MEDICAID TRANSFORMATION IMPLEMENTATION. (NEW)

View NCGA Bill Details2019-2020 Session
House Bill 555 (Public) Filed Tuesday, April 2, 2019
AN ACT TO APPROPRIATE FUNDS FOR THE IMPLEMENTATION OF MEDICAID TRANSFORMATION AND TO MAKE OTHER MEDICAID TRANSFORMATION-RELATED CHANGES.
Intro. by Dobson, White, Saine, Lambeth.

Status: Re-ref Com On Rules and Operations of the Senate (Senate action) (Oct 31 2019)

SOG comments (1):

Long title change

House committee substitute to the 2nd edition changed the long title.  Original title was AN ACT TO MAKE CHANGES TO MEDICAID AND NC HEALTH CHOICE TELEMEDICINE AND TELEPSYCHIATRY POLICIES TO FACILITATE INCREASED ACCESS TO SERVICES, EVOLVE WITH THE LATEST TECHNOLOGY, AND ALIGN WITH BEST PRACTICES.

Bill History:

H 555

Bill Summaries:

  • Summary date: Sep 3 2019 - More information

    The Governor vetoed the act on 8/30/19. The Governor's objections and veto message are available here: https://webservices.ncleg.net/ViewBillDocument/2019/6473/0/H555-BD-NBC-7160.


  • Summary date: Aug 26 2019 - More information

    Senate amendment makes the following changes to the 4th edition.

    Part I.

    No longer repeals Sections 9D.15 (regarding the use of the Medicaid Transformation Fund for specified transformation needs) and 9D.15B (regarding Medicaid Transformation administrative reduction flexibility and reporting) of HB 966 (the Appropriations Act of 2019) if HB 966 becomes law.

    No longer repeals all of Part II of the act if HB 966 becomes law. Instead, if HB 966 becomes law, repeals Section 2.1 and 2.2 (appropriating funds for Medicaid and NC Health Choice programs rebase, and for transitioning to Medicaid managed care, for the 2019-20 and 2020-21 fiscal years) and Part III of the act (providing for the use of the Medicaid Transformation Fund for specified Medicaid transformation needs).

    Part III.

    Changes the amount to be transferred from the Medicaid Transformation Reserve in the General Fund to the Medicaid Transformation Fund from $224 million to $193 million for the 2019-20 fiscal year, and from $45 million to $24 million for the 2020-21 fiscal year. 

    Regarding the amount permitted to be transferred from the Medicaid Transformation Fund to the Department of Health and Human Services (DHHS), Division of Health Benefits, for the 2020-21 fiscal year for providing the State share for nonrecurring qualifying needs directly related to Medicaid transformation, specifies that the specified amount is in nonrecurring funds.

    No longer authorizes transfers to the Division of Health Benefits for the 2019-20 and 2020-21 fiscal years for the purpose of providing nonrecurring funding for administrative expenses during the transition to Medicaid-managed care.

    Part IV.

    Deletes the provisions of Part IV, which reduced the budget of the Division of Health Benefits for the 2019-20 and 2020-21 fiscal years, and established reporting requirements regarding the Division's reduction of administrative costs.

    Part IX.

    Makes a technical change to new GS 143C-4-11. Further amends the statute to allow allocation or expenditure of funds from the Medicaid Contingency Reserve if the Director of the Budget finds additional funds are needed to cover a shortfall, after the State Controller has verified that all Medicaid and NC Health Choice program receipts are being used appropriately (previously, generally required prior verification of receipts).

    Part X.

    Amends Section 10.3(b) of the act, if HB 966 becomes law, regarding the transfer of receipts collected from supplemental and base assessments in excess of that anticipated in the Governor's proposed base budget for the 2019-20 fiscal year for the Division of Health Benefits. Now provides for the specified transfers if the receipts collected are in excess of those anticipated in HB 966, rather than the Governor's proposed base budget.

    Part XII.

