Wednesday morning, the N.C. House held a surprise vote and overrode the governor’s veto on the budget. That move, if the Senate follows suit, would provide the funding needed to transition North Carolina’s Medicaid population to managed care. Carolina Journal’s Julie Havlak explains:

House Bill 555, Medicaid Transformation Implementation, would privatize the management of Medicaid by contracting it out to third-party health insurers. Its funding was trapped in the budget stalemate, delaying the transformation. Cooper also vetoed H.B. 555, a standalone measure.

…The overhaul aims to rebuild the incentives of providers and payers. In exchange for monthly payments, five health insurance companies will take over management of the state’s $14 billion Medicaid program and begin to push it toward value-based care — the hottest trend in health care today. 

National Conference of State Legislatures program principal, Emily Blanford, explains how this potentially could produce better patient outcomes:

“Another entity is at risk for the costs, so they’ve got an incentive to keep costs down by keeping people healthier… When done well, managed care will help people get better, more consistent access to primary care and preventative services… Keeping them healthier helps prevent those more costly interventions that can come along when you don’t get that access to primary care.”

North Carolina is a little late to the trend. Havlak writes:

More than two-thirds of all Medicaid beneficiaries in the U.S. are covered by managed care organizations. And in the private market, still more Americans with health insurance coverage through their employer use some form of managed care, according to the Kaiser Family Foundation…

“North Carolina is one of the last remaining states that hasn’t gone to managed care,” said Katherine Hempstead, Robert Wood Johnson Foundation senior policy adviser. “It’s definitely the normal now for beneficiaries in managed care, especially in the expansion populations.”

The measure still has to pass through the Senate, and if it does, N.C. is projected to make the transition in February. Havlak reports, that transition will likely be a bumpy one:

“There’s always a transition period to learn the ropes. Patients need to learn the rules, and so do physicians,” said Deborah Freund, American Society of Health Economists executive director. “The transition is difficult for everyone, and that has nothing to do with the managed care organization.”

Read the full story here. Learn more about managed care from JLF’s Jordan Roberts here.