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North Carolina Providers Wary of Medicaid Overhaul

By Marissa Evans, CQ Roll Call

June 7, 2016—North Carolina Republicans may be celebrating the submission of an application to overhaul the Medicaid program but some medical providers in the state are not buying in just yet.

Republican North Carolina Gov. Pat McCrory signed off on a federal application June 1 that would turn the Medicaid program into managed care, saying that would help beneficiaries "reach their full potential."

"Our proposal provides a North Carolina Medicaid Plan that focuses on patient-centered care and improves health outcomes at more predictable costs," McCrory said.

Under the proposed federal waiver, the Tar Heel State would dismantle the existing primary care management system and create two systems. Provider-led groups would be in charge of Medicaid funds and create their own networks while commercial insurers would administer services to Medicaid beneficiaries across the state.

The waiver application comes months after lawmakers voted in September to move toward a managed care program. The Republican-led legislature has long criticized the federal health law, including Medicaid expansion. Under expansion, the federal government would pay to cover 500,000 low-income North Carolina residents through 2017. By that year, states are responsible for chipping in on the cost until by 2020, they would pay for 10 percent of costs. Thirty-one states and the District of Columbia have broadened Medicaid.

Advocates are disappointed lawmakers are not considering Medicaid expansion this session, said Ciara Zachary, health policy analyst for the North Carolina Justice Center.

For the overhaul plan, Zachary said there are still unknowns with how the managed care regions would be split up, how network adequacy would be guaranteed, and how beneficiaries with more intense health care needs will be treated.

"Because North Carolina has such a strong primary care case management system that's been developed for so many years, people are just wondering is this going to be better than what we have in place," Zachary said.

That program, Community Care North Carolina, or CCNC, serves 1.3 million Medicaid patients and has saved almost $400 million a year, according to a 2015 North Carolina State Auditor report. Providers argue that some of the measures that would be implemented under the managed care transformation could have been done through CCNC.

Ben Money, chief executive officer for the North Carolina Community Health Center Association, said in an interview that providers are most worried about the looming administrative burdens that come with the overhaul. He said if the prepaid health plans have varying billing and claims processes, providers may throw their hands up, choose the simplest one and try to force patients to switch to that plan. The situation could be detrimental for low-income people in the program if the health department does not streamline the billing process, Money said.

"If access were restricted across the state because fewer providers were accepting Medicaid payments we'd have to really ramp up to make sure we could meet the demand," Money said.

While North Carolina may be focused on restructuring the program, the Centers for Medicare and Medicaid Services (CMS) could still broach the idea of Medicaid expansion during negotiations, said Trish Riley, executive director for the National Academy of State Health Policy.

"It'll be interesting to see how the negotiations go," Riley said in an interview. "There's a precedent for CMS negotiating waivers for states that don't expand but that will be the test because uncompensated care would be diminished if they expanded."

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