Bill Summary for H 1181 (2013-2014)

Summary date: 

Jul 17 2014

Bill Information:

View NCGA Bill Details2013-2014 Session
House Bill 1181 (Public) Filed Wednesday, May 21, 2014
AN ACT TO MODERNIZE AND STABILIZE NORTH CAROLINA'S MEDICAID PROGRAM THROUGH FULL‑RISK CAPITATED HEALTH PLANS TO BE MANAGED BY A NEW DEPARTMENT OF MEDICAL BENEFITS.
Intro. by Dollar, Burr, Avila, Lambeth.

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Bill summary

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

Amends Section 1, Intent and goals, to include as goals: (1) provide whole-person integrated care, (2) maintain access to care for the state's Medicaid population, and (3) provide accountability for budget and program outcomes (was, require provider accountability for budget and program outcomes).

Rewrites Section 2 of this act, which specifies the principal building blocks of the reform of North Carolina's Medicaid program. Includes as one of the principal building blocks a new Department of Medical Benefits (Department), created in Section 10 of this act, to be managed by a board consisting of experienced business, health care, and health insurance leaders appointed by the Governor and General Assembly. Prescribes that the Department is to focus on the Medicaid and NC Health Choice programs.

Provides that the building blocks are also to include full-risk capitated health plans to manage and coordinate all care for Medicaid recipients and cover all Medicaid health care items and services. (Such plans involve shared financial risk among all participants and place providers in the network not only for their own financial performance but also for the performance of other providers in the network. In a capitated health plan, the medical provider is given a set fee per patient regardless of the treatment required as in an HMO).

Also identifiescompetition between multiple provider-led and non-provider led health plansas a principal building block of transforming the state's Medicaid program. Provides that full risk for provider-led health plans is to be phased in over a two-year period in order to allow the provider-led plans to become established.

Other new building blocks include regional health plans, subject to four specified conditions; risk adjusted capitated rates based on eligibility categories, geographic areas, and clinical risk profiles of recipients; participant choice of plans offering customized benefits packages; mechanisms to provide incentives and encourage personal accountability for participating in the beneficiaries' own health outcomes; and mechanisms to identify Medicaid recipients who may benefit from other state services and programs to maximize opportunities and reduce reliance on Medicaid and refer those individuals to the appropriate other services and programs.

Establishes timelines from August 1, 2014, through July 1, 2018, by which specified milestones for Medicaid reform must happen, including creating the new Department by August 1, 2014, receiving final approvals from Centers for Medicare & Medicaid Services for reform plan by January 1, 2016, and provider-led plans at full risk by July 1, 2018.

Requires that the Department (was,Department of Health and Human ServicesDivision of Medical Assistance) develop,with stakeholder input, a detailed plan for Medicaid reform. Amends the items that must be included in the plan to add 14 items, including: proposed waivers or state plan amendments that may be necessary to implement and secure federal financial participation in reform; mechanisms for measuring the state's progress toward the reform goals; strategies for ensuring fair negotiations among plans, providers, and the Department of Medical Benefits; and a strategy for program integrity. No longer requires the following to be included in the plan: proposed time frames for implementing system transformation on a phased-in basis and the recommended effective date for full implementation and mechanisms for measuring the state's progress toward increased performance on six specified items, including budget predictability, access to service, and quality management systems.

Adds that the report of the detailed reform plan and the semiannual report on progress toward completing the reform must be provided to the Joint Legislative Oversight committee on Medical Benefits.

Replaces references to the Department of Health and Human Services (DHHS), Division of Medical Assistance, with the Department of Medical Benefits, which is created in this act.

Requires the Department of Medical Benefits to work with the Centers for Medicare & Medicaid Services to attempt to preserve existing levels of funding generated from Medicaid-specific funding streams to the extent that the levels of funding may be preserved (was, preserve existing Medicaid-specific funding streams as they currently exist). Requires the work to be facilitated by the Division of Medial Assistance.

Adds a new section requiring the Division of Medical Assistance, during the time of transition of the Medicaid program into its new form, to cooperate with the Department to ensure a smooth transition. Requires the Division to facilitate communications between the Department of Medial Benefits and the Centers for Medicare & Medicaid Services and submit requested state plan amendments. Requires DHHS to cease any activities related to implementing Medicaid reform within the existing divisions, except for activities directly related to assisting the new Department with the reform. Requires the two departments to enter into appropriate memoranda of understanding to define responsibilities.

Requires DHHS, Office of the Secretary, to organize a Medicaid stabilization team to do six specified activities, including maintaining the Medicaid and NC Health Choice programs until the transfer; making recommendations to the Joint Legislative Oversight Committee on Medical Benefits on any additional authorization or funding necessary to successfully complete these requirements; and reporting to the Joint Legislative Oversight Committee on Medical Benefits no later than September 1, 2014, on the plan to communicate to employees, as required in the section.

Adds a new section requiring the Secretary of Health and Human Services to identify and designate essential positions, by September 1, 2014, throughout DHHS without which the Medicaid and NC Health Choice programs cannot operate on a day-to-day basis. Provides specified bonuses to those employees serving in positions designated as essential positions, effective August 1, 2014. Appropriates $600,000 for 2014-15 to the Division of Medial Assistance from the funds appropriated in the Appropriations Act of 2014 for Medicaid reform to fund the state share of the bonuses.

