North Carolina DHHS Set to Launch Medicaid Prepaid Health Plans July 1 – Provider Networks Forming Now

January 14, 2021Alerts

In a January 12 report to state lawmakers on Medicaid managed care implementation, the North Carolina Department of Health and Human Services (DHHS) predicted it will launch prepaid health plans as scheduled on July 1, 2021, and urged health care providers to enter into network contracts by February 1. 

Unlike fee-for-service Medicaid, many contract terms between health care providers and prepaid health plans (PHPs) are negotiable, and the short time left for contracting may impact contract negotiations.

Here are some key takeaways from the DHHS presentation:

1. Go-Live Date

Despite previous launch delays, DHHS Deputy Secretary Dave Richard and Assistant Secretary Jay Ludlam repeatedly said DHHS is on target to launch prepaid health plans (PHPs) on time, on July 1, 2021, and both encouraged providers to get on with contracting. Some have questioned whether the provider networks will be sufficient to go live on time, but in response to questioning from state lawmakers about the chance of additional delays, Richard and Ludlam said they are confident the program will launch on time (while stopping short of making a firm commitment that it would).

2. Provider Network Contracting

Time for network contracting is short. Although DHHS did not announce a hard deadline by which providers must contract with PHPs, it encourages providers to enter contracts by February 1 to be included in PHP provider directories before open enrollment begins (March 15), or at a minimum, by April 12 for inclusion in provider directories before the open enrollment period ends (May 14) and auto-enrollment begins. Ludlam also noted that provider contracting has been a challenge, in part because of the ongoing pandemic, and that PHPs are currently focused on contracting with health systems and primary care physicians. DHHS provided the timeline below:

A complete copy of the DHHS presentation, including this timeline, is available here:NC DHHS Report to Joint Legislative Oversight Committee, NC Medicaid and Health Choice.

3. Additional Takeaways

  • Network adequacy: Although there is no specific deadline for providers to contract with PHPs, DHHS said PHPs should meet network adequacy requirements in advance of auto-enrollment, which begins May 15.
  • Additional legislative changes forthcoming: Richard said DHHS would send a set of proposed legislative changes to the General Assembly this session as the implementation progresses.
  • Provider manuals finalized: Ludlam reported that the PHPs’ provider manuals are finalized and are available on the PHPs’ provider contracting web sites.

Contracting Considerations for Providers

Several points in the presentation may be useful knowledge for providers contracting with PHPs.  If PHPs are currently focused on contracting with health systems and primary care practices, it is likely there will be a rush between this March and early May to sign up other provider types to meet the PHPs’ network adequacy requirements, which are set forth in Attachment F of the PHP contract and are mandatory under federal Medicaid regulations (42 CFR 438.68 and 438.206). In addition to hospitals and primary care physicians, PHPs must meet network adequacy standards for numerous provider types, including:

  • OB/Gyn
  • Specialty care providers (allergy/immunology, anesthesiology, cardiology, dermatology, endocrinology, ENT/otolaryngology, gastroenterology, general surgery, infectious disease, hematology, nephrology, neurology, oncology, ophthalmology, optometry, orthopedic surgery, pain management, psychiatry, pulmonology, radiology, rheumatology and urology)
  • Occupational/physical/speech therapy
  • Pharmacies
  • Nursing facilities
  • Behavioral health (outpatient, location-based services, crisis services, inpatient, partial-hospitalization, and low-intensity residential services)
  • Long-term services and supports (home care, home health, private duty nursing, personal care services and hospice).

Although the PHP contract allows for exceptions to the network adequacy requirements, those exceptions are at the discretion of DHHS, and require in part that PHPs:

  1. Have made good faith efforts to contract with providers, and
  2. Provide a plan and estimated time to remedy the gap in their network.

Therefore, PHPs are strongly incentivized to meet the network adequacy requirements in the first instance.  Consequently, certain providers may have significant leverage in negotiating contract terms (including reimbursement rates) with Medicaid PHPs, especially those in underserved areas that PHPs need to meet network adequacy requirements.

For more information about North Carolina's Medicaid managed care rollout, contact Marc Hewitt at [email protected] or 919.755.8776, or another North Carolina's based member of the firm's Health Law team.