What North Carolina Practices Need to Know About the State’s Delayed Transition to Medicaid Managed Care

The North Carolina Department of Health and Humans Services (NC DHHS) announced yesterday that the state’s initial transition from Medicaid fee-for-service to Medicaid managed care will be delayed. Rather than making the transition in two stages, the entire state is now scheduled to implement managed care on February 1, 2020. This postponement is the result of the ongoing budget standoff between Governor Cooper and the North Carolina General Assembly, which has delayed key legislation and funding.

The Transition to Medicaid Managed Care

NC DHHS had planned to implement the transition to Medicaid managed care in two stages across six regions. In the first stage (“Phase 1”), Regions 2 and 4 were scheduled to transition to managed care in November 2019, with the remaining regions transitioning in February 2020 as part of the second stage.

Preparations for Phase 1 were well underway before yesterday’s announcement, and many physicians have already contracted with the Prepaid Health Plans (PHPs) selected to operate the Medicaid managed care program. Enrollment packets were mailed to beneficiaries in early July, and the open enrollment period for beneficiaries in Regions 2 and 4 began on July 15.

NC DHHS has also put together a number of resources to help providers (and beneficiaries) have a smooth transition, and regular stakeholder calls between NC DHHS and provider associations were scheduled to begin next week.

2020 Budget Fight & Its Impact

These preparations and the implementation schedule have now run headlong into the more than two-month-old N.C. budget standoff. While the budget fight is centered primarily on the question of expanding Medicaid coverage, the budget bill also includes provisions necessary to implement Medicaid transformation. These provisions include mechanisms for funding the transition, including moving money from a reserve fund, as well as creating new assessments on hospitals and a new tax on the PHPs.

With the implementation date for Phase 1 only ten weeks away, NC DHHS felt that it needed to announce the postponement now, because it was not going to have enough time to complete its necessary pre-transition activities. These activities include finalizing health plan and provider rates, confirming health plans have sufficient provider networks, assigning beneficiaries to plans (when the beneficiaries do not self-select plans), and obtaining federal approval to launch.

The budget uncertainty has also reportedly played a role in health plans’ inability to finalize contracts with physicians and other providers.

What Does the Delay Means for NC Physician Practices?

The Medicaid transformation delay will impact many physician practices, but in most cases, this impact should not be overly disruptive. Practices in Regions 2 and 4 will continue to be paid under the Medicaid fee-for-service system from November 1, 2019, through February 1, 2020, when the statewide transition to managed care is scheduled to occur.

NC DHHS also has announced that open enrollment has been extended for beneficiaries in Regions 2 and 4 until December 13, 2019. For the time being, physician practices in these regions should continue encouraging Medicaid patients to enroll with one of the practice’s preferred PHPs. Practices in all other regions should continue their work preparing for the beginning of open enrollment on October 14, 2019, and the scheduled Medicaid managed care transition on February 1.

All practices also should continue to keep a watchful eye on the budget impasse. NC DHHS made this postponement announcement two months before the initial November 1 implementation date. Assuming the amount of time DHHS requires between the budget passing and implementing the transition to Medicaid managed care stays the same, a budget stalemate that continues into mid or late November has the potential to negatively impact the now statewide February 1, 2020, implementation date.

We encourage physicians and their practices to continue to check Curi’s News & Knowledge content for updates on NC’s transition to Medicaid managed care. Members with specific questions can reach out for additional assistance by emailing sam.cohen@curi.com.