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Update on changes proposed for Medicaid

What is “managed care” and how is NC already managing the care of people receiving Medicaid?

The federal government’s Medicaid program allows states to use health maintenance organization (HMO) managed-care models in the design of its Medicaid programs. At its most basic, a health maintenance organization, such as an insurance company or a provider-led health organization, is paid a per-member, per-month fixed rate to deliver services to people needing health care and related supports. Because these organizations have a limited amount to spend on care, there is a built-in cost incentive to keep people “well” and out of more expensive care. Funds paid to a Managed Care Organization (MCO) can be retained by them as either profit (for a for-profit organization) or savings to expand available services (typically by nonprofit organizations). Some states cap MCO profits or fund retention, so that “savings” found in delivering better outcomes are either returned to the state or are used to expand services.

Several years ago, NC implemented 1915 (b) and 1915 (c) Medicaid waivers to carve out services for people with mental health, intellectual and/or developmental disabilities, or addictive disease/substance abuse needs (MH/DD/SAS). This created a pre-paid, shared-risk, managed-care program to deliver home- and community-based and/or long-term care services. These 1915 b/c waivers are administered through Local Management Entities/Managed Care Organizations (LME/MCOs), which are quasi-governmental managed-care programs that use state, local and block grant funds to provide services and supports specifically to those with intellectual and/or developmental disabilities (IDD), mental health, or substance abuse needs in their regions.

At present, the remainder of Medicaid services for physical health care, including things such as preventative care, doctor visits, emergency care, and long-term care for other special populations, remain a “fee for service” program in which providers are paid set fees for specific services directly via the Medicaid program. North Carolina will start using a managed-care model to deliver all Medicaid services – physical and behavioral health care as well as services for IDD – over the next five to six years. Currently, the NC Department of Health and Human Services (NC DHHS) is working with the federal Centers for Medicare and Medicaid Services (CMS) for approval of a new Medicaid waiver, North Carolina’s 1115 managed-care waiver, for these changes. NC DHHS submitted the 1115 to CMS for approval in November 2017.


What changes are coming to Medicaid?

Those developing the new Medicaid managed-care system want to make sure that the program integrates physical and behavioral health, addresses the root causes of health conditions, and focuses on healthier outcomes. Two plans will be available. The Standard plan for most Medicaid beneficiaries will cover all types of physical and mental health care, similar to other insurance plans. The second plan, called Tailored plans, will cover people with developmental disabilities, mental health needs, and addiction, who have more intensive and longer term needs.

  • Integrated care in the Standard plan: Physical and behavioral health will be managed together in a single plan, the Standard plan, which will focus on both direct health care and connections to resources to address social determinants of health, such as housing, transportation, and food insecurity. “Behavioral health” in the Standard plan will include some services for mental health care and addiction treatment, as well as some autism interventions for children under Medicaid EPSDT services.
  • Specialized plans for some populations: Special Tailored plans will be available for those with more intensive needs, including those with intellectual and developmental disabilities who are on Innovations waivers and those with serious mental health and substance use disorders. Details of these plans are yet to be determined and will roll out several years after the Standard plans are implemented. The expectation is that these plans will also integrate non-Medicaid funding that is needed to provide things such as housing, residential and employment supports, and other services.
  • Private managed-care companies and regional provider-led health plans: Contracts to serve Medicaid beneficiaries will be awarded to private managed-care companies through a request for proposal (RFP), an NC government procurement process. While we do not know what the outcome will be this early on, based on the authorizing legislation and 1115 proposals, statewide plans will likely be run by major insurance companies. Regional plans will likely be run by provider or hospital led health organizations. People on Medicaid plans would be assigned to either the Standard Plan or the Tailored plan based on their assessed needs. The legislation authorizing Medicaid transformation allows for multiple statewide plans as well as regional options. In the Standard plan, consumers will be able to choose, with guidance as needed, which of several statewide or local Medicaid plan options will best fit their needs. It’s not yet clear whether Tailored plan beneficiaries will have more than one option for a Medicaid plan.


When will this happen?

State officials are working to have the 1115 managed-care waiver approved by CMS this year and implement the new Standard plans by July 1. Four years later, the Tailored Medicaid plans would begin through the new management network and the current LME/MCO system and structure will sunset unless a change is made by the NCGA.


What about IDD and autism services in Medicaid?

There are still many details to work out when it comes to IDD services in both the Standard plan and especially in the Tailored plans. Here is some of what we know based on the current proposal:

  • Research-Based Intensive Behavioral Health Treatment: Intensive behavior treatments for autism, including Applied Behavior Analysis (ABA), that are available under Medicaid EPSDT services will be available in both the Standard and Tailored plans. ASNC has advocated for these services to be available across Medicaid plans so that families and children with autism can receive them regardless of which plan they choose or the intensity of their needs.
  • Innovations waivers: Those receiving Innovations waiver services (formerly CAP MR/IDD waivers) will be part of the Tailored plans for those needing more intensive services as well as supportive services such as employment, housing supports, and services that are paid for with funds outside of Medicaid (i.e. IPRS or state-funded services). At this time, it’s not clear which Medicaid plan options will be offered to those who are Medicaid-eligible and on the Innovations wait list. NC DHHS is working on a more standardized way to manage the wait lists that are currently administered by the LME/MCOs.
  • LME/MCOs: At this time, it’s not clear what the exact role will be for the current LME/MCOs in the new Medicaid system. The legislation that now governs Medicaid reform would end their current role in 5-6 years, but their fate is not certain. Discussions at the General Assembly are ongoing, and we will continue to monitor legislation related to Medicaid in the upcoming NCGA session for additional changes.


What about things we have heard in the news and elsewhere about Medicaid expansion or work requirements for people on Medicaid?

The proposal that NC DHHS made to CMS did include potentially expanding Medicaid, possibly with work requirements, to low-income adults who do not qualify for health-care subsidies. Those changes to the state’s Medicaid program would require legislation by the General Assembly. The General Assembly leadership has repeatedly and recently stated that they have absolutely no intention of expanding Medicaid to new populations. We think it highly unlikely that the NCGA would add work requirements into the current Medicaid program and no recommendations for this are expected for the short session.


How can I comment on these proposed changes or find more information?

NC DHHS has begun issuing concept and policy papers detailing the plans and publishing more information. You can keep up with what is happening in North Carolina’s Medicaid transformation, as well as submit comments, through the NC DHHS website.

Many details of the transformation are still uncertain as NC DHHS and CMS continue their negotiations over NC’s waiver, and the NC General Assembly reviews the proposals. ASNC will continue to monitor managed-care changes and other Medicaid policy issues, as we continue our advocacy for autism services and supports in Medicaid, as well as in health care across the board.


Background: ASNC began focusing advocacy on the needs of individuals with autism in a managed-care health system when North Carolina began its discussion of managed care for MH/DD/SAS in 2010. We have issued many statements about the unique needs of those with autism, the most recent of which can be found here.

If you have questions about policy issues, please contact Jennifer Mahan, ASNC Director of Public Policy, at or 919-865-5068.

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