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

Makes technical changes to the whereas clauses.

Amends GS122C-3, providing that an LME/MCO is defined as an LME/MCO that is under contract with the Department of Health and Human Services (Department) to operate the combined Medicaid Waiver program.

Amends GS 122C-124.2(a), providing that the required certification by the Secretary of compliance with the requirements of GS 122C-124.2(b) must be based on an internal and external evaluation by an approved independent External Quality Review Organization (EQRO) (previously, did not require the certification to be based on any specified criteria).

Amends GS 122C-124.2(b), establishing requirements for the Secretary's certification, which were previously provided for in GS 122C-124.2(a) of the 3rd edition. Makes technical and clarifying changes to those requirements. Also, in determining adequate provision against insolvency, deletes the provision that the ratio of assets to liabilities does not include sources of funds that are not Medicaid funds. More precisely defines the intradepartmental monitoring team that reviews financial reports to determine whether adequate provisions against insolvency were taken.

Amends GS 122C-124.2(c), establishing the actions required to be taken by the Secretary when a certificate of compliance for an LME/MCO cannot be issued due to noncompliance with requirements (1)-(3) of subsection (b) (previously provided for in GS 122C-124.2(b) of the 3rd edition), providing that the Secretary must provide a written notice of noncompliance to the LME/MCO and, not later than 10 days after the notice of noncompliance has been issued, the Secretary must assign the LME/MCO's contract to operate the Medicaid Waiver to a compliant LME/MCO and oversee the transfer of the operations and contracts from the noncompliant LME/MCO to the compliant LME/MCO in accordance with the provisions of GS 122C-124.2(e).

Amends GS 122C-124.2(d), setting out the steps the Secretary must take when, at any time, a determination is made that an LME/MCO is not in compliance with a requirement of the Medicaid Waiver contract other than those specified in subsection (b) (previously provided for in  GS 122C-123.2(c)), including requiring the Secretary to prepare and deliver notice of the noncompliance, allow the noncompliant LME/MCO 30 days to respond and cure any defect, and make a final determination on the issue of noncompliance. If an LME/MCO is still determined to be noncompliant, the Secretary is required to reassign its contract to a compliant LME/MCO and oversee the transfer of operations and contracts.

Enacts new GS 122C-124.2(e), specifying the actions the Secretary must take when transferring management, responsibilities, operations, and contracts of a noncompliant LME/MCO to a compliant LME/MCO, providing that the Secretary must ensure that there is no interruption in the provision of services to recipients by doing the following:

(1) Arranging for service providers to be paid for authorized services previously rendered.

(2) Effectuating an orderly transfer of management responsibilities from the noncompliant LME/MCO to the compliant LME/MCO.

(3) Overseeing the dissolution of the noncompliant LME/MCO and transferring its assets and risk reserve to the complaint LME/MCO. The Secretary must also satisfy any liabilities if there are insufficient assets to satisfy the liabilities of the noncompliant LME/MCO.

(4) Directing the dissolution of the noncompliant LME/MCO and notifying the board of county commissioners in each of its constituent counties of the dissolution.

Enacts new GS 122C-124.2(g), providing definitions, for use in this section, for contract and compliant local management entity/managed care organization.

Amends GS 122C-112.1(a) by adding a new subdivision (39) to the list of powers and duties of the Secretary, providing that the Secretary must develop and use a standard contract for all LME/MCOs for operation of the Medicaid Waiver.

Amends GS 122C-115(a), eliminating the authority of a county to provide mental health, developmental disabilities, and substance abuse services through a county program. Adds new subsection (a3), which provides that a county can disengage from an LME/MCO and realign with another multicounty area authority operating under the Medicaid Waiver with the approval of the Secretary. Directs the Secretary to adopt rules to establish the process for county disengagement and provides minimum standards that the rules must meet for a realignment. Requires adoption of a resolution by a majority of area board members to add counties to the existing catchment area (was, by agreement).

Makes conforming changes to GS 122C-115.3, Dissolution of area authority. Also establishes that any fund balance available to an area authority at the time of its dissolution not utilized for the payment of liabilities upon dissolution is to be transferred to the LME/MCO in the area authority's catchment area.

Amends GS 122C-118.1(a), eliminating the requirement that a resolution of county commissioners to appoint members to an area board must be unanimous as well as a deadline for the resolution.

Amends GS 122C-118.1, adding new subsection (f), providing that if an area authority adds one or more counties to its existing catchment area, the expanded catchment area must be represented through membership on the area board as provided in GS 122C-118.1(a), Structure of area board, with or without adding members to the board.

Enacts new GS 122C-118.2, Establishment of county commissioner advisory board, providing for such advisory boards for each catchment area, consisting of one county commissioner from each county in the catchment area, designated by the board of commissioners of each county.  The function of the board will be to serve as the chief advisory board to the area authority and its director on matters relating to the delivery of services for individuals with mental illness, intellectual or other development disabilities, and substance abuse disorders in the catchment area. Sets out the method for the designation of board members.

Amends GS 122C-142(a), making conforming changes.

Amends GS 150B-1(e), adding a new subdivision (21), which provides that the right to a contested case hearing under the Administrative Procedures Act does not apply to actions taken by the Secretary under the new GS 122C-124.2.