Overview of the NC Medicaid Transformation Process Thus Far

Conor Brockett, the North Carolina Medical Society’s Vice President of Legal & Regulatory Affairs and Associate General Counsel, offers this quick overview of Medicaid transformation in North Carolina thus far.

In 2015, the North Carolina General Assembly enacted House Bill 372, marking the start of the state’s transition away from its classic fee-for-service Medicaid and Health Choice programs to Medicaid managed care. Under HB 372, North Carolina Medicaid will rely on multiple statewide and regional prepaid health plans (“PHPs”) to manage the insurance risk of the program and fully embrace the principles of value-based care delivery.

In the current session, the General Assembly enacted House Bills 156 and 403, which provide additional clarity on how the Medicaid transformation will proceed. Given these new laws, the North Carolina Medical Society has partnered with Medical Mutual to review the status of the transition and what it means for medical practices across the state.

Most medical practices probably haven’t noticed significant changes yet. However, many have started receiving communications from companies that hope to become one of the state-selected PHPs. These companies seek to form early relationships with providers (typically by contract or a non-binding letter of intent) to demonstrate their viability as a PHP and to improve their chances in the bidding process.

Here’s a quick overview of the history of Medicaid transformation and what’s next.

The History of Medicaid Transformation

Since 2015, the NC Department of Health & Human Services (DHHS) has been gradually designing the new program. This effort involves shifting its own culture and role from operating the Medicaid program to administering multiple large contracts for the delivery of health services. Here are some key events that have occurred since the enactment of House Bill 372:

  • June 2016: DHHS submits North Carolina’s 1115 Waiver Application to the federal Centers for Medicare & Medicaid Services (CMS), which must review and approve major changes to Medicaid. CMS usually takes many months to review large-scale programmatic changes.
  • August 2017: DHHS issues Proposed Program Design for Medicaid Managed Care and seeks public comment. This detailed blueprint articulates DHHS’s priorities for Medicaid reform under Secretary Mandy Cohen’s leadership, which began in January 2017.
  • November 2017: DHHS submits to CMS an amended version of the 1115 Waiver Application. This is the most current version of NC’s Waiver Application and is still under review by CMS.
  • November 2017: DHHS begins publishing a series of short concept papers on key topics in transformation. These papers reveal how DHHS may answer important policy questions it faces in transformation.
  • March 2018: NC’s Medical Care Advisory Committee convenes stakeholder subcommittees to study and issue recommendations on key reform topics. Subcommittees on network adequacy, provider credentialing, beneficiary engagement, and managed care quality (among others) are asked to make recommendations to the MCAC and DHHS.
  • June 2018: The General Assembly enacts additional legislation (HB 156 and HB 403) that will accelerate Medicaid transformation. Highlights of the legislation include:
    • Requires PHPs to adhere to patient and provider protections that apply in the commercial insurance market. Provider groups have consistently advocated for these “Chapter 58 protections,” which include prompt payment, direct access to certain specialists, fair contracting, and more.
    • Requires each PHP to maintain a medical loss ratio of 88%.
    • Sets a 60-day deadline for DHHS to release its request for proposal (RFP) and open the competitive bidding process for PHPs.
    • Increases the number of statewide PHP contracts to be awarded from three to four.
    • Creates a pathway for new “tailored plans” to finance the care for certain patients with serious, persistent mental illnesses.

What’s Next?

The next major step in Medicaid transformation is DHHS’s release of the RFP and the competitive bidding process for PHPs. This milestone—originally scheduled to occur in spring 2018—is expected to take place this summer. The document will reveal in more definitive detail what the transformed Medicaid program will look like under the management of PHPs. Once the RFP is released, bidders will have 60 days to submit their responses.

Once submitted, DHHS will review the bids and award contracts in the fall. The entities selected will then proceed with a more intensive ramp-up process. They will continue recruiting providers to their networks, determine coverage policies and claims processing rules, prepare materials for their beneficiaries, and prepare for implementation.

DHHS is still currently sticking to the original proposed go-live date of July 1, 2019. This is when PHPs begin receiving capitated payments from the state and when Medicaid beneficiaries will start receiving services from medical practices as network providers. However, there is considerable speculation that go-live may be pushed to 2020, given the delay in the state’s release of the RFP and CMS’s continued review of the Waiver Application.


The second half of 2018 will be the busiest period yet in the transformation of North Carolina Medicaid. Physicians and medical practices should begin following the developments closely and analyzing their options for future involvement with the selected PHPs.

To follow the latest news, watch for updates on the North Carolina Medical Society’s website (www.ncmedsoc.org)and DHHS’s dedicated website at www.ncdhhs.gov/medicaid-transformation. Medical Mutual members can also reach out to the company’s Senior Vice President of Health Policy, Sam Cohen, for additional guidance (sam.cohen@mmicnc.com and 919.878.7602).


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