Adds new GS Chapter 108D, "Medicaid Managed Care for Behavioral Health Services."

Provides definitions of terms as used in this chapter.

Scope: States that this chapter applies to every local management entity and managed care organization (LME/MCO) and to every applicant, enrollee, provider of emergency services, and network provider of an LME/MCO.

Conflicts and Severability: Provides that federal law prevails if there is a conflict between this chapter and the Social Security Act or 42 CFR Part 438. Provides that ifthis chapter conflicts with any other provision of state law that is contrary to the principles of managed care that ensure successful containment of costs for behavioral health care services, this chapter prevails. Provides that if any section, term, or provision of this chapter is judged to be invalid for any reason, the invalidity does not affect other provisions and applications that can be given effect without the invalid provisions or applications.

Rights and Responsibilities of LME/MCOs, Providers, and Applicants: Authorizes each LME/MCO to operate a closed network of appropriate providers and specifies that the relationship between an LME/MCO and a provider is contractual and the provider has no right to jointhe closed network of any LME/MCO.

Makes each LME/MCO responsible for the selection and screening of providers under applicable federal and state law.

Requires each LME/MCO to conduct a criminal history record check, in accordance with federal law and regulation,of each (1) applicant, (2) provider, (3) person with an ownership or control interest in the applicant or provider, and (4) managing employee of the applicant or provider. Defines person with an ownership or control interest and managing employee as those terms are defined in 42 CFR�_ 455.101.Requires the LME/MCO to deny or terminate an applicant's enrollment in accordance with the terms set forth in GS 108C-4 (regarding termination or denial of enrollment of persons whose criminal acts are determined in the criminal history check).

Provides that an LME/MCO is authorized to conduct investigations and audits and requires providers to cooperate with any investigations and audits. Sets a threshold for recoveryof overpayments, declaring that an LME/MCO should not seek recovery of any total amount due that is less than $150 unless directed to do so by the Centers for Medicare and Medicaid Services, or unless recovery would be cost-effective.

Provides additional guidelines regarding the authority of an LME/MCO to suspend payment to providers, providing circumstances under which payment suspension is allowed. Provides that the LME/MCO has the right to require a provider to undergo a prepayment claims review and denies a right of appeal to a provider of a decision to place the provider on prepayment claims review.

Requires a provider to notify each LME/MCO with whom it contracts of a change in ownership atleast 30 days before the effective date of the change. Defines what occurrences constitute a change in ownership.

Provides that all disputes between a provider or an applicant and an LME/MCO are governed by 42 CFR Part 438. Specifies that GS 122C-151.3, GS 122C-151.4, and any rules or policies adopted under those statutes do not apply to disputes concerning LME/MCOs. Provides that the venue for all legal actions between LME/MCOs and a provider or an applicant is the superior court of the county in which the LME/MCO's corporate office is located, unless the contract provides for a different venue. Provides that the Office of Administrative Hearings does not have jurisdiction over any dispute between an LME/MCO and a provider or applicant.

Enrollee Grievances and Appeals: Requires that providers must be authorized in writing as a prerequisite to acting on behalf of enrollees. Directs each LME/MCO to establish an internal grievance and appeal processthat complies with the Social Security Act and 42 CFR Part 438, Subpart F, and provides constitutional rights to due process and a fair hearing to enrollees and providers authorized to act on behalf of employees. Permits grievances and appeals to be filed orally or in writing; however, unless the request is for an expedited appeal, the oral filing must be followed by a written, signed grievance or appeal. Provides additional details regarding the grievance and appeal process, including rules regarding expedited appeals.

Provides exception under which the Office of Administrative Hearings has jurisdiction over cases between LME/MCOs and enrollees that contest a notice of resolution issued by an LME/MCO. Provides that this is the exclusive method for enrollees to contest a notice of resolution issued by a LME/MCO. Provides guidelines for filing the administrative appeal and the required content of the appeal request form. Also provides that the Administrative Law Judge (ALJ)may simplify the administrative hearing procedure for contested hearings conducted underthis section for time and efficiency. Provides additional guidelines regarding burden of proof, new evidence, and the issue to be heard. Directs the ALJ to provide a written decision with findings of fact and conclusions of law and send it to the parties. Requires that the written decision also notify the parties of the right to seek judicial review under Article4 of GS Chapter 150B.

Makes conforming changes to GS 108C-1, GS 122C-3, GS 122C-151.3, and GS 122C-151.4(g).

Effective July 1, 2013.