Yesterday, the North Carolina Department of Health and Human Services (DHHS) announced plans to modify the state’s Medicaid Reform proposal that was submitted for federal approval last June.  Medicaid, the public health insurance program that offers medical assistance to low-income children, adults, pregnant women, elderly and disabled, covers 2 million people and consumes a large portion of the state’s General Fund. With state and federal monies combined, Medicaid costs $14 billion a year.

In 2015, North Carolina lawmakers passed pivotal legislation that will transform Medicaid’s financial and management structure. Starting in 2019, Medicaid will no longer pay most providers on a fee-for-service schedule. Instead, commercial insurance companies will contract with the state and pay in-network Medicaid providers a defined monthly fee to cover patients’ care. The shift from volume to value-based payment in health care is a popular trend, and legislators and other special interests involved with the reform process are hoping that this will place the program on a more sustainable path while improving overall patient care.

DHHS’s revised Medicaid program design comes with some significant positives:

  • Integrated Care: DHHS wants to coordinate both behavioral and physical health services for Medicaid patients. While North Carolina is among the last states to transition to a Medicaid managed care system for physical health needs, it has led the nation since the early 2000s in delivering mental health services via a managed care model. Even before the state’s behavioral health managed care entities were implemented statewide in 2011, one organization, Cardinal Innovations, was able to save the state $200 million in five years by better coordinating care for North Carolina’s low-income patients who suffer from substance abuse and developmental disabilities.


  • Telehealth: The revised Medicaid plan also calls to leverage more telemedicine initiatives so patients who live in rural areas have better access to health care. With the advancement of technology, licensed medical providers can securely connect with more patients for primary and specialty needs. It’s worth noting that North Carolina’s Medicaid program has offered telemedicine services for almost 20 years, and also reimburses physicians for telemedicine services the same rate for treatment delivered in an in-patient setting. Including telemedicine as a benefit within a Medicaid managed care health plan has the potential to further reduce unnecessary ER visits and travel time for patients.

For more details on North Carolina’s Medicaid reform implementation plan, see here.