Bill Summary for S 425 (2023-2024)

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Summary date: 

Mar 30 2023

Bill Information:

View NCGA Bill Details2023-2024 Session
Senate Bill 425 (Public) Filed Wednesday, March 29, 2023
Intro. by Krawiec, Burgin, Corbin.

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Bill summary

Section 1

Repeals Section 9D.7(a) of SL 2022-74 (setting deadlines and initial terms for BH IDD tailored plans [integrated plans for individuals with behavioral health needs and intellectual/developmental disabilities, hereinafter referred to throughout this summary as Plans or Plan]). Sets new deadline for the Division of Health Benefits (DHB) of the Department of Health and Human Services (DHHS) to implement the Plans by no later than October 1, 2023, with its initial term ending on December 1, 2026, in alignment with the initial term of the standard benefit plan prepaid health plan capitated contracts.  Allows DHHS to extend the initial term of the Plans if it also extends standard benefit plan contracts so that both contracts are extended for the same amount of time. 

Section 2

Amends GS 108A-68.2 (pertaining to the Medicaid beneficiary management lock-in program [MLIP], which targets prescription drug substance abuse by restricting the pharmacy and prescribing physician of Medicaid beneficiaries who qualify for the program) as follows.

Changes the definition of Lock-in program from a requirement that a Medicaid beneficiary (Beneficiary) select a single prescriber and pharmacy to align it with the requirements of the federal Medicaid rule (42 CFR 431.54) that a requirement that restricts the number of prescribers from whom, and the number of pharmacies from which, a Beneficiary may obtain covered substances. Deletes provisions specifying that the statute does not apply to any MLIP for Medicaid or NC Health Choice beneficiaries who are not enrolled in a Prepaid Health Plan (PHP). Changes statutory reference from “prepaid health plan” to “PHP,” and makes conforming changes throughout. Deletes statutory criteria for PHP’s to develop MLIP’s for Beneficiaries and instead directs PHP’s to use the criteria set forth in DHHS’s Outpatient Clinical Coverage Policy. Allows Beneficiaries to choose up to two prescribers/pharmacies when medically necessary. Updates language for when a Beneficiary fails to designate prescribers/pharmacies to account for increase in number from one to two designees.  Adds language allowing a PHP to impose MLIP on Beneficiary for up to two years if it finds that the Beneficiary is using Medicaid services at a frequency or amount that is not medically necessary. Makes conforming change to GS 58-51-37(l) (authorizing lock-in programs under insurance policies for prescription drug coverage) to refer to GS 108A-68.2. Effective on the later of the date the act becomes law or the date that the NC Health Choice program is eliminated, as approved by the Centers for Medicare and Medicaid Services (CMS) in accordance with Section 9D.15(a) of SL 2022-74.

Section 3

Amends GS 108D-35(b) (pertaining to services covered by PHP’s) to require PHP capitated contracts to now cover substance abuse comprehensive outpatient treatment program services, substance abuse intensive outpatient program services, and social settings detoxification services, in addition to list of 15 already covered services. Makes conforming changes. Effective October 1, 2023.

Section 4.

Enacts new provisions pertaining to state, county, and area authority as part of the organization and delivery system of mental health, development disability, and substance abuse services under the Mental Health Act, Developmental Disabilities, and Substance Abuse Act of 1985 (Act), as follows.

Current law provides that within the public system of mental health, developmental disabilities, and substance abuse services, there are area, county, and State facilities. An area authority or county program is the locus of coordination among public services for clients of its catchment area (i.e., the geographic part of the state served by a specific area authority or county program). (GS 122C-101 and GS 122C-3(4)). Enacts GS 122C-115.5, pertaining to alignment of counties with an area authority. Prohibits counties from withdrawing from an area authority or an area authority from being dissolved without prior approval of the DHHS Secretary (Secretary). Allows for counties to realign with another area authority operating a Medicaid waiver upon approval of the Secretary. Allows for area authorities to add additional counties to their catchment area upon adoption of a resolution approved by a majority of the members of the area board and the approval by the Secretary. Requires Secretary to adopt rules to establish a process for county disengagement to ensure that provision of services is not disrupted by the engagement, the timing of the disengagement is accounted for and does not conflict with setting capitation rates, adequate notice is provided, and provisions exist for the distribution of any real property no longer within the catchment area of the area authority.  Requires Secretary to direct the dissolution of an area authority upon the termination of a BH IDD tailored plan contract with an area authority or upon the Secretary's delivery of a notice of noncompliance to an area authority. Lists 12 things that must occur relating to timing, provision of services, notice, reassignment and transfer of services, area cooperation, and funding when an area authority is dissolved at the discretion of the Secretary.

