Gov. Roy Cooper on Thursday signed a Medicaid transformation bill that ends years of wrangling with legislators over the issue.
Transformation privatizes the management of the state’s Medicaid program. The state will pay five managed care companies $30 billion over five years to cover 1.6 million low-income North Carolinians.
Senate Bill 808 is designed to insulate the state from overspending on Medicaid. Republicans hoped to save money and secure better health outcomes by privatizing the program’s management. Under the current system, providers bill the state for services, and the state pays. For years, the program overran its budget, and lawmakers scrambled to make up the difference.
Republicans targeted that overspending when they took over the General Assembly in 2011. They began the switch to Medicaid managed care five years ago.
“It’s hard to govern that way, when it’s basically a built-in cost and you don’t know what it’s going to be,” Rep. Josh Dobson, R-McDowell, told Carolina Journal. “We will know definitively what we’re going to have to allocate for Medicaid. Budget predictability and better health outcomes are the two main things.”
The managed care organizations will stand between providers and the state. The MCOs will absorb the costs of going over budget, or they will keep whatever they don’t spend on patients.
Medicaid transformation was scheduled to start last fall but became a casualty of the fight between Cooper and Republican lawmakers over expanding Medicaid. Cooper wanted to expand coverage to hundreds of thousands of uninsured, low-income adults. Republicans refused. Cooper vetoed the transformation funding in the state budget and again in a mini budget.
The health department put transformation on hold in mid-November. Department officials warned that delays would slow future rollout. The managed care organizations said delays cost them millions of dollars per month.
The new deadline is ambitious, said Dave Richard, deputy secretary of the N.C. Medicaid program. But Dobson says he’s optimistic that the state will succeed.
The state Department of Health and Human Services will ramp up transformation planning in July. But it faces damage dealt by delays, Richard said.
The budget stalemate stalled work on transformation and forced the department to lay off contractors. The coronavirus outbreak channeled resources into fighting the pandemic, Richard said.
“As you can imagine, when you’re rushing to make a deadline, there’s a lot of momentum,” Richard told CJ. “Once we stopped, a lot of that momentum slowed down … Work really stopped during that period.”
North Carolina must overhaul the structure of its Medicaid program by July 1, 2021. But if the department can’t make the new deadline, it won’t face penalties.