What are Prepaid Health Plans?

Blog | August 29, 2018


By Berkeley Yorkery


Medicaid Prepaid Health Plans (PHPs) are coming to North Carolina as soon as November of 2019.[1] Under Medicaid transformation, the North Carolina Department of Health and Human Services (DHHS) will remain responsible for the Medicaid and NC Health Choice programs, but will contract with PHPs to provide managed care services to most beneficiaries. DHHS will contract with up to four statewide Medicaid managed care organizations (commercial plans) and up to 12 regional provider-led entities (PLEs) beginning in 2019.[2] All plans offered will be called PHPs.


Are there different types of Prepaid Health Plans?


While there will be multiple PHP options for beneficiaries, the PHPs will all cover the same core services under the Standard Benefit Plans. These Standard Plans will provide integrated physical health, behavioral health, and pharmacy services. Everything that Medicaid currently covers will still be covered, but there will be incentives built into the contracts to encourage PHPs to focus on prevention and care management. Plans may offer extra services (e.g. transportation, nurse help line, health education) if they choose. Enrollment navigators will be available to help individuals select the plan that best meets their needs.


While most Medicaid beneficiaries will transition to PHPs, some populations have been made exempt.[3] These populations will remain in Medicaid fee-for-service. Additional types of benefit plans will be developed to meet the needs of high-need populations in future years.


Who will offer Prepaid Health Plans?


DHHS recently released a competitive Request for Proposal (RFP) for PHPs. The RFP calls for applications from organizations that are “experienced Medicaid managed care” providers that would like to offer PHPs to North Carolina’s eligible Medicaid and NC Health Choice beneficiaries. Statewide bids are expected from health insurers currently operating in North Carolina and large commercial managed care plans that would like to operate in the state. (PHPs awarded contracts will be required to have offices and provide core Medicaid operations with staff located in North Carolina.) Because Medicaid PLEs are a new type of organization in North Carolina, all PLEs will be newly formed. Several organizations in North Carolina have already announced the formation of PLEs and are expected to submit proposals.


Selected PHPs will contract with DHHS for three years through June 30, 2022 (at which point another RFP will be issued). Prospective commercial plans and PLEs are eager to be awarded contracts to provide services to the 1.6 million Medicaid beneficiaries (representing approximately $6 billion/year) that will be enrolled in PHPs.


PHP contracts are scheduled to be awarded in February. Until then, we will be waiting to learn who will be offering PHPs, what regions they will serve, and what extra services plans will use to distinguish themselves from one another.



In this monthly blog series, we will explore Medicaid Transformation in North Carolina.


Previous posts in this series: 

What is Medicaid Transformation?

North Carolina's Medicaid Transformation Design




[1] The North Carolina General Assembly set in motion the move to Medicaid managed care in 2015. The state is still waiting for federal approval for the state’s Medicaid 115 waiver but is moving forward with implementation with the expectation that approval will be granted this fall. Session Law 2018-49 required DHHS to issue an RFP for the PHPs by August 21, 2018.

[2] The timeline issued with the RFP includes a phased roll out of PHPs beginning with enrollment opening next summer and the first phase of PHPs going live in November of 2019. Under this timeline all Medicaid beneficiaries, except exempt populations, will be managed under PHPs by February of 2020.

[3] See https://files.nc.gov/ncdhhs/30-19029-DHB.pdf page 4 for list of exempt populations