Enacts new GS 122C-115.6 pertaining to the transfer of area authority fund balance upon county realignment. Requires that a portion of the risk reserve and other funds of the area authority from which the county is disengaging to be transferred to the area authority with which the county is realigning. Specifies that the amount of risk reserve and other funds to be transferred must be determined by DHHS in accordance with a formula or formulas developed in accordance with GS 122C-115.6. Provides that the formula developed by DHHS must consider the stability of both the area authority from which the county is disengaging and the area authority with which the county is realigning. Requires the formula to support: (1) the ability for each area authority to carry out its responsibilities under State law; (2) the successful operation of the 1915(b)/(c) Medicaid waivers; (3) the capitated BH IDD tailored plans arrangements authorized by GS 108D-60(b), and (4) the successful operation of BH IDD tailored plans under 108D-60. Emphasizes that the formula must assure that the area authority from which the county is disengaging retains sufficient funds to pay any outstanding liabilities to healthcare providers, staff-related expenses, and other liabilities. Sets forth procedures for DHHS’s development/amendment of the formula, including submission of the draft to specified NCGA Committees, and public comment.  Exempts the development and application of the formula from rulemaking and contested case provisions of the APA.  Requires the DHHS, starting on July 15, 2023, and quarterly thereafter, to report to the specified NCGA Committees and the Fiscal Research Division any funds transferred as a result of disengagements during the previous quarter. 

Amends GS 122C-3 (definitions of the Act), as follows. Deletes the defined term state or local consumer advocate. Incorporates definition of standard benefit plan from GS 108D-1. Makes technical and organizational changes. Repeals GS 122C-112.1(a)(25), setting forth the Secretary’s power to adopt rules for determining minimally adequate services for purposes of GS 122C-124.1 (pertaining to actions by the Secretary when the area authority or county program is not providing minimally adequate services). 

Amends GS 122C-115 (pertaining to the duties of counties and appropriation and allocation of funds by counties and cities), as follows. Deletes language referencing 1915(b)/(c) Medicaid Waivers. Deletes provisions specifying minimum population requirements for catchment areas of area authorities and for the reduction of funds for local management entities (LME’s) that do not comply with the population requirements. Deletes provisions relating to county disengagement with LME or managed care organization and realignment. Makes conforming changes to delete language that is duplicative of new GS 122C-115.5. Deletes reference to county programs in bar on counties reducing funds to area authorities because of the availability of State funds or other fees for the area authority. Deletes statutory references to certain qualifying recipients and dates and changes the date that LME’s/managed care organizations (MCO’s) cease managing Medicaid services for all Medicaid recipients who are enrolled in a standard benefit plan to July 1, 2021. Makes clarifying changes. In provision authorizing LME’s/MCO’s to continue to operate certain behavioral health and developmental disability services for certain individuals, deletes statutory references to certain qualifying recipients and replaces it with catchall Medicaid recipients not enrolled in a BH IDD tailored plan, to indicate authorized recipients. Repeals GS 122C-115.3(h) (requiring the dissolution of area authority upon termination of a BH IDD tailored plan contract with an area authority effective until December 1, 2023) and GS 122C-124.1 (pertaining to actions by the Secretary when area authority or county program is not providing minimally adequate services).

Amends GS 122C-124.2 (pertaining to actions by the Secretary to ensure effective management of behavioral health services under the 1915(b)/(c) Medicaid Waiver) as follows. Makes conforming changes to incorporate new GS 122C-125.3 and deletes references to statutes repealed under the act. Deletes provisions pertaining to what the Secretary must do if they are not going to provide a local LME/MCO with a certificate of compliance or if they determine  it is not in compliance with certain contract requirements and instead requires the Secretary to direct the dissolution of the LME/MCO in accordance with “GS 122C-155.5(d)” (Appears to intend to refer to new GS 122C-115.5.)  Deletes further provisions relating the dissolution of a noncompliant LCO/MCO. Amends the term contract to include a contract for the operation of a BH IDD tailored plan.

Repeals GS 122C-125 (pertaining to area authority financial failure, state assumption of financial control), and GS 122C-125.2 (pertaining to LME/MCO solvency ranges).

