Navigating Provider/PHP Disputes in NC Medicaid Managed Care

February 1, 2021Alerts

With managed care contracts between North Carolina Medicaid providers and the state’s new prepaid health plans (PHPs) expected to begin July 1, 2021,[1] and provider network contracting well underway, it is safe to assume that many disputes will arise between Medicaid providers and PHPs in the months and years to come. To protect their rights in these disputes, providers must follow and exhaust the dispute resolution procedures included in their PHP network contracts, and must also understand their right to further appeals to an administrative law judge or the courts.

Because PHPs will be paid a flat, per-member capitated rate, PHPs can be expected to scrutinize and deny questionable claims by health care providers. Further, because providers will be learning new procedures and simultaneously dealing with several PHPs with different procedures and requirements, mistakes are certain to occur.

Disputes between providers and PHPs will likely include:

  • Claim denials (e.g., errors, incomplete documentation, medical necessity, etc.) 
  • HP refusal to contract with providers/exclusion of providers from PHP networks
  • Post-payment audits/statistical extrapolation
  • Out-of-network provider claim denials and/or out-of-network payment rate disputes

Pitfalls for Providers Challenging Unfavorable PHP Decisions

Providers may challenge adverse determinations by PHPs, but if the dispute(s) cannot be resolved directly through the PHP’s appeal procedures, the right to further appeal and the proper procedure for such appeals becomes murky. As a result, providers must be very careful to understand the proper forum and procedures for appeal to avoid accidentally losing their rights to challenge unfavorable decisions. 

PHP contracts with network providers must include procedures for resolution of “contractual differences between the PHP and the provider” (see PHP Contract, Section V.D.5, see also Attachment I). These procedures are generally outlined in the PHP’s network contracts and/or provider manuals. However, not all PHP contracts or provider manuals address a provider’s rights in disputes that are not resolved even after a provider goes through the PHP’s internal reconsideration and appeal procedures.[2]

By statute, providers can appeal payment denials, suspensions, reductions or recoupments to the North Carolina Office of Administrative Hearings.[3]  However, providers’ rights to appeal from other PHP decisions are unclear, such as a PHP’s refusal to contract with a provider or to terminate or not renew an existing provider contract.[4] This ambiguity leads to the risk of a provider mistakenly filing an appeal in the wrong forum, missing an appeal deadline or otherwise waiving its right to review by a Superior Court or administrative law judge (ALJ).

In any case, it is clear that providers must exhaust the dispute resolution procedures available under the PHP network contract before pursuing a remedy in any other forum.[5]  Failure to exhaust all remedies under the PHP contract could lead to a dismissal in the OAH and/or Superior Court for a lack of jurisdiction.[6] 

In the disputes that will inevitably arise between Medicaid providers and PHPs, providers must not only know and follow the dispute resolution procedures under their PHP network contract, but they should also work with experienced counsel to ensure their case can be heard by an ALJ or Superior Court judge by protecting their right to appeal.

For more information on navigating Medicaid - Provider/PHP Disputes in North Carolina, contact author Marc Hewitt at [email protected] or 919.755.8776.


[1]  SL 2020-88, Sec. 7(a).

[2] E.g., Section 8.3 of WellCare’s network contract template provides for arbitration of disputes unless prohibited by state law, and does not describe a provider’s administrative appeal rights (See Provider Contract Template available at https://www.wellcare.com/North-Carolina/Providers/Medicaid).

[3] N.C. Gen. Stat. § 108C-12.

[4] PHPs may not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates.  SL 2015-245, Sec. 5(6)d, as amended.  PHPs must hear appeals from PHP decisions to terminate or not renew provider contracts, or decisions not to contract with a provider in the first place. However, if the provider is unsatisfied with the PHP’s internal appeal decision, the Medicaid statutes and rules do not specifically address a providers’ right to further appeal to any civil or administrative court. 

[5] See PHP Contract, Section V.D.5.e.

[6] See, e.g., Abrons Family Practice & Urgent Care, P.A. v. N.C. Dep’t of Health & Human Servs., 810 S.E.2d 224 (N.C. 2018).