North Carolina awards $6 billion in Medicaid contracts
AmeriHealth Caritas, Blue Cross and Blue Shield of North Carolina, UnitedHealthcare and WellCare Health Plans scored statewide contracts to serve North Carolina Medicaid beneficiaries under the state's new managed-care program launching in November.
Carolina Complete Health, a provider-led partnership between the North Carolina Medical Society and insurer Centene Corp., won a contract to serve beneficiaries in two regions. In total, the five Medicaid managed-care contracts, which will last three years with the option to extend for an additional two years, are worth $6 billion per year.
Aetna, Optima Health and My Health by Health Providers, a partnership of 12 North Carolina health systems, bid for a contract but were snubbed.
Dr. Mandy Cohen, secretary of North Carolina's Department of Health and Human Services, explained Monday on a call with reporters that an evaluation committee made up of department staff and outside experts recommended the agency award the four statewide contracts after a rigorous process in which bidders were scored based on myriad factors. They included company finances, provider networks, and the ability to coordinate care and address beneficiaries' social determinants of health.
"We are very much building toward a model that incorporates 'healthy opportunities'—those are the social determinants—so that is a key part of it," Cohen said. "How are they going to drive to quality? How are they going to drive to value? All of those pieces built toward the entire package of how the evaluation committee scored these."
While the evaluation committee didn't choose a provider-led organization to receive an contract, North Carolina Medicaid's deputy secretary Dave Richard recommended the agency award a fifth regional contract to Carolina Complete Health after considering the intent of the original legislation directing the state to move to a managed-care model and finding that including a provider-led entity would be in the best interest of the state because it would spur innovation.
North Carolina law had authorized the state to award up to four statewide contracts and up to 12 smaller regional contracts.
Cohen said the agency expects some organizations to protest the awards, but for now the five winners will begin contracting with hospitals and doctors and working through the IT, operational and business processes so they are ready for the first phase of the new Medicaid program to launch on Nov. 1. The program will initially be rolled out to 565,000 beneficiaries in regions 2 and 4, in the northwest part of the state, and then across the rest of the state in February 2020.
North Carolina represents a big opportunity to the health insurers and providers that bid for a contract to serve the state's 2 million Medicaid beneficiaries. Of the states that have not yet allowed managed-care organizations to administer Medicaid benefits, North Carolina spends the most on the program at $13.5 billion each year. The state has not expanded Medicaid under the ACA to cover more low-income residents. Doing so would increase Medicaid spending and the size of the managed-care contracts.
North Carolina's General Assembly in 2015 directed the state to move its fee-for-service Medicaid program to a managed-care model. In October 2018, the CMS approved the state's demonstration waiver to overhaul its Medicaid program into one that the North Carolina Department of Health and Human Services says will focus on "whole-person-centered" care by integrating physical health, behavioral health and pharmacy services, also addressing the social determinants of health that can have a bigger impact on outcomes than services delivered in a hospital.
The managed-care organizations will be required to screen every Medicaid beneficiary for insufficient access to food, lack of stable housing and transportation and exposure to interpersonal violence. Those managed-care companies will then connect the beneficiaries in need to community resources that can help them find a food bank or shelter, for instance. North Carolina is also launching pilots in some parts of the state to test intervention to reduce cost and improve health by addressing social determinants.
North Carolina's Medicaid plans will also be held accountable for meeting targets to improve care delivery, pay for value and support healthy people and communities, and will be subject to financial penalties if certain quality metrics are not met after 18 months. Cohen said in August 2018 that the department is shooting for the plans to have at least 50% of their medical expenditures in alternative payment models by the end of the second year after transitioning to the new model.
The contract awards announced Monday comprise standard plans providing integrated physical health, behavioral health and pharmacy services; the state will later offer tailored plans for beneficiaries with serious behavioral health and other needs.
Most Medicaid beneficiaries across the country are enrolled in managed-care plans. Supporters of the managed-care model say the health plans that administer the benefits are better able to coordinate care and rein in healthcare spending than state Medicaid agencies. But peer-reviewed evidence documenting Medicaid managed-care savings and improved health among beneficiaries is lacking, authors from consulting firm Navigant Healthcare pointed out in a 2018 Health Affairs article.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.