North Carolina Waiver With ‘Healthy Opportunities’ Pilots Approved

Manatt on Health: Medicaid Edition

On October 24, 2018, North Carolina received approval from the federal Centers for Medicare & Medicaid Services (CMS) of its 1115 waiver for a five-year demonstration period. The waiver provides the North Carolina Department of Health and Human Services (DHHS) authority to transition its fee-for-service delivery system to a managed care program.1 The waiver also gives North Carolina flexibility to incorporate innovative features into its managed care program, including:

  • The “Healthy Opportunities” Pilots.2 This pilot program will allow Medicaid managed care plans to cover evidence-based, nonmedical interventions that have a direct impact on enrollees’ health outcomes and costs.
  • “Tailored Plans.” All of North Carolina’s managed care plans will offer integrated physical, behavioral and pharmacy benefits; however, “tailored plans” will also cover a specific, more intensive set of benefits for individuals with more complex behavioral health needs or intellectual/developmental disabilities (I/DD).
  • A Waiver of the Institution for Mental Diseases (IMD) Exclusion. North Carolina will begin covering services provided to individuals residing in IMDs who are receiving substance use treatment.

Healthy Opportunities Pilots

In two to four regions of the state, Medicaid managed care plans—known as Prepaid Health Plans (PHPs)—will implement “Healthy Opportunities Pilots,” covering evidence-based interventions that address housing instability, transportation insecurity, food insecurity, and interpersonal violence and toxic stress for a subset of Medicaid enrollees. PHPs will be responsible for determining who is eligible to receive these services and which services they will receive. Each PHP operating in a pilot region will have a capped allocation of funding to spend on pilot services and will need to manage its budget within this allocation. A network of community-based organizations and social service agencies will deliver the pilot services and will be established, managed and overseen by “Lead Pilot Entities” (LPEs), organizations that will serve as the essential connection between the PHPs and community-based providers.

The federal government has authorized up to $650 million in federal and state Medicaid funding for the pilots over the five-year life of the waiver to pay for the delivery of the services as well as capacity building, which in the early years will predominantly support the information technology and systems development that LPEs and community-based organizations need to launch the project.

To ensure accountability for this investment, the demonstration will increasingly rely upon value-based payments tied to certain process and outcome-based measures. In addition, the state will conduct “rapid cycle assessments” that identify which interventions are most and least effective, enabling North Carolina to shift pilot funding to interventions with a demonstrated impact on cost and outcomes.

North Carolina is the first state to receive approval to tackle such a broad range of factors affecting health through its Medicaid managed care program.

Tailored Plans

North Carolina will integrate physical, behavioral and pharmacy benefits for all enrollees through “standard plans” and “tailored plans.” Tailored plans are targeted to specific subpopulations: people with a serious mental illness, a serious emotional disturbance, a severe substance use disorder, an I/DD or a traumatic brain injury. Individuals who are eligible for and choose to enroll in a tailored plan will have access to a specific, more intensive set of benefits not available in standard plans, such as treatment in psychiatric residential treatment facilities and child and adolescent day treatment services. Additionally, tailored plan enrollees will receive care management through a specialized behavioral health and I/DD health home model designed to meet enrollees’ complex needs, to be authorized through a State Plan Amendment (SPA).

Waiver of the IMD Exclusion

North Carolina will begin reimbursing for substance use disorder (SUD) services provided to individuals residing in IMDs and, through forthcoming SPAs, expand the SUD service array to ensure the provision of the full continuum of services. This is one component of the state’s larger efforts to decrease the long-term use of opioids and increase the use of medication-assisted treatment with other opioid treatment services, as further described in its Opioid Action Plan.

Pended Waiver Requests Requiring Further Negotiation

CMS and North Carolina agreed to continue negotiating several waiver requests that were not approved in this 1115 waiver, including:

  • Behavioral Health and I/DD Health Home Capacity Building Funds. North Carolina is seeking funding to support upfront investments to ensure that health homes are prepared to meet the needs of people with I/DD or significant behavioral health needs.
  • Uncompensated Care Pool for Tribal Providers. North Carolina’s waiver application included a request for expenditure authority for an uncompensated care pool to address the high burden of uncompensated care borne by the Cherokee Indian Hospital Authority.
  • Workforce. North Carolina requested expenditure authority to establish an “Innovation Workforce Fund,” which would support loan repayment and recruitment bonuses for targeted, critical Medicaid provider types.

Moving Forward

The waiver initiatives described above complement a range of other activities being developed that do not require waiver authority, such as implementation of primary-care focused “Advanced Medical Homes.” North Carolina is in the process of procuring its managed care plans and is aiming for a November 2019 managed care launch, which is when the majority of the 1115 waiver becomes effective.3

1As required under General Assembly Session Law 2015-245 and amended by Session Law 2016-121, North Carolina is transitioning its Medicaid and NC Health Choice (North Carolina’s Children’s Health Insurance Program) enrollees to Medicaid managed care.

2The Healthy Opportunities Pilots are referred to as the “Enhanced Case Management and Other Services Pilot Program” in the 1115 waiver special terms and conditions.

3Tailored plans will launch at a later date.



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