    Amends new GS 143C-9-9 to refer to the Hospital Uncompensated Care Fund consistently throughout.


  • Summary date: Aug 22 2019 - More information

    Senate committee substitute to the 3rd edition makes the following changes.

    Part IV.

    Changes the proposed reduction of the General Fund budget for the Division of Health Benefits for the 2019-20 fiscal year to $30,658,885 in recurring funds, rather than $30,658,855 in recurring funds.


  • Summary date: Aug 21 2019 - More information

    Senate committee substitute to the 2nd edition deletes the previous provisions and instead provides the following.

    Part I.

    Directs that the act's implementation be in conjunction with the procedure for budget continuation under specified state law, with the act's provisions superseding conflicting state law. 

    Repeals Sections 9D.14, 9D.15, 9D.15A, 9D.15B, 9D.16, 9D.17, 9D.18, and 9D.19 of HB 966 (Appropriations Act of 2019) of the 2019 Regular Session if HB 966 becomes law.

    Repeals Part III of this act if HB 966 becomes law.

    Part II.

    Appropriates $33,758,136 in recurring funds from the General Fund to the Department of Health and Human Services (DHHS), Division of Health Benefits, for the 2019-20 fiscal year, and $199,784,238 in recurring funds for the 2020-21 fiscal year, for the Medicaid and NC Health Choice programs rebase.

    Appropriates $28,617,655 in recurring funds from the General Fund to the Division of Health Benefits for the 2019-20 fiscal year, and $40,167,655 in recurring funds for the 2020-21 fiscal year, for transitioning to Medicaid managed care.

    Deems receipts received as a result of the act appropriated in each year of the 2019-21 biennium for the specified purposes.

    Part III.

    Directs the State Controller to transfer $224 million for the 2019-20 fiscal year, and $45 million for the 2020-21 fiscal year, from funds available in the Medicaid Transformation Reserve in the General Fund to the Medicaid Transformation Fund. Authorizes the transfer of funds from the Medicaid Transformation Fund to the Division of Health Benefits for payment of claims related to services billed under the fee-for-service payment model for recipients being, or who have been, transitioned to managed care (known as "claims run out"). Allows for transfer on an as-needed basis; deems transferred funds appropriated.

    Authorizes $27,280,947 in nonrecurring funds for the 2019-20 fiscal year, and $10,983,548 for the 2020-21 fiscal year, to be transferred from the Medicaid Transformation Fund to the Division of Health Benefits to provide the State share for nonrecurring qualifying needs, as defined, directly related to Medicaid transformation required by SL 2015-241, as amended. Allows for transfer on an as-needed basis; deems transferred funds appropriated. Requires the Division of Health Benefits to make transfer requests to the Office of State Management and Budget (OSBM), providing for the amount request and the nonrecurring qualifying need for which the funds are to be used. Requires OSBM to verify the amount and use, and that the amount requested provides a State share that will not result in total requirements that exceed $190 million in nonrecurring funds for the 2019-21 fiscal biennium, prior to any transfer. Mandates that any federal funds received in any fiscal year by the Division of Health Benefits that represent a return of State share already expended on a qualifying need related to the funds received by the Division under the act be deposited into the Medicaid Transformation Fund. Authorizes $30,658,885 in nonrecurring funds for the 2019-20 fiscal year, and $21,345,808 in nonrecurring funds for the 2020-21 fiscal year, to be transferred from the Medicaid Transformation Fund to DHHS for the purpose of providing nonrecurring funding for administrative expenses during the transition to Medicaid-managed care. Deems transferred funds appropriated.

    Part IV.

    Reduces the General Fund budget for the Division of Health Benefits by $30,658,855 in recurring funds for the 2019-20 fiscal year, and $42,691,615 in recurring funds for the 2020-21 fiscal year due to reduced administrative costs resulting from the implementation of Medicaid transformation. Authorizes the DHHS Secretary to reduce administrative costs across all DHHS Divisions. Prohibits any reduction that reduces funds that impact direct services (not including the reduction of administrative costs associated with contracts for the provision of direct services) or that are used to support a specified settlement agreement between the State and the US Department of Justice. 

