Medicaid transformation will be a casualty of the budget stalemate. 

The N.C. Department of Health and Human Services confirmed Tuesday, Nov. 19, that Medicaid transformation would be placed on hold indefinitely.

That announcement came hours after Sen. Joyce Krawiec, R-Forsyth, issued a news release predicting the move. Krawiec’s release suggested that an announcement from Gov. Roy Cooper’s administration would arrive Wednesday morning.

“With managed care suspended, NC Medicaid will continue to operate under the current fee-for-service model administered by the department,” according to a DHHS news release. “Nothing will change for Medicaid beneficiaries; they will get health services as they do today. Behavioral health services will continue to be provided by Local Management Entities/Managed Care Organizations. All health providers enrolled in Medicaid are still part of the program and will continue to bill the state through NCTracks.”

Medicaid funding was stuck in the budget stalemate for months. As Cooper and the legislature wrestled over Medicaid expansion, Medicaid transformation languished. Now, it could be stuck in purgatory. 

The legislature adjourned last week, and won’t return until January.

But open enrollment has already begun, and state legislation requires the N.C. Department of Health and Human Services to begin rollout no later than April 2020. The legislature seems prepared to fight indefinite delays. Krawiec is arguing that DHHS Secretary Mandy Cohen lacks the authority to place the program on hold. 

Medicaid managed care is the biggest change to hit the state since the inception of Medicaid. It would privatize the state’s Medicaid program by paying five managed care companies $30 billion over five years to cover 1.6 million low-income North Carolinians. 

The transformation has been years in the making, ever since the Republican-led legislature passed managed care legislation in 2015. 

The stalemate first delayed the program’s original November rollout, pushing transformation to February. As negotiations dragged on, even the February rollout seemed unlikely. 

Cohen warned DHHS would be forced to delay rollout again if a budget didn’t materialize by mid-November, but the deadline passed without a budget. 

The managed care companies risk hemorrhaging money. Cohen warned more delays would cost insurers dearly, as they had already hired staff and made investments in the transition. 

The legislature passed the funding twice, once in the state budget and again in a mini-budget. Cooper vetoed both bills, and now the legislature is blaming the governor for the delays. 

“This is another crisis of Gov. Cooper’s own making,” Krawiec said in her own news release. “His veto will force insurers to lay off thousands of people they’ve already hired as part of the years-long plan to transform Medicaid.”

The managed care companies pleaded for a budget last week. 

“Transforming North Carolina’s Medicaid program will improve health outcomes and provide whole-person care while lowering costs for taxpayers,” said the N.C. Association of Health Plans in a statement. “But to keep this process moving forward and to not lose any ground, it’s critical that the state fully fund Medicaid transformation as soon as possible.”

The legislative leadership hoped to use managed care to control the cost of the program and improve health outcomes. 

In late October, hospital lobbyists seemed to support further delays. Hospitals and providers have voiced concerns the program isn’t ready for transformation.   

In late October, fewer than half of providers who saw a Medicaid patient in the last year had signed contracts. And only three hospital systems and 12 regional hospitals had signed on. 

Medicaid transformation was supposed to unfurl in stages, but the budget stalemate forced the department to abandon staggered enrollment. Instead, the department planned to put all 1.6 million enrollees in Medicaid transformation Feb. 1. Now the future of the program remains uncertain.

DHHS acknowledged the change in its Tuesday afternoon release.

The suspension of work and the wind-down process will begin tomorrow. Once suspended, managed care cannot easily or quickly be restarted. The department will not decide on a new go-live date until it has program authority within a budget that protects the health and safety of North Carolinians and supports the department’s ability to provide critical oversight and accountability of managed care.

Both the conference and transformation mini budgets passed during this year’s legislative session and vetoed by Governor Roy Cooper left the department vulnerable to an unprecedented cut that would have had a crippling effect on its ability to provide services that protect people’s health and safety and moved the department out of Raleigh to Granville County. In addition, neither expanded Medicaid so that hardworking North Carolinians could afford access to health coverage.

In a separate release, State Rep. Donny Lambeth, R-Forsyth, a co-chair of the House Health Committee, called the decision “a major setback for North Carolina and the Medicaid patients served.”

“North Carolina has invested millions of dollars and years of bipartisan planning to create a better system of managed care, yet unfortunately the governor has placed more emphasis on politics than improving the quality of care for existing Medicaid participants,” Lambeth said.