H372 - Medicaid Transformation and Reorganization (SL 2015-245)

Overview: S.L. 2015-245 requires transformation of the Medicaid and Health Choice programs in the following ways:

• Requires transition of the current Medicaid and NC Health Choice service delivery system to capitated contracts with Prepaid Health Plans (PHPs).
• Creates a new Division of Health Benefits (DHB) within the Department of Health and Human Services (DHHS) to plan and implement transformation of the programs.
• Creates a new Joint Legislative Oversight Committee on Medicaid and NC Health Choice (Medicaid Oversight Committee) to oversee the programs and the transformation process and outlines specific dates for DHHS to report to the Committee.

Key components of the transition to capitated contracts with PHPs include the following:

• The entities eligible for a PHP contract are provider-led entities (PLEs) and commercial plans (CPs). Both PLEs and CPs must meet solvency criteria developed by the Department of Insurance to be eligible for a capitated PHP contract.
• PHPs will receive capitated per-member per-month payments to provide all covered services for their enrolled beneficiaries.
• Geographical coverage of PHPs will include statewide and regional plans. Statewide contracts will be awarded to 3 PHPs, and up to 10 regional contracts may be awarded to PLEs in 6 regions, which will be defined by the new Division of Health Benefits and will cover the entire State.
• Populations covered by the PHPs will include all Medicaid and Health Choice beneficiaries, except beneficiaries who are dually eligible for Medicare and Medicaid.
• Services covered by the PHPs will include all services, except for dental services, and except that local management entities/managed care organizations (LME/MCO) services will be provided through existing arrangements during the first 4 years of capitated PHP contracts. The primary care case management function provided by Community Care of North Carolina (CCNC) will transition to PHPs.
• The timeline for implementation requires that capitated payments under PHP contracts will begin 18 months after approval of the plan by the federal government, with submission of documents to the federal government required by June 1, 2016.

The new law pertaining to the appointment process and term of office for the Director of the Division of Health Benefits becomes effective January 1, 2021. The effective date of the new law requiring a cooling-off period for certain DHHS employees is November 1, 2015. The remainder of this act became effective September 23, 2015.