    Requires the DHHS Secretary to report to the specified NCGA committees and division by January 15, 2020, and January 15, 2021, on the reduction actions taken during the respective fiscal year. Requires the Secretary to list any positions eliminated with specified accompanying information.

    Part V.

    Repeals Section 12H.12(b) of SL 2014-100 (which replaced the individualized base rates for hospital inpatient services under the Medicaid and NC Health Choice programs with a specified single statewide base rate for hospital inpatient services) and Section 12H.23 of SL 2015-241 (which prohibited Medicaid providers from receiving reimbursement for Graduate Medical Education (GME) in addition to their DRG Unit Value rate).

    Part VI.

    Requires DHHS to ensure that the existing DHHS Customer Service hotline is responsive to questions posed by a Medicaid beneficiary or provider, or the general public, related to Medicaid transformation during the 2019-20 fiscal year.

    Part VII.

    Authorizes DHHS to contract with the Indian managed care entity (IMCE) or an Indian health care provider (IHCP) to assist in the provision of health care or health care-related services to Medicaid and NC Health Choice beneficiaries who are members of federally recognized tribes or who are eligible to enroll in an IMCE. Details care and services permitted by the contracts. Requires that coverage provided by the IMCE or IHCP can be more permissive but no more restrictive than Medicaid or NC Health Choice medical coverage policy adopted or amended by DHHS. Requires coverage to be in compliance with federal regulations and policies related to the receipt of federal funding for health care or health care-related services. 

    Amends Section 4 of SL 2015-245, as amended, to exclude eligible recipients enrolled in a DHHS-contracted IMCE from the required coverage of capitated PHP contracts. Makes conforming changes to include this new exception in the management transformation process set forth in Section 4 of SL 2015-245. Effective October 1, 2019.

    Authorizes DHHS to seek approval from CMS and submit any necessary State Plan Amendments and waivers, or any amendments, to implement Part VII.

    Part VIII.

    Requires DHHS to revise the supplemental payment program for eligible medical professional providers. Effective October 1, 2019, the following two changes to the program must be implemented: (1) the program must no longer utilize a limit on the number of eligible medical professional providers that may be reimbursed through the program, and must instead use a limit on the total payments made under the program and (2) payments under the program must consist of supplemental payments that increase reimbursement to the average commercial rate under the State Plan and directed payments that increase reimbursement to the average commercial rate under the managed care system.

    Requires that the limitation on total payments made under the Average Commercial Rate Supplemental and Directed Payment Program for eligible medical professional providers applies to the combined amount of payments made as supplemental payments under the State Plan and payments made as directed payments under the managed care system and must be based on the amount of supplemental payments made during the 2018-2019 fiscal year as specified depending on when services were provided. 

    Requires DHHS to limit the total amount of supplemental and directed payments that may be received by the eligible providers affiliated with East Carolina University Brody School of Medicine and the University of North Carolina at Chapel Hill Health Care System. Provides that average commercial  rate supplemental payments and directed payments must not be made for services provided in Wake County. 

    Repeals SL 2013-360, Section 12H.13(e) (which reduces the percentage of allowable costs for hospital outpatients from 80% to 70% under the Medicaid and NC Health Choice Programs, which became effective January 1, 2014) and SL 2014-100, Section 12H.13(b) (which requires UNC and ECU to submit an annual report based on their preceding fiscal year to the Joint Legislative Oversight Committee on Health and Human Services on each individual provider for whom the specified supplemental payment was made) and Section 12H.13A (which sets the settlement for outpatient Medicaid services performed by UNC Hospitals and Vidant Medical Center at 70% of costs, which became effective July 1, 2014). Effective October 1, 2019.

