- Associated Press - Tuesday, March 1, 2016

RALEIGH, N.C. (AP) - North Carolina Medicaid leaders revealed new details Tuesday about their plans to overhaul health systems that covers more than 1.9 million people. They’ll rely on commercial insurers and medical provider networks to keep patients healthier and control costs - doing what legislators and Gov. Pat McCrory already agreed upon.

Meeting their first deadline set in Medicaid overhaul legislation approved last September, top officials at the Department of Health and Human Services filed a status report on the project with a General Assembly oversight committee.

The legislation requires DHHS to change the current system, in which Medicaid pays for each service performed on a patient, into one where the state contracts with commercial managed-care companies or local hospital or doctor networks.

To make that change, the state must get waivers from federal regulators. The Medicaid law directed DHHS to apply by June 1, and the waiver process is expected to take about 18 months. It should take until at least June 2019 for the system to be in place. Tuesday’s report and comments at the committee meeting previewed the state’s application.

Medicaid covers mostly poor children, older adults and the disabled and spends about $3.5 billion in state money annually. The overhaul also will apply to children in low- and middle-income families covered through North Carolina Health Choice.

The new system will focus on innovative care and offer flexibility to provide patient services not easily obtained through the current funding model, state Health and Human Services Secretary Rick Brajer said.

“We are really not trying to mimic another state,” Brajer said. “We are providing a North Carolina solution.”

Groups called “prepaid health plans,” would receive a set monthly amount for each Medicaid consumer they agree to cover.

These plans will have incentives to keep patients well, which in turn will boost the plans’ bottom lines. The state also would have more certainty in year-to-year Medicaid spending.

Medicaid leaders envision patients being served in what are called “person-centered health communities” within the prepaid health plans.

Building on a previous case-management model led by Community Care of North Carolina, the effort aims to smooth the funding process for patients to get treatment beyond that of a primary-care physician. That could mean helping a patient meet with a nutritionist, obtain mental health treatment or get assistance from local social services agencies, said Dave Richard, the DHHS deputy secretary overseeing Medicaid.

“The goal is to create a system where people are healthier but also … to do that by bending the cost curve so we’re not spending money on things that don’t work,” Richard said.

The 2015 law says there must be three commercial plans to serve patients statewide and up to 10 provider-led plans serving six regions of the state. Medicaid officials say they want legislators to increase the number of provider-led plans allowed to 12. They also want one of the three statewide plans to provide a special emphasis on the needs of foster children. The plans also must meet performance measures and could trigger financial rewards or sanctions for the contractors, the DHHS status report said.

Brajer said the state’s leading hospital networks, along with insurers such as United Health Care and Blue Cross Blue Shield of North Carolina, have expressed interest in participating in the new system.

Members of the Medicaid oversight committee largely praised the proposal.

Many details still must be finalized, including solvency standards for the prepaid health plans to ensure they can cover patient expenses. DHHS will schedule 12 public meetings this spring to receive feedback on the proposal. The proposal doesn’t address whether lawmakers should consider expanding Medicaid coverage to more of the uninsured through the federal health care law.

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