North Carolina Medicaid care providers have submitted a proposal for Medicaid reform to the General Assembly that accomplishes the State’s goal for a capitated, sustainable system to serve the more than 1.8 million North Carolinians who depend on Medicaid for their health care.

North Carolina hospitals and physicians, along with care providers from across the state, support a provider-led system for Medicaid that puts the decision-making responsibility for patient care  in the hands of those who provide care instead of in the hands of insurance companies. North Carolina hospitals and doctors are invested in their communities and want to help build a long-term solution for Medicaid that improves health outcomes for all North Carolinians.

On this page, we’ll provide an overview of the proposal and will add FAQs as details develop.

How does it address North Carolina’s needs?

Our proposal meets the goals outlined by legislative leaders in the following ways:

  • Provides the State with budget predictability by transforming the current Medicaid system from a fee-for-service program to a capitated, risk-based program that will pay a set amount for each person enrolled. The State will continue to be at-risk for enrollment growth.

  • Lays out a clear plan to enroll all Medicaid beneficiaries in the program and achieve “whole-person care” by integrating physical, mental and behavioral health care as well as long-term care services and incorporating all other Medicaid providers faster than any other state in the nation.

  • Ensures Medicaid patients more coordinated, patient-centered and cost-effective care by aligning the payment that all care providers receive with the quality of their patients’ outcomes.
  • Commits to transparency through standardized public reporting of cost, quality and patient satisfaction metrics.

How will it work?

This proposal establishes ‘provider-led entities’ (PLEs), legal organizations of Medicaid care providers that are both provider-owned and provider-controlled that agree to be jointly accountable for the cost and quality of health care for the Medicaid enrollees they serve.

  • PLE governance will be flexible to allow for partnerships among hospitals, physicians, other Medicaid care providers and community organizations.

  • To ensure that decisions are made with the best clinical interest of the patients and communities in mind, a majority of each PLE governing board must be comprised of physicians that provide clinical services to Medicaid patients.
  • Each PLE receiving a capitated payment should be expected to meet a minimum medical loss ratio of 90/10, which means that 90% of the state payments would be spent on medical care, while 10% would be allowed for administrative costs like billing, enrollment, credentialing and other functions. (This is a higher percentage than required under the newest CMS guidelines for corporate Medicaid managed care or for all insurance companies under the ACA, which is typically 80-85%.)

What is the proposed timeline?

The proposal and timeline have been carefully developed to position North Carolina for a successful transformation. While any PLE can complete the transition to full risk as soon as it is able, the plan calls for all PLEs to accept full financial risk for all Medicaid physical health services (including hospice and palliative care) to all Medicaid beneficiaries no later than 3 years after federal government approval.

Within five years after federal approval, each PLE will be responsible for “whole person” care including behavioral health, dental and long-term care.

During the transition, PLEs will build on existing programs that contain costs and improve patient outcomes. Examples include the primary care case management system, the current Medicaid informatics infrastructure, patient-centered medical homes, and pregnancy medical homes.

Read more about Provider-led Medicaid Reform in our blog.