Adds a section requiring the Division of Medical Assistance to ensure that any Medicaid-related or NC Health Choice-related state contract entered into after the effective date of the act contain a clause allowing DHHS or the Division to terminate the contract without cause upon 30 days' notice. Any contract signed by DHHS or the Division after the act becomes effective that does not have such a clause is deemed to include such a clause and is cancellable without cause with 30 days' notice.

Deletes sections that required the Division to begin the restructuring of the Medicaid Program by transitioning into a system for provider lead capitated health plans, and that required specified DHHS divisions to conduct an integrated care pilot and study.

Amends GS 108A-54.1A to allow DHHS to submit amendments to the state plan if the Department requires that DHHS submit an amendment.

Enacts new Article 14, Department of Medical Benefits, in GS Chapter 143B. Establishes the Department of Medical Benefits (Department) to operate the Medicaid and NC Health Choice Programs. Requires that the Department be governed by a Board, which is responsible for ensuring that the programs provide quality medical assistance to eligible recipients at a predictable cost. Require the Medicaid program to be operated through full-risk capitated health plans that include all aspects of care so that the state bears only the risk of enrollment numbers and enrollment mix. Effective August 1, 2014.

Establishes the 7-member Board of The Department of Medical Benefits (Board), with three members appointed by the Governor, two by the General Assembly on recommendation of the President Pro Tempore, and two by the General Assembly on recommendation of the Speaker of the House. The Secretary of Health and Human Services serves as an ex officio non-voting member. Sets out initial appointment term lengths and establishes staggered terms for later appointees; sets terms at four years and allows members to serve up to two consecutive terms. Specifies five categories of individuals who may not serve on the Board, including those who are or have been registered lobbyists for a provider receiving payments from the Medicaid or NC Health Choice program or an employee of such a lobbyist. Provides that Board members serve as fiduciaries for the Medicaid and NC Health Choice programs and are subject to the duties of care, loyalty, and obedience as established under nonprofit corporate law, in addition to duties placed on the Board members as public servants. Provides that Board members are not state employees. Establishes the Board's eleven powers and duties, including employing the Medicaid Director and other staff (including legal staff); setting compensation for the employees and Board of the Department, including performance-based bonuses; and entering into and managing contracts for the administration of the Medicaid and NC Health Choice programs. Provides that until the Board is designated as the single state agency for administering and operating the programs, the Department of Health and Human Services retains its authority as the single state agency, and the Department's powers are limited to the extent that they conflict with the authority of the Department of Health and Human Services as the single state agency. Provides that the General Assembly retains the authority to determine the eligibility requirements for the Medicaid and NC Health Choice programs. Effective August 1, 2014.

Sets out the following six exemptions, limitations, and modifications of state law that apply to the Department: exempting employees of the Department from portions of the State Personnel Act, but allowing after July 1, 2016, the Department to designate employee positions as subject to the Act; allowing the Department to choose to retain legal counsel other than the Attorney General; exempting personnel contracts from review and approval by the Office of State Human Resources; exempting the Department from state contract review and approval requirements if the Department establishes alternative procedures; allowing the Board to move into a closed session for discussions of four specified topics; and exempting documents created for or developed during a closed session of the Board for one of those four reasons, as well as minutes of the session, from public records until the item under discussion has been made public through the publishing of the relevant rate, finding, or budget forecast report or General Assembly report.

Amends GS 126-5 to add that except as to GS 126-13 (Appropriate political activity of State employees defined), 126-14 (Promise or threat to obtain political contribution or support), 126-14.1 (Threat to obtain political contribution or support), 126-14.2 (Political hirings limited), and the provisions of Articles 6 (Equal Employment and Compensation Opportunity; Assisting in Obtaining State Employment), 7 (The Privacy of State Employee Personnel Records), 14 (Protection for Reporting Improper Government Activities), 15 (Communications With Members of the General Assembly), and 16 (Flexible Compensation Plan) of GS Chapter 126, the provisions of the Chapter (State Personnel System) do not apply to employees of the Department, except for employees designated by the Board as subject to the Chapter. Effective August 1, 2014.

Sets the initial compensation of the Board members at $8,000 per month. Allocates and appropriates $280,000 to the Department from the funds appropriated in the Appropriations Act of 2014 for Medicaid reform for 2014-15, to fund the state share of the Board compensation. Effective August 1, 2014.

Enacts new Article 23B, Joint Legislative Oversight Committee on Medical Benefits, in GS Chapter 120. Establishes the 14-member Joint Legislative Oversight Committee on Medical Benefits (Committee), made up of seven members of the Senate and seven members of the House of Representatives with at least two members from each chamber coming from the minority party. Member terms are two years. Requires the Committee to examine budgeting, financing, administrative, and operational issues related to (1) the reform of Medicaid and the transition of the program from the Department of Health and Human Services to the Department; (2) any aspect of the Medicaid and NC Health Choice programs operated by the Division of Health and Human Services; and (3) the Medicaid and NC Health Choice programs, as operated by the Department. Gives the Committee access to any paper or document and allows compelling the attendance of any state official or employee before the Committee or securing evidence under GS 120-19 (State officers, etc., upon request, to furnish data and information to legislative committees or commissions). Effective August 1, 2014.

Amends GS 120-208.1 to remove the duty of the Joint Legislative Oversight Committee on Health and Human Services to examine issues relating to services provided by the Medical Assistance Division within the Department of Health and Human Services. Makes conforming changes. Effective August 1, 2014.

Requires any reports by the Department of Health and Human Services or the Division of Medial Assistance related to Medicaid that are due during the 2014-15 fiscal year to be made to the Joint Legislative Oversight Committee on Medical Benefits. Effective August 1, 2014.

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