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CMS Grants NC 1115 Medicaid Waiver to Implement Managed Care System

North Carolina has received a 1115 waiver from CMS to transition from a state-administered Medicaid program to a managed care system with private payers.

North Carolina received approval to implement a managed care system.

Source: Thinkstock

By Thomas Beaton

- North Carolina has received a 1115 waiver from CMS allowing the state to implement a Medicaid managed care system administered through private payers.

The state’s Department of Health and Human Services (DHHS) can now recruit private payers to administer Medicaid programs and “Tailored Plans” that provide comprehensive pharmacy benefits and behavioral health services.

The transition to a managed care Medicaid system allows North Carolina to provide services not usually covered by Medicaid, such as home health services and in-home care management services.

“Our highest priority is the health and well-being of the people we serve,” said DHHS Secretary Mandy Cohen, MD. “Receiving this waiver approval from the federal government will help us continue to build an innovative and whole-person centered system that addresses both medical and non-medical drivers of health.”

North Carolina submitted the waiver in early 2017 and has since invited several private payers to bid for program participation.

The state’s new managed care program will focus on critical public health issues affecting the state’s residents, including behavioral healthcare.

Managed care payers will have the ability to provide substance abuse treatments focused on opioid abuse. Managed care payers will support behavioral health treatments, cover medication-assisted treatment (MAT), and provide similar services for patients.

The waiver will also implement programs called “Healthy Opportunities Pilots” to test new programs that address social determinants of health (SDOH). Starting in 2019, managed care payers can fund and sponsor programs to address key SDOHs including housing, food insecurity, personal safety, and employment.

“North Carolina is the first state to receive approval to comprehensively pilot these innovations, making it a national leader in promoting value and improving health through its managed care program,” according to state officials.

The waiver will go through two independent evaluations by third party administrators during the demonstration. These evaluations are to determine the effectiveness and budget neutrality of waiver-based programs.

However, CMS did not approve some of the waiver’s components, according to the agency’s approval letter.

The agency said that North Carolina’s new managed care program would not be able to compensate tribal providers, implement a Medicaid work requirement for newly enrolled beneficiaries, support telemedicine care delivery, and fund short-term behavioral healthcare within institutions of mental disease.

CMS explained that these initiatives require legislative approval from the state, directly conflict with CMS’s funding guidelines, or are already supported by other federal programs.

A number of commercial payers have submitted requests to join North Carolina’s managed care program. The program would award six statewide contracts to cover Medicaid services for 2.1 million beneficiaries.

Aetna, AmeriHealth Caritas of North Carolina, BlueCross BlueShield of North Carolina, UnitedHealthcare, and WellCare are just a few insurers vying to participate in North Carolina’s managed care program. North Carolina currently spends $14 billion a year on Medicaid services, which would be transitioned from public administrators to managed care payers.

North Carolina’s new program will begin at the start of 2019 and expire on October 31, 2024. The five-year program reflects the increasing reliance on private payers to administer Medicaid across the country.

In 2012, managed care accounted for 38 percent of national Medicaid spending and is likely to grow as more private payers enter into managed care markets. Recently, several states received approval from CMS to reform managed care programs into more cost-effective Medicaid systems.

Rhode Island received CMS approval to restructure managed care contracts that support value-based care. Ohio adopted a new Medicaid drug pricing model so managed care payers could negotiate higher rebates directly with pharmaceutical manufacturers.

The growing reliance on private payers to administer managed care across the US may create new opportunities for commercial payers to enter public payer markets.


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