North Carolina Medicaid offers coverage for a full range of essential medical services to kids, including well-child exams; hearing, vision, and dental screenings; and other services to treat physical, mental, and developmental illnesses and disabilities. The benefits of this coverage are enormous. Providing Medicaid coverage for children leads to proven long-term health, educational, and economic gains as adults. Across the state, about 40% of all children receive health care thanks to Medicaid and NC Health Choice.
Lawmakers have mandated that DHHS move forward with a transformation of Medicaid from fee-for-service to managed care. What will this mean for children?
Medicaid Transformation Timeline
Legislation to transform Medicaid to a privatized managed care system was enacted in 2015, with the federal government approving the move last year. Once that approval was secured, NC DHHS scheduled a phased roll-out for the new privatized plans. The first phase was to begin on November 15, 2019, and then on February 1, 2020, but was delayed because new funding and program authority were required from the General Assembly to meet the deadline.
In July 2020, the General Assembly passed SB808, the Medicaid Funding Act setting transformation in motion again. Medicaid Managed Care is now scheduled to go live on July 1, 2021.
While most families who receive Medicaid benefits will begin enrollment for the standard plan in July, some tailored plan beneficiaries and other groups will stay in Medicaid Direct and have plans continue to be managed by the state for another year or more during the phased transformation process. Until July 2021, NC Medicaid will continue to operate under the current fee-for-service model.
NC’s Transition to Managed Care
Nearly all states have some form of managed care in place. Under managed care, NC will contract with private Prepaid Health Plans (PHPs), which are paid a predetermined set rate per person to cover all services. This model tends to promote value over volume, theoretically increasing access to lower-cost preventative care and eliminating incentives for unnecessary, costly procedures. Managed care systems are built on the premise that individual costs can be reduced through health promotion and prevention.
Providing managed care to children presents a challenge to this premise though, because of the demonstrated importance of Early and Periodic, Screening, Diagnostic, and Treatment (EPSDT), a fundamental component of Medicaid. Preventive care is essential for ensuring kids’ long-term health outcomes. With MCOs making decisions on what services to approve or deny, it’s possible that necessary health care could be denied to reduce short-term costs.
However, there are also good opportunities in value-based care for kids. DHHS is heading in the right direction by focusing on social determinants of health. In the long run, excellent value-based care will likely cost more up front, but will save money in the longer term across related systems, including education, child welfare, and others.
To ensure a high-quality managed care system, state agencies must ensure strong oversight and accountability, stakeholder and family engagement, robust data systems to track key indicators, and public transparency.
Opportunities for Kids
With over a million NC kids now relying on Medicaid, including half of all babies born in the state, we must get this transition to managed care right. And we must find additional ways to alleviate burdens on families. Families already have large hurdles to navigate, including changes to job status, school changes, health challenges, and more. One way to remove unnecessary barriers would be to merge the Medicaid and NC Health Choice programs. This would reduce the overall administrative burden and confusion for families navigating multiple health coverage programs.
NC Health Choice was implemented in 1998 as a separate, though similar program to Medicaid. Over the years, the reimbursement rates for the programs became identical in NC, and the benefits packages are almost the same. The only real difference in the programs is that Medicaid includes the EPSDT benefit, which allows children to access any medically necessary treatment.
EPSDT is most commonly used by children with special health care needs. NC Health Choice does not provide this crucial benefit. Streamlining these programs under COVID-19 would cut red tape, cost, and confusion — for DHHS and for families. Most importantly, it would ensure that kids get the care they need.
Lastly, we must not forget that the transformation to Medicaid managed care does not help the hundreds of thousands of kids and family members who don’t have any form of health insurance right now. NC legislators can still take action to expand the state’s Medicaid program, accepting billions of dollars in federal healthcare dollars, to ensure that more of North Carolina’s families can weather the pandemic and health challenges in the future with coverage.
Click below to contact your state legislators and urge them to take action on expanding Medicaid to more parents and caregivers.