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Beneficiaries Worry About North Carolina's Medicaid Transformation

Mental health care advocates say patients face challenges in insurance coverage.
Mental health care advocates say patients face challenges in insurance coverage.

In a few weeks, a major health care program in the state will get a total overhaul.

On July 1, Medicaid in North Carolina will launch what's been labeled a "transformation," a change years in the making.

Here's a snapshot of the fee-for-service model, the way it's been for years, but will soon phase out:

A Medicaid patient goes to a provider, then that doctor bills the Department of Health and Human Services. The more than 2 million people who qualify for Medicaid in North Carolina, get about $15 billion in health care per year. The state taxpayer covers about one-quarter of those costs. The federal government picks up most of the rest.

Now, the new system: Broadly speaking, the change will introduce a new administrative layer. Instead of the state paying providers directly, DHHS will pay private third-party companies lump sums. Those companies will then handle all the billing invoices providers give them. If these companies pay out less in medical claims than they get from the state, they make a profit.

The changeover has caused some confusion and frustration among Medicaid beneficiaries.

Alicia Jones lives in Wendell, just east of Raleigh. Two of her grandchildren, both teenagers, are Medicaid recipients for mental health services. Jones has been helping them get everything in order ahead of the transformation, but the process hasn't been easy.

"You call and of course, you know, you respect the wait but I'm having to go through four times," she said. "The information is not consistent across the board. For instance, when we go to the information sessions about the transfer, we're supposed to be able to pick who will call the number next day. It doesn't go like that."

Jones' frustration echoes that of Medicaid beneficiaries across the state, even as transformation is on the horizon. In a recent poll conducted for North Carolina for Better Medicaid, more than 60% of respondents said they knew very little or nothing at all about the Medicaid transformation.

However, the N.C. Department of Health and Human services has a lot of information on its website, and open enrollment was offered in March, April and May. State Health Secretary Dr. Mandy Cohen says lots of people in her department have been trying to get good information out to beneficiaries. Of course, she's also been preoccupied with the pandemic.

"We want to make sure that if beneficiaries have questions, one: they can call their doctor that they've seen, or they can call our Medicaid helpline, and we can be sure to answer their questions," she said at a recent media briefing. "But we also have a lot of policies in place to make sure that as we do this transition, we're protecting beneficiaries."

Importantly, beneficiaries are not locked in to a plan right away.

"So if they don't like the plan … they can change for up to 90 days. So there's a lot of flexibility to both protect our doctors and our hospitals in this change as well as our beneficiaries and give folks flexibility. So hopefully this one can be a smooth transition," Cohen said.

And, of course, everyone has been dealing with the pandemic for the past year. It has taken a lot of attention, so it's maybe understandable that some people have missed information about the change in Medicaid.

 Ciara Zachary, UNC-Chapel Hill assistant professor, and Health Policy Concentration Lead, Master Of Public Health Program in the Department of Health Policy And Management
UNC Chapel Hill /
Ciara Zachary, UNC-Chapel Hill assistant professor, and Health Policy Concentration Lead, Master Of Public Health Program in the Department of Health Policy And Management

Ciara Zachary, assistant professor in the Department of Health Policy and Management at UNC-Chapel Hill Gillings School of Global Public Health, says launching a new version of Medicaid during a pandemic creates an extra lift for DHHS.

"There will be maybe some bumps in the road. But I know that [DHHS] has really been trying to figure out best ways to outreach to people and continue to educate them during this transition," she said.

Probably the biggest potential driver of value under this new model will come in the form of better care coordination. A pitfall of the fee-for-service model is that it can result in over- or improper use of the health system. Under a managed care model, the third-party payer ideally can direct patients to the best care, leaving the patient healthier while also reducing costs.

"These provider-led entities that will be in North Carolina that are going to oversee someone's overall health care needs,” Zachary said. "To streamline and hopefully guide consumers in to how they seek services. And not having things be so disjointed, so that people aren't just spinning their wheels thinking, 'Where do I go next? How do I get a referral for this service?'"

Of course, patient advocates say the other side of that coin is that the managed care organizations could be incentivized to deny claims to save money.

"Many advocates in the state of North Carolina have been pushing for transparency," said Zachary. "There's going to be an ombudsman program, so that Medicaid beneficiaries can report if they feel like they are being overburdened or denied services that they feel that they deserve."

Whenever the word Medicaid is mentioned in North Carolina, it immediately becomes a politically-charged hot button issue. To be clear, this transformation is not Medicaid expansion, which has consistently been a lightning rod in North Carolina politics.

Gov. Roy Cooper has steadfastly pushed for expansion and says he remains hopeful that the Republican-led legislature will work with him to reach that goal now that Medicaid transformation is happening.

However, GOP leaders have not given any indication they support expansion.

"This is not the time for us to take on a new program, with the expense of a new program," Senate Leader Phil Berger said last fall. "Now is not the time. It is not the right policy in my view."
Copyright 2021 North Carolina Public Radio. To see more, visit North Carolina Public Radio.