Enacts new GS 122C-125.3, pertaining to LME/MCO solvency and corrective action plans, as follows. Requires DHHS to establish in its contracts with LME/MCOs, solvency standards based on industry-standard financial accounting measures, such as the current ratio of assets to liabilities, defensive interval ratio of current assets to average monthly expenditure, capital reserves, and profit and loss. Requires the contracts to contain the development of a corrective action plan when an LME/MCO does not meet the solvency standards specified in the contract. Requires DHHS to publish a dashboard on its website containing certain information for the LME’s/MCO’s each quarter. Sets forth notification provisions to the specified NCGA Committees when the dashboard is updated. 

Amends GS 108D-60(b) allowing DHHS to contract with entities providing BH IDD tailored plans for certain individuals who are excluded from PHP coverage, to replace the reference to PHP coverage with language authorizing that coverage for individuals who are not enrolled in a BH IDD tailored plan.  Adds new subsection authorizing four temporary delivery systems when an area authority is undergoing dissolution.

Makes conforming amendments to the APA as follows: (1) exempts DHHS from rulemaking with respect to the development and application of any formula under GS 122C-155.6 (appears to intend to refer to new GS 122C-115.6); (2) exempts DHHS’s actions taken under GS 122C-124.2 and GS 122C-115.5(d) and GS 122C-155.6 (appears to intend to refer to new GS 122C-115.6) from the contested case provisions.

Repeals Section 3.5A of SL 2021-62 (pertaining to transfer of area authority fund balances/county disengagement) and Section 9D.13(b) of SL 2022-74(b) (pertaining to certain changes related to the launch of BH IDD tailored plans). 

Section 5

Amends GS 122C-102(b) (pertaining to the contents of the State Plan for mental health, developmental disabilities and substance abuse services) to require the plan to also contain, in addition to the 12 other requirements, identification of priority infrastructure, services, and supports that are needed across the State related to mental health, intellectual or other developmental disabilities, and substance use disorder.

Amends GS 122C-112.1(a)(pertaining to powers and duties of the Secretary) to require the Secretary to direct and oversee the allocation and use of single-stream funding to support the priority infrastructure, services, and supports identified in the State Plan). Amends GS 122C-112.1(b)(4) (list of things Secretary may do) to cross reference the new infrastructure requirement for the State Plan, described above. Makes technical changes. Enacts new subdivision GS122C-112.1(b)(4a) to authorize the Secretary to spend certain State funds for the priority infrastructure areas discussed above.

Section 6

Amends GS 122C-112.1(a)(6) to delete reference to county programs. Now requires Secretary to establish comprehensive, cohesive oversight and monitoring procedures and processes to ensure continuous compliance with third-party contractors of area authorities, in addition to other parties listed. Also now only requires Secretary to only include a monitoring mechanism for the progress of area authorities, not area authorities and county programs.  Deletes reference to required technical assistance.

Amends GS 122C-142(a) (pertaining to contracts for services by area authorities) as follows. Specifies that area authorities must assure that contracted services meet both State and federal laws and rules (currently, just references State laws and rules). Makes conforming changes to similarly refer to compliance with State and federal rules. If an area authority's oversight of a contract for services results in noncompliance, authorizes the Secretary to direct the area authority to cancel the contract for services.

Amends GS 122C-115.4(c) (pertaining to functions of LME’s) to specify that LME’s are also subject to contractual requirements established by the Secretary in addition to other limitations on its ability to subcontract its functions to another entity.  Requires LME’s to cancel a contract when directed to do so by the Secretary under GS 122C-142(a), as amended by the act.

Repeals GS 122C-115.4(f)(3) requiring the Commission to adopt rules on the notice and procedural requirements for removing one or more LME functions under GS 122C-115.4(d). Repeals GS 122C-115.4(d) and (e) pertaining to removal of LME’s.

Section 7

Amends GS 126-5 (listing employees subject to State Human Resources Act) to exempt employees of area mental health, developmental disability, and substance abuse authorities except as otherwise provided by law and all employees of area authorities from the State Human Resources Act. Applies to employees of area mental health, developmental disabilities, and substance abuse authorities, defined as area authorities under GS 122C-3, hired after the date the act becomes law.

Section 8

Amends GS 150B-1(e)(25) to expand DHHS’s exemption from the APA’s contested case provisions to also include disputes arising from a prepaid inpatient health plan, as defined in 42 CFR  438.2 and disputes arising from a primary care case management entity, as defined in 42 CFR 438.2.

Section 9

Retroactive to June 26, 2020, amends GS 108A-54.3A (pertaining to eligibility categories and income thresholds for Medicaid) to require that the applicable federal poverty guidelines for the eligibility categories will be updated annually on April 1 immediately following publication of those guidelines. Directs the Revisor of Statutes to implement technical correction to statutory citation.