Medicaid is an insurance program funded by both federal and state governments. Federal law requires states to provide Medicaid to specific groups, including low-income families, people with certain disabilities, low-income older adults living in nursing homes, and low-income pregnant women and infants. States can choose to insure additional groups under Medicaid and can design their programs in different ways to try to reduce costs and improve enrollees’ health.

In traditional Medicaid, doctors (and thus insurers) are paid for each test, office visit, and procedure they complete. Under this fee-for-service arrangement, doctors and insurers have a financial incentive to provide lots of care but have no incentive to keep patients healthy. As a result, many states have tried to reduce their healthcare spending by switching away from fee-for-service Medicaid and enrolling beneficiaries in so-called “managed care” plans. These managed care plans are run by private insurance companies, who get a fixed amount of money per Medicaid beneficiary (an arrangement called capitation). Under this arrangement, MCOs have a financial incentive to keep their beneficiaries’ healthcare costs low

In September 2015, the North Carolina state legislature passed a bill to move North Carolina Medicaid beneficiaries into managed care. Now, the NC Department of Health and Human Services (DHHS) has released their draft plan explaining how they will make this change. They are looking for public input on this proposal.

What Medicaid Reform Means

More than 90% of Medicaid enrollees will be transitioned over to managed care plans, which DHHS calls “prepaid health plans” (PHPs), starting in July 2019. Medicaid eligibility rules will remain the same, and the same health services will remain covered. However, there will be a major change to how behavioral health care is managed.

Currently, behavioral health services and services for people with intellectual and developmental disabilities are covered differently from physical health services. Groups called local management entity-managed care organizations (LME/MCOs) manage behavioral health services, with 14 LME/MCOs providing coverage to different regions across the state. The DHHS Medicaid proposal would end this carve-out of mental health services. Instead, people with severe intellectual/developmental disabilities, mental illness, and other behavioral health needs would be moved into “Tailored Plans,” insurance plans designed to meet their needs. People with less severe mental health needs would simply get their behavioral health coverage through a “Standard Plan,” which would cover mental and physical health services and pharmacy services.

DHHS’ proposal also includes plans to improve access to treatment for opioid overdose and substance use disorders, promote use of telemedicine, and increase patient access to care management services.

Submitting Comments:

DHHS is seeking comments about their proposed changes to Medicaid. Healthcare advocates have raised several concerns about the plan that you may wish to address in your comments, namely:

  • LME/MCOs are currently in charge of many state-funded, non-clinical programs, such as supported employment programs, that serve people with intellectual and developmental disabilities, severe mental illness, and substance use disorders. The state legislature has been cutting funding for this programming, and there is some concern that managed care plans will fail to adequately support these services moving forward. In your comments, consider advocating for continued support for state-funded programs (also known as “single-stream”-funded programs).
  • In states like California, the shift to Medicaid managed care has led to lower provider payment rates. Doctors get paid much less for seeing Medicaid patients than for seeing patients covered by other insurance. This has discouraged doctors from accepting Medicaid patients, which has in turn made it hard for some Medicaid enrollees to find a doctor who will take their insurance. Urge DHHS to closely monitor beneficiaries’ access to care under managed care to make sure doctors don’t dump all of their Medicaid patients because of lower payment rates.
  • Bureaucratic hassle is another barrier to physician participation in Medicaid. Because the reform plan would allocate patients to different insurers based on the region where they live, healthcare providers will now have to bill multiple insurers for Medicaid costs rather than just billing directly to Medicaid. Encourage DHHS to make the Medicaid billing process as simple as possible to encourage doctors to continue seeing Medicaid patients.
  • For over a decade, a group called Community Care of North Carolina (CCNC) has been working with providers to help coordinate care for some of the sickest and most complex Medicaid beneficiaries. CCNC currently serves the overwhelming majority of NC Medicaid beneficiaries, and their work has been shown to save the state millions of dollars by helping keep people healthy and out of the hospital. Encourage DHHS to preserve CCNC’s existing role and not abandon their successful, established model for reducing health costs while improving health outcomes.

In your comments, you may also want to highlight why Medicaid matters to you, what services Medicaid provides that are important to you and people you know, and what you’d like to see from Medicaid in the future.

Public comments are due by September 8, 2017 and may be submitted by email or mail or delivered in person.


US Mail
Dept. of Health and Human Services, Division of Health Benefits
1950 Mail Service Center
Raleigh NC 27699-1950

Dept. of Health and Human Services, Dorothea Dix Campus
Adams Building Reception
101 Blair Drive
Raleigh NC

(Information provided by Eleanor Wertman)