House committee substitute makes the following changes to the 1st edition.

Provides that the proposed amendments to GS 122C-112.1(a)(39) apply to contracts entered into on or after the effective date of the act.

Amends the definition ofarea directorin GS 122C-3 to apply regulations of area directors to the administrative heads of area authorities, LMEs, or LME/MCOs, regardless of title or contract.

Amends the proposed change to GS 122C-116 to correct a statutory reference.

Makes a conforming change to the proposed amendment to GS 122C-117(a). Directs an area authority to maintain disability-specific infrastructure and competency to address the needs of disabilities covered by the 1915(b)/(c) Medicaid Waiver, to maintian administrative and clinical functions, and to maintain full accountability for all aspects of Medicaid Waiver operations and meeting contract requirements. Enacts new subsection (a2), authorizing an area authority to subcontract to other entities the following functions upon the written approval of the Secretary: information systems; customer service operations; claims processing; provider, enrollment, credentialing, and monitoring; professional services; treatment plan development; and referral to services. Provides that new subsection (a2) applies to area authority subcontracts to other entities entered into on or after the date the act becomes law.

Clarifies that proposed GS 122C-121(a1)(2) refers to area boards. Further prohibits area boards from authorizing any salary adjustment for an area director that is above the normal allowable salary range, except as the requirements permit. Clarifies that the notification under proposed GS 122C-121(a3) must show how the Secretary determined that the salary did not comply. Provides that the total compensation for each area director must be reviewed for written approval by the Director of the Office of State Human Resources and the Secretary on an annual basis to determine compliance with this statute. Directs the area director to ensure compliance by the area authority with the powers and duties established under GS 122C-117 (instead of with the specified operational requirements of the area authority).

Amends proposed GS 126-11(b2) to authorize the board of newly merged or consolidated area mental health authorities to petition the State Human Resources Commission to determine whether its personnel system meets the statutory requirements with the approval of three-quarters of the boards of commissioners of counties which comprise the newly merged or consolidated area mental health authority (currently, each county's board of commissioners).

Provides in SL 2015-241 that for each month of the fiscal year after July, the DMH/DD/SAS shall distribute, on the first Tuesday of the month, one-eleventh of the amount of each LME/MCO's single stream allocation that remains after subtracting the amount of the distribution that was made to the LME/MCO in July of the fiscal year.