received a nod to take on Medicaid patients in just two of six regions in the state.

Other potential roadblocks along the path to Medicaid transformation include a major announcement last month in the national health insurance world that the managed care giant Centene is buying WellCare. Both companies have roles to run  Medicaid managed care plans in North Carolina. In addition, there are North Carolina health providers who anticipate problems in a mandated switch to electronic health records.

My Health by Health Providers, a consortium of a dozen hospital systems in the state, elevated its dissatisfaction this week by filing a complaint at the N.C. Office of Administrative Hearings, accusing DHHS of favoring for-profit managed care companies and discounting the state legislature’s desire to allow homegrown, provider-led plans significant roles in the restructured Medicaid plan.

“[T]he Department ignored the legislative directive,” attorneys for My Health by Health Providers wrote in their legal filings. “Instead, the Department favored commercial insurers with out-of-state experience without regard to whether the experience of these commercial plans in other states was negative, including incidents of widespread mismanagement, patient abuse and even fraud.”

The hospital group is asking the administrative law body to halt DHHS’ ongoing transition to managed care until a hearing can be held. Medicaid is the federally mandated health care program that provides care for nearly 2.2 million low-income children and their families, seniors and disabled persons in North Carolina. One in every five Tar Heels, including more than a million children, depend on Medicaid for their health care.

When it comes to the current shift to Medicaid managed care, DHHS officials say, regardless of the protests from managed care companies, they’re plowing ahead with plans to begin transitioning Medicaid patients in the Triangle and Piedmont area this November. The rest of the state will follow in 2020.

“At this point we are just moving forward with the bidders that were selected,” said Debra Farrington, the N.C. Medicaid program’s chief of staff.

Another group protesting the final selection, Aetna Better Health, missed getting a contract by a sliver, coming in just two points below the closest competitor out of 1,025-point evaluation scale DHHS used to make its decision of which four companies to do business with.

Those entities selected for managed care contracts were AmeriHealth Caritas, Blue Cross Blue Shield of North Carolina, United HealthCare and WellCare. Carolina Complete Care, the N.C. Medical Society plan that will be run by Centene, didn’t initially receive a recommendation for a contract until DHHS Sec. Mandy Cohen and Medicaid Director Dave Richard intervened, citing the need to have at least one provider-led group in the mix.

As part of its complaint, My Health by Health Providers is also questioning why Carolina Complete Health got that regional contract when it received a slightly lower ranking than the hospital group. The state had maintained My Health by Health Providers listed itself as only interested in a statewide contract, an assertion the provider-led group denies.

The road ahead for Medicaid

Medicaid is one of the largest government programs run by the state of North Carolina, its $14 billion annual cost funded through a mix of federal and state dollars with the federal government chipping in $2 for every $1 the state spends.  North Carolina had long been using a fee-for-service system, where the state managed and paid for every Medicaid patients’ flu shots, hospital stays and other health care needs. The Republican-led legislature called for a switch to privatized managed care in 2015 in hopes prepaying for health care would bring about budget predictability and better health outcomes.

North Carolina is the largest state that does not have a significant presence of commercial managed care companies running Medicaid. The state does have locally grown managed care organizations running the state’s mental health Medicaid programs, but the legislature retains significant control over those organizations.

The 2015 legislation included slots for up to a dozen regional provider-led groups, though only three applied and just  one – Carolina Complete Health -ended up with a contract in the end.

Separately, the state is in the midst of a years-long conversation about whether to sign up for Medicaid expansion, a signature piece of the Obama Administration’s Affordable Care Act.  N.C. Gov. Roy Cooper, a Democrat, has made clear his desire to expand Medicaid coverage to poor adults without affordable health care options. Several Republican House lawmakers proposed a Medicaid expansion plan this week with participant work requirements though the bill faces an uphill battle to passage with members of the Senate lukewarm to the plan, at best.

In the new system, the state will pay managed care groups a yet-to-be-determined rate per patient to handle all the health care needs of what will initially be 1.6 million Medicaid patients. Those patients will be able to choose what plan they want to sign up with. If no choice is made, the individual will be enrolled in plans their current providers are affiliated with and then have the option of switching if dissatisfied.

An approximate half-million other Medicaid patients with more complex behavioral health needs will stay on the state’s current fee-for-service system until specialized tailored plans are offered later on.

The possibility of protests and legal action was expected by DHHS officials.

When announcing the awardees in February, Cohen told reporters she and others were expecting protests, or formal requests to the department for reconsideration, from those companies and entities that hadn’t been selected. The contracts were the largest in the state health departments’ history and meant big opportunities – and revenues – for those selected.

“Whenever you have a procurement as large as ours, we anticipate that there will be a protest,” Cohen said in February.

Some invested in the process, however, said they were surprised that more provider-led groups didn’t make the final cut.

Corporate consolidations also ahead

Another wrinkle in North Carolina’s Medicaid switch is the late-March announcement that St. Louis-based Centene is buying WellCare, currently headquartered in Tampa. The deal is the latest in a string of large health insurance consolidations and will create a giant in the national health care landscape with as many as 22 million Americans receiving care through its Medicare, Medicaid and health insurance exchange offerings.

Both companies are involved with North Carolina’s transition to Medicaid managed care, with WellCare receiving a statewide contract and Centene the health insurance company that will run the provider-led Carolina Complete Health plan on a day-to-day basis.

If the planned consolidation happens, it could mean one company essentially gets two bites at North Carolina’s Medicaid managed care apple.

Farrington, in an interview, said DHHS is going forward with the assumption right now that things are not going to change.

“We don’t have anything different from what we’ve been told,” she said.

Any drastic changes to how the companies are structured and operate, however, could potentially invalidate the contracts the state has already signed with each selected managed care company.

But, with the deal still needing to get regulatory approval, it’s too soon to say whether it could end up changing the Medicaid managed care offerings in North Carolina, Farrington said.

The agency, she said, is instead focused on the immediate work ahead, including finalizing the details on the Health Opportunities Pilot, which will incorporate ways to address how housing, family violence and access to food and resources affect people’s health. The agency is also seeking an ombudsman to serve as a go-between for DHHS, providers and the managed care companies.

That ombudsman group should be up and running late this summer, about the same time the first wave of Medicaid patients transitioning to the new system will begin hearing about their choices in detail, Farrington said.

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