Budget Impasse Impacts Implementation of Medicaid Transformation

Blog | November 21, 2019


By Berkeley Yorkery


The budget impasse of the North Carolina General Assembly (NCGA) and Governor Cooper for state fiscal years 2019-2021 has again imperiled the implementation of the state’s move to Medicaid Managed Care. Implementation of North Carolina Medicaid Managed Care was supposed to begin this month for beneficiaries in three regions of the state with the rest beginning in February of 2020. The budget is typically passed over the summer, however budget delays this year already pushed the delay of the November rollout. The Department of Health and Human Services, the department in charge of implementing the move to Medicaid Managed Care, released a statement Tuesday announcing that implementation will be suspended. At this point it is unclear when the state will have an operating budget for SFY 2020-2021 and Medicaid Managed Care cannot move forward without one.


How Did We Get Here?

The budget for North Carolina’s Medicaid program, like other state government-run programs and operations, must be approved by the NCGA. Typically, this happens within a larger state appropriations act. Every two years, the NCGA must pass a budget that funds state government for the coming two years. This year the Republican majority House and Senate passed a budget that the Democrat governor vetoed. The House overrode the governor’s veto on September 11, 2019. The Senate has not voted on the override and is not scheduled to convene again until January of 2020. In the absence of a current operating budget, government funding reverts to funding as set in the previous budget. While many government programs can move forward under previous operating budgets, funding for Medicaid Managed Care was not in the previous budget as it is a new program.


Impact of Delay

Delay of Medicaid Managed Care is costly to the state, the companies with Medicaid Managed Care contracts, and to Medicaid beneficiaries. At this point, the state has invested millions in funding staff to implement Medicaid Managed Care as directed by the NCGA in 2015. The companies with contracts to administer the health plans for Medicaid Managed Care have hired extensively to run the North Carolina Medicaid prepaid health plans and will now have to make decisions about staffing given the delay in implementation. Community Care of North Carolina (CCNC), the care management company that manages care for high-need patients under the current Medicaid program, has been preparing to transfer some care management to the prepaid health plans.   CCNC must now quickly adjust staffing and budgets to continue to provide care after its anticipated contract expiration. Medicaid beneficiaries will continue to be served in a fee-for-service Medicaid program. There is the potential for confusion among beneficiaries and a delay of new services under quality and efficiency programs from the new health plans.


The budget impasse between the NCGA and the governor has created challenges for contracted companies, health care providers, and beneficiaries. Plans for implementation of managed care will remain suspended until such time as the Department of Health and Human Services has program authority based on a state budget.