    Part IX.

    Enacts GS 143C-4-11, establishing the Medicaid Contingency Reserve to be used for budget shortfalls in Medicaid or NC Health Choice programs. Sets forth three criteria that must be met in order for funds from the Medicaid Contingency Reserve Fund to be allocated or expended, including a legislative appropriation, verification of appropriate use by OSBM, and immediate reporting of the shortfall by the Director of the Budget to the Fiscal Research Division, as specified. Specifies that gubernatorial authority is not limited by the statute.

    Part X.

    Repeals Article 7 of GS Chapter 108A, Hospital Provider Assessment Act, effective October 1, 2019. Effective October 1, 2019, enacts new Article 7A, Hospital Assessment Act, in GS Chapter 108A, providing as follows. 

    Provides that the assessments apply to all licensed North Carolina hospitals, except exempts from the supplemental assessment and the base assessment critical access hospitals, freestanding psychiatric hospitals, freestanding rehabilitation hospitals, long-term care hospitals, state-owned and state-operated hospitals, and the primary affiliated teaching hospital for each UNC medical school. Exempts public hospitals from the supplemental assessment.

    Requires both the base and supplemental assessments to be a percentage, established by the NCGA, of total hospital costs. Requires the DHHS proposed supplemental assessment rate on: (1) the percentage change in aggregate payments to hospitals subject to the supplemental assessment for Medicaid and NC Health Choice enrollees, excluding hospital access payments made under 42 CFR § 438.6 and (2) any changes in the federal medical assistance percentage rate applicable to the Medicaid or NC Health Choice programs for the applicable year. Requires the proposed base assessment rate to be based on: (1) the change in the State's annual Medicaid payment for the applicable year; (2) the percentage change in aggregate payments to hospitals subject to the base assessment for Medicaid and NC Health Choice enrollees, excluding hospital access payments made under 42 CFR § 438.6, as determined by the DHHS; (3) any changes in the federal medical assistance percentage rate applicable to the Medical or NC Health Choice programs for the applicable year; and (4) any changes, as determined by DHHS, in reimbursement under the Medicaid State Plan, managed care payments authorized under 42 CFR § 438.6 for which the nonfederal share is not funded by General Fund appropriations, and reimbursement under the NC Health Choice program. Provides that beginning October 1, 2019, assessments are due quarterly. Allows a hospital to appeal a determination of the assessment amount owed through a reconsideration review. Provides that if the Centers for Medicare and Medicaid Services (CMS) determines that an assessment is impermissible or revokes approval of an assessment, then that assessment must not be imposed and DHHS authority to collect the assessment is repealed.

    Provides that if a hospital exempt from both the base and supplemental assessments under this Part (1) makes an intergovernmental transfer to DHHS to be used to draw down matching federal funds and (2) has acquired, merged, leased, or managed another hospital on or after March 25, 2011, then the exempt hospital must transfer an additional amount to the State. Sets out the formula for calculating that amount. 

    Requires that the proceeds of the assessments imposed under this Part, and all corresponding matching federal funds, must be used to make the State's annual Medicaid payment to the State, to fund payments to hospitals made directly by DHHS, to fund a portion of capitation payments to prepaid health plans attributable to hospital care, and to fund the nonfederal share of graduate medical education payments.

    Sets the percentage to be used in calculating the supplemental assessment at 2.26% and the base assessment rate at 1.77% for the taxable year October 1, 2019, through September 30, 2020.

    Directs the State Controller to transfer funds from the Medicaid Contingency Reserve to the Division of Health Benefits only upon request by the Division as needed to cover any shortfall of receipts from the supplemental or base assessments under new GS 108A-141 and GS 108A-142, and only if two conditions are met: (1) OSBM has certified that there will be a shortfall and (2) OSBM has certified that the amount requested does not exceed the shortfall in receipts certified. Requires the Division of Health Benefits to notify the specified NCGA committee and division of any request and the amount requested. Deems transferred funds appropriated. Sunsets this authority June 30, 2020.

