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

Part I. LME/MCO Modifications

Deletes the provisions directing three actions to occur on the date when Medicaid capitated contracts with Prepaid Health Plans (PHPs) begin.

Makes organizational changes.

Modifies and makes organizational changes to Section 7 (was, Section 8). Moves to 7(b) the provision establishing that the salary range for area directors, which was last updated by the State Human Resources Commission in 2010, is void. Adds that, beginning on the date the act becomes law and until the Office of State Human Resources and the State Human Resources Commission complete a revision and update of the job description and salary range of the area directors as required by Section 7, an LME/MCO area board cannot pay an area director a salary that exceeds by more than 30% the average salary of the area directors of the remaining LME/MCOs. Provides that for area directors who are under an employment contract with an LME/MCO area board at the time the act becomes law: (1) the salary limitation required in Section 7(c)(2) applies after the end of the current contract period or upon amendment of the contract and applies to extensions of those contracts and (2) any salary reduction required by Section 7(d) applies after the end of the current contract period or upon amendment of the contract and applies to contract extensions (previously, provided that Section 7(d) applies to contracts with area directors beginning on or after the date that the State Human Resources Commission revises the salary range for area directors as provided in Section 7(b)). Makes conforming change to now provide that the Office of State Human Resources can recommend adjustments to the salary range for area directors to the State Human Resources Commission after the date the State Human Resources Commission revises the salary range for area directors required by Section 7(b)(3) and until four years after the date Medicaid capitated contracts with Prepaid Health Plans begin in accordance with SL 2015-245, as amended (previously, until the LME/MCOs are dissolved pursuant to the directive in Section 1 of the act, which is deleted by this committee substitute).

Part II. Medicaid Transformation Modifications

Modifies the proposed changes to Section 4 of SL 2015-245, as amended.

Amends the changes to the definition of prepaid health plan (PHP), maintaining existing language that requires a majority of a provider-led entity's governing body to have experience treating beneficiaries of the NC Medicaid program, as determined by the Secretary of the Department of Health and Human Services (DHHS).

Deletes the proposed changes to subsubdivision (4)a., prohibiting capitated PHP contracts from covering Medicaid services currently covered by the LME/MCOs for Medicaid recipients with a serious mental illness, a serious emotional disturbance, a substance use disorder, an intellectual/development disability, or who have survived a traumatic brain injury for four years after the date capitated contracts begin (currently, not to cover behavioral health services for Medicaid recipients currently covered by LME/MCOs for four years after the date capitated contracts begin; the previous edition deleted the provision entirely). Eliminates the proposed deletion of subsubdivision (4)b, maintaining existing language prohibiting capitated PHP contracts from covering dental services.

Eliminates the proposed changes to subdivision (6a), instead maintaining existing language directing PHPs to comply with GS Chapter 58, to the extent allowed by federal law.

Deletes the proposed elimination of the provision stating that this requirement does not require PHPs to cover services not covered by the Medicaid program, and instead amends subdivision (9) to require LME/MCOs to continue to manage the Medicaid services that are currently covered by the LME/MCOs, for four year after the date capitated PHP contracts begin, for Medicaid recipients with a serious mental illness, a serious emotional disturbance, a substance use disorder, an intellectual/developmental disability, or who have survived a traumatic brain injury. Directs that, beginning on the date that capitated contracts begin, LME/MCOs must cease managing Medicaid services for all other Medicaid recipients. Directs that the Division of Health Benefits continue to negotiate actuarially sound capitation rates directly with the LME/MCOs, but removes the provision requiring the negotiation to be in the same manner as currently utilized. Finally, Directs DHHS to report to the Joint Legislative Oversight Committee on Medicaid and NC Health Choice no later than November 1, 2017, with a plan for defining and determining whether a Medicaid recipient has a serious mental illness, a serious emotional disturbance, a substance use disorder, an intellectual/developmental disability, or has survived a traumatic brain injury, and also a plan for ensuring that recipients who experience a change in status appropriately transition between the LME/MCO delivery system and the PHP delivery system. Directs DHHS to report to the Joint Legislative Oversight Committee on Medicaid and NC Health Choice no later than March 1, 2018, with a plan for providing coordinated Medicaid services to the recipients described in subsubdivision (4)a.

Deletes the proposed changes to subdivision (6) of Section 5 of SL 2015-245 as amended, maintaining existing language concerning the duty and responsibility of DHHS during Medicaid transformation to include entering into capitated PHP contracts for delivery of the Medicatid and NC Health Choice services described in Section 4, subdivision (a), of SL 2015-245. Deletes proposed new subdivision (7a), which required DHHS, within 30 days of this bill becoming law or upon CMS approval of a waiver if required, requiring providers enrolling or re-enrolling as a Medicaid or NC Health Choice provider to agree to accept 90% of the Medicaid fee-for-service rate for the services they provide to PHP enrollees if the provider has been offered a contract with a PHP but is not under a contract with that PHP, or if other conditions are met. Adds new subdivision (14), directing DHHS to study options for capitating Medicaid payments for dental services as part of the transformed Medicaid delivery system, including adding dental services coverage to capitated contracts or entering into capitated contracts with prepaid dental plans. Directs DHHS to report findings and recommendations on the options considered as well as any proposed legislation related to those findings and recommendations no later than March 1, 2018.