March 2, 2021
The Joint House and Senate Appropriations Committee on Health and Human Services met today for an overview of NC’s Medicaid program and NC Health Choice from the legislature’s Fiscal Research Division.
NC’s Medicaid program is administered by the state under guidelines set by the federal government, and covers the cost of health insurance for qualifying low-income individuals. The state must get permission from the federal government’s Centers for Medicare and Medicaid Services (CMS) to modify any parts of the Medicaid program through state plan amendments and waivers. The Medicaid program is funded jointly between the state and federal government. The base federal share of the program (FMAP) is 67.4% in North Carolina. On October 1, 2021, the FMAP will increase to 67.65%. Federal COVID-19 relief legislation last year included a 6.2% increase to the FMAP, but is contingent on the non-termination of Medicaid enrollment during the pandemic.
Certain groups must be covered under a state’s Medicaid program, including coverage for the aged, blind and disabled, pregnant women up to 133% of the federal poverty level (FPL), foster children and adoptive children, newborns up to 196% FPL, children through age 18 up to 133% FPL, and families with children to age 18 who would have been eligible for Aid to Families with Dependent Children (AFDC) in May 1988. The North Carolina General Assembly has also set additional eligibility for Medicaid beneficiaries beyond the mandatory categories.
To enroll in Medicaid, local county departments of social services conduct eligibility determinations. NCDHHS reports Medicaid enrollment in 18 “Program Aid Categories” (PACs) that represent the different beneficiary groups and eligibility requirements. As of February 1, 2021, there were 2,381,918 beneficiaries in the NC Medicaid program. By accepting the federal government’s 6.2% FMAP increase, the State had to agree to not terminate Medicaid beneficiaries during the pandemic. Before the pandemic, enrollment had been relatively flat since the end of 2018. Enrollment has grown quickly during the pandemic, which is due in part to the non-termination of enrollees.
NC’s Medicaid program provides a variety of benefits to enrollees. Services include those provided by physicians, midwives and nurse practitioners, children’s dental, hearing, and vision services, services provided by federally qualified and rural health centers, durable medical equipment, ambulance and medical transport, hospital inpatient and outpatient services, psychiatric residential treatment facilities, and more. NC Medicaid also provides additional optional benefits, including prescription drug costs, personal care services, inpatient psychiatric services, and health clinics, among others. Not all services are available to all Medicaid beneficiaries, such as family planning eligibility. NCDHHS has the authority to set coverage policies and reimbursement rates for most providers, and all changes must be within the state budget for Medicaid.
Medicaid behavioral health services for individuals with intellectual/developmental disabilities (IDD) are coordinated by 7 regional Local Management Entities/Managed Care Organizations (LME/MCOs). Medicaid pays LME/MCOs per-person rates (capitated rates) to manage and provide community-based mental health, substance abuse treatment, and supports and care for the IDD population. Close to $3 billion of Medicaid’s budget goes to behavioral health services, with almost all going to LME/MCOs.
Children account for 50% of the population covered by Medicaid, with aged, blind, and disabled at 20%, family planning at 16%, adults at 9%, dual eligible at 4%, and immigrants and refugees at 1%. Over 66% of Medicaid spending is for the aged, blind and disabled, 23% for children, and 10% for adults. Generally, any licensed provider in good standing who is
willing to accept the rates paid by Medicaid can participate in providing these services. Providers pay a $100 State provider application and recredentialing fee every 5 years, in addition to the federally required fee. Close to 20,000 providers received Medicaid payments in FY 2019-20, at over $9.2 billion in total payments.
The committee then received an update on NC Health Choice, which provides medical coverage to children ages 6 through 18 in households with income between 133% and 210% of FPL. NC Health Choice benefits are similar to Medicaid, but not identical. NC Health Choice is under the federal Children’s Health Insurance Program (CHIP), and CHIP funding is an allotment, not an entitlement like Medicaid. The base federal match rate is currently 77.18%. but COVID-19 relief legislation from the federal government increases the federal share to 81.52% through at least June 30, 2021. In addition to NC Health Choice, the CHIP federal match applies to approximately 180,000 children included in Medicaid enrollment numbers. NC Health Choice enrollment had been growing until July 2020. During the pandemic, Medicaid children cannot be moved to NC Health Choice, but they can be moved from NCHC to Medicaid.
The committee also received a brief overview of Medicaid transformation. In July, the State will move from the fee-for-service delivery system of Medicaid to managed care. Prepaid Health Plans will receive per-person payments to coordinate and pay for physical and behavioral healthcare for enrollees. Roughly 1.8 million of Medicaid and NC Health Choice enrollees will move to managed care on July 1st. The committee is scheduled to hear a more in-depth discussion on Medicaid transformation tomorrow. Lastly, the Fiscal Research Division gave an overview of the budget for NCDHHS’s Division of Health Benefits (DHB). DHB spends over $14.9 billion a year, with 97.4% going to aid and public assistance. The federal government supports 64.9% of funding for DHB, with state appropriations supporting 26.4% of funding.