    Directs DHHS to establish a new fund code, Hospital Assessment Fund, to be used to support a decrease in the supplemental assessment or base assessment rates corresponding with the amount in the Fund.

    Applicable for the 2019-20 fiscal year only, provides for the transfer of over-realized receipts from the supplemental and base assessments, based on the amount anticipated in the Governor's proposed base budget for the Division of Health Benefits for the fiscal year, as follows: $45 million transferred to the Hospital Assessment Fund, or if the total amount of over-realized receipts is less than $45 million, then the full amount to the Hospital Assessment Fund; and the remainder, after the $45 million transfer, if appropriate, to the Medicaid Transformation Reserve. Requires OSBM to certify that there will be over-realized receipts for the 2019-20 fiscal year from the supplemental and base assessments, and that the amounts transferred are in compliance with these provisions, prior to transferring any amount. 

    Part XI.

    Makes the following changes to Article 8B of GS Chapter 105, retitling the article Taxes Upon Insurance Companies and Prepaid Health Plans.

    Adds capitation payment and prepaid health plan to the defined terms set out in GS 105-228.3. Makes organizational changes.

    Amends GS 105-228.5, expanding the gross premium tax to subject capitation payments received by prepaid health plans to a 1.9% gross premium tax, measured by gross capitation payments received by the prepaid health plan (PHP) by the DHHS for services delivered to enrollees in the State Medicaid program or NC Health Choice program in the preceding calendar year. Makes conforming additions concerning calculating the tax base of PHPs. Provides that capitation payments refunded by a PHP to the State are the only allowable deductions. Adds clarification to the exclusion of Medicaid premiums, providing that the exclusion includes Medicaid or NC Health Choice premiums other than capitation payments, paid by or on behalf of a Medicaid or NC Health Choice beneficiary. Requires the net proceeds of the tax to be credited to the General Fund. Makes further technical and clarifying changes. 

    Amends GS 58-6-25, concerning insurance regulatory charges, to include PHPs that pay the gross premium tax set out in GS 105-228.5 in the term insurance company.

    Amends GS 105-259 to allow state officers and employees to exchange tax information with DHHS when needed to fulfill a duty imposed on the Department of Revenue.

    Effective October 1, 2019. 

    Part XII.

    Enacts GS 143C-9-9, establishing the Hospital Uncompensated Care Fund as a nonreverting special fund in DHHS, consisting of the federal disproportionate share adjustment receipts arising from certified public expenditures. Authorizes DHHS to use funds from the Fund to (1) make payments to institutions for mental diseases, as defined by federal law and (2) make payments to hospitals to reimburse inpatient services uncompensated care costs or outpatient services uncompensated care costs, or both, provided the entity has been determined eligible. Requires DHHS to adopt rules for determining eligibility for, and allocations of, Hospital Uncompensated Care Fund payments. 

    Makes conforming changes to the act's titles.


  • Summary date: May 2 2019 - More information

    House committee substitute to the 1st edition corrects a typo. 


  • Summary date: Apr 3 2019 - More information

    Requires the Department of Health and Human Services (DHHS) to make 6 specified changes to the Medicaid and NC Health Choice Clinical Coverage Policy No. 1H, Telemedicine and Telepsychiatry, regarding reimbursement, referrals, delivery of services by phone or video cell phone, same-date billing, best practices, and inclusion in the coverage policy of certain behavioral health providers. Directs DHHS to expand the billing code set available for telemedicine and telepsychiatry to include most outpatient billing codes, but not to include group-type therapies other than family therapy.  Changes become effective after the completion of the process for amending policy that is required under GS 108A-54.2 (procedures for changing medical policy in public assistance programs).

    Requires DHHS to submit to the Centers for Medicare and Medicaid Services any waivers or amendments to the NC Medicaid State Plan necessary to implement this act.  


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