North Carolina: Medicaid Leader, Medicaid Laggard

When it comes to enrolling Medicaid members into managed care, North Carolina is both an innovator and an outlier.

The state has been an innovator since the 1980s, when it began using different forms of managed care for Medicaid beneficiaries, including primary care case management and patient-centered medical homes. But North Carolina is also on the fringe because it’s one of only 12 states that have yet to expand Medicaid enrollment under the Affordable Care Act (ACA) and, until last year, it was one of just 10 states that did not contract with a private company to manage the healthcare of its Medicaid beneficiaries.

But on July 1, 2021, North Carolina launched its Medicaid Transformation program to enroll 1.7 million Medicaid beneficiaries into five for-profit managed care organization (MCOs) — AmeriHealth, Blue Cross Blue Shield, Carolina Complete Health, UnitedHealthcare and WellCare — or into a health care program for members of the Eastern Band of Cherokee Indians. Seven months later, North Carolina Health News, a news website, reported that the transition to MCOs led to hundreds of complaints to state officials. When the program started, about 25% of Medicaid beneficiaries did not know about it and by February, thousands were still confused based on reports filed with the state’s Medicaid Ombudsman’s office, the news site reported.

“As with any new program, there’s always a learning curve and kinks to be worked out,” says Rebecca Whitaker, Ph.D., a research director at the Duke-Margolis Center for Health Policy in Durham, North Carolina. “But people are working together to make sure those kinks didn’t prevent people from accessing the care they need.”

A March 2022 survey by North Carolina for Better Medicaid, a coalition of patient advocates, community groups and health plans, showed that the transition to managed care was not a disaster, as some had predicted, nor the cure-all that many wanted.

Meanwhile, about 1.1 million Medicaid-eligible adult residents of North Carolina remain uncovered because the state hasn’t expanded Medicaid. Christopher A. Cooper, Ph.D., a professor and director of the Public Policy Institute at Western Carolina University, says closely divided partisan politics is one reason North Carolina has, in some respects, been behind the curve on Medicaid policies. “There’s no way to have a conversation about health policy without talking about politics,” he says. “We’re a purple state, with a Democratic governor and a Republican legislature, and that’s meant we’ve been a little slower to move on a variety of health policy issues.”

Tar Heel trailblazing

Yet North Carolina can stake a claim to having one of the country’s most innovative Medicaid programs in terms of healthcare delivery and addressing social determinants of health. As

Politico reported, in 1989 the state developed a primary care medical home and case management program for low-income individuals under a program known as Carolina Access. Primary care case management (PCCM) programs are among the oldest types of Medicaid managed care and often lead states to shift to having managed care organizations deliver care to Medicaid members, according to a report last year from the National Academy of State Health Policy.

When Carolina Access started, it was a physician-driven PCCM program for Medicaid beneficiaries in 12 of the state’s 100 counties. The participating physicians got $3 per member per month to provide care and coordinate members’ care with other providers and authorize specialty referrals when needed. In 1992, state officials agreed to expand the program statewide, and by the end of 1997, it was operating in all but one of North Carolina’s 100 counties; Mecklenburg County, where Charlotte is located, was the exception.

By that time, the program had more than 2,000 primary care doctors operating medical homes for more than 650,000 Medicaid members, about 70% of whom were women and children. One of the goals of medical homes is to reduce nonurgent emergency department (ED) visits, one of the most expensive places for care. The program cut those visits by 30%, according to Community Care of North Carolina (CCNC) a public-private partnership of regional networks of primary care clinicians, hospitals, pharmacies, public health agencies and other groups.

By 2001, CCNC had become the successor to Carolina Access. Under CCNC, participating physicians in provider-led networks statewide were getting a per-member, per-month payment for not only providing primary care services but also for coordinating beneficiaries’ care, Whitaker explains. Those providers work in multidisciplinary teams to deliver routine care — and still do today — and provide high-cost, complex care for beneficiaries who have chronic conditions, such as diabetes.

“Through that program, the state had a lot of success and received some national recognition for that initiative,” Whitaker says.

For Whitaker, three of the innovations in North Carolina’s Medicaid program stand out. First, the program has adopted value-based payment for providers who coordinate care to improve patient outcomes. Second, it integrates behavioral and physical care along with pharmacy services. And third, the program addresses the social drivers of healthcare costs and outcomes. Community-based organizations are getting reimbursed with Medicaid dollars to provide 29 services on a fee schedule that are related to such factors as lack of housing, food or transportation, or that relate to interpersonal violence and toxic stress, Whitaker says.

Medicaid expansion

One big question remains, says Cooper. Will North Carolina expand Medicaid? Yes certainly seemed to be the answer, but in August a carefully brokered deal fell apart at the last minute.

Cooper says there are good reasons for North Carolina going ahead with Medicaid expansion. It would get increased funding and potentially a greater return on its investment in managed care. “The ROI argument is persuasive and also, the sky hasn’t fallen since Medicaid Transformation began,” he says.

The Republican-led Senate voted 44-2 for Medicaid expansion in June. One reason for that vote was testimony showing that the federal government would provide $1.5 billion under the American Rescue Plan Act of 2021 to help pay that state’s 10% share of Medicaid expansion costs to cover those who are uninsured. Those costs are estimated to be about $8 billion per year. Those federal funds would cover the remaining 90%. Democratic Gov. Roy Cooper has long been a proponent of Medicaid expansion, and he said so again in July.

State Sen. Kevin Corbin (R-Franklin) agrees. Corbin has firsthand experience on how much Medicaid expansion would benefit the state’s low-income residents. In addition to his work in the state senate, Corbin is an insurance broker assisting low-income residents in buying health coverage.

“Take the example of a single mother who has two kids and makes a decent wage by working 30 hours a week at about 14 bucks an hour,” he says. “That’s less than 100% of the federal poverty level, which means she doesn’t qualify for tax credits under the Affordable Care Act.”

No way could she afford the standard health insurance policy at $650 a month, Corbin estimates. By making too much to qualify for Medicaid and too little to qualify for ACA subsidies, she falls into the Medicaid coverage gap. That means she’s uninsured while her children quality for coverage under the Children’s Health Insurance Program, he says.

When that mother needs health care, she is unlikely to have a primary care doctor and thus may seek care in the ED. If she’s unable to pay, North Carolina taxpayers would cover those costs, he says.

Joseph Burns is an independent journalist in Brewster, Massachusetts, who covers healthcare, health policy and health insurance.