Behavioral Health and Medicaid Modifications

nc-stampHB 403 – Behavioral Health and Medicaid Modifications

Primary Sponsors: Rep. Nelson Dollar (R-Wake), Rep. Donny Lambeth (R- Forsyth), Rep. Josh Dobson (R-Avery), Rep. Donna White (R-Johnston)

*June 14, 2018 Update*

This Conference Report was calendared on June 14, 2018.

The Conference Report passed the House with a vote of 104-0.

The Conference Report passed the Senate with a vote of 34-0.

This bill was signed by Governor Cooper on June 22, 108.

Conference Report Summary

Section 4 (2)

This defines that a Prepaid Health Plan (PHP) could be an LME/MCO.

Section 4 (4) 

This states that Medicaid services currently provided by an LME/MCO shall not be covered by any capitated PHP contract other than a BH IDD Tailored Plan. The bill lists services that would be required.

Section 4 (5)

Capitated PHP contracts would not cover the following:

  • Medicaid Family Planning recipients;
  • Inmates;
  • Community Alternative Program for Children and Disabled Adult Recipients;
  • Recipients with a serious mental illness or TBI;
    • This population would be covered under the Tailored Plans once available
    • These recipients must meet one of these criteria:
      • Serious emotional disturbance, developmental disability, mental illness.
    • Individuals who have two or more behavioral health episodes.
      • After the second episode they would remain with the PHP until DHHS provides an assessment within 14 days.
    • Individuals receiving any behavioral health services covered by LME/MCOs not covered through a PHP contract other than a Tailored Plan.
    • Individuals currently or need to be receiving behavioral services.
    • Children with complex needs.
    • Children 0-3 at risk for disability.
    • Children in the DPS Delinquency Prevention Programs.

Section 4(6)

  • The number of PHP statewide Medicaid and NC Health Choice contracts changes from 3 to 4.
  • There will still be up to 12 regional contracts.
  • A PLE may bid for more than one regional contract if the regions are contiguous.
  • The number of contracts in this section will not apply to Tailored Plans.
  • Capitated PHP contracts may be awarded on staggered terms of 3-5 years.

Section 4 (9)

  • When captivated contracts begin, LME/MCOs would stop managing Medicaid services except for those described in subdivision 5 (see above).
    • Until the Tailored plans become operational LME/MCOs will continue to manage Medicaid services.
    • The Division of Health Benefits would negotiate capitation rates based on the population served by LME/MCOs.

Section 4 (10a)

  • Tailored Plans would not begin the application process until August 31, 2018 or until authorized by the NCGA.

Tailored Plans

DHHS would be required to create a plan with these requirements:

  • If 1915 (b)/(c) Waivers were discontinued the following information must be included in the 1115 Waiver. Entities offering Tailored plans must include the following:
    • Pay for and manage services under the 1915(b)/(c)
    • Operate care coordination functions
    • Oversee community based services
    • Maintain closed provider networks for behavioral services
    • Manage provider rates
    • Provide local business plans
  • Tailored Plans would start one year after the implementation of the first contracts for the Standard Benefit Plans and last four years. An LME/MCO would be the only entity that can operate a Tailored Plan. Capitation payments would be received under the Tailored Plan contracts. All entities offering Tailored Plans would be required to conduct care coordination and will bear risk for service utilization.
  • Any LME/MCO must meet DHHS requirements and use an application process to be approved.
  • Every county in NC must be covered by an LME/MCO that operates a Tailored Plan.
  • DHHS will issue no more than seven and no fewer than five Tailored Plan contracts. No statewide Tailored Plan contracts will be issued.
  • After contracts, Tailored Plan contracts will result from RFPs issued by DHHS.
  • LME/MCOS must contract with an entity that holds a PHP license and covers services under a Standard Plan.
  • Tailored Plans will utilize closed provider networks for behavioral health.
  • Tailored Plans would be required to meet DHHS criteria for operation.
  • Tailored Plans will cover behavioral health and continue to manage non-Medicaid behavioral health.
  • Tailored Plan patients would have the option to enroll in a Standard Plan, if those services would not be included originally.

Section 4 (10b)

DHHS would be required by June 22, 2018 to report to the JLOC on Medicaid and NC Health Choice with a plan for implementation of Tailored Plans.

The report would include the following:

  • Date when Tailored Plans are operational.
  • Proposed parameters for LME/MCO and entity contracts for Tailored Plans.
  • Incentives for integrated care.
  • Cost Shifting strategies.
  • Proposed language for legislative changes needed to implement the plan.
  • Transition processes between Tailored and Standard Plans.
  • Estimate of State Spending.
  • Measureable outcomes with a time frame.
  • Solvency requirements.
  • Barriers to meet contract terms.
  • Justification for management of closed provider networks.
  • Plan for adding CAP/C populations.
  • Plan for transitioning children 0-3 with disability.
  • Plan for adding coverage.

After this report, the NCGA would make modifications necessary during the 2018 regular session.

On August 31, 2018, DHHS is authorized to take action to implement Tailored Plans in accordance with this act.

*June 29, 2017 Update*

The House did not concur with the Senate, and conferees have been appointed.

The conferees in the House include the following: Rep. Nelson Dollar (R-Wake)Rep. Donny Lambeth (R- Forsyth), Rep. Josh Dobson (R-Avery),

June 28, 2017 Update

Sen. Hise (R-Madison) introduced this bill on the Senate floor. This bill passed the Senate, and will move to the House for concurrence.

June 27, 2017 Update

This bill was withdrawn from the Senate calendar.

June 26, 2017 Update

This bill was withdrawn from the Senate calendar, and placed on the Senate calendar for June 27, 2017.

June 22, 2017 Update

This bill received a favorable report in the Senate Rules and Operations Committee, and will now move to the Senate floor.

The bill was placed on the Senate Calendar for June 26, 2017.

June 15, 2017 Update

This bill was re-written into a new proposed committee substitute.

Our comments on the bill and objections can be found here.


Section 5 of this bill states the authority of LME/MCOs.

Section 7 of the bill gives the Secretary the ability to approve alternative area board members. Beginning on July 1, 2017, LME/MCOs would be required to submit the following information:

  • (1)        The area board appointment process, the process for filling vacancies on the area board, and the appointing authority for each area board position.
  • (2)        The membership of the area board.
  • (3)        The county of residence of each member.
  • (4)        How the membership composition requirements of subsection (b) of this section are being met.
  • (5)        The term of office of the chair of the area board and each member.
  • (6)        The LME/MCO’s compliance status with training requirements for its board members.
  • (7)        The board’s policies and procedures for conducting the area director’s annual performance review

Section 8 of the bill clarifies that LME/MCOs would only be allowed to use funds related to their responsibilities under this Chapter.

Section 10 of the bill states the role, duties, and salary limitations of an area director. This section also gives the Secretary the power to terminate an area director if their compensation exceeds these limitations. In addition, it requires each area board to submit to the Secretary and the Director of the Office of State Human Resources all employment contracts.


This bill was referred to the House Health Care Reform Committee on March 20, 2017.

A proposed committee substitute received a favorable report on March 29, 2017.

This bill was re-referred to the Committee on Appropriations on March 29, 2017. It was withdrawn from this committee on April 5, 2017.

This bill passed second and third readings in the House on April 6, 2017.

This bill was sent to the Senate.


This bill was referred to the Senate Rules and Operations Committee on April 10, 2017.

This bill was withdrawn from the committee on June 13, 2017.

This bill was re-referred to the Senate Health Care Committee. If it is found favorable there it will move to the Senate Rules and Operations Committee.

A proposed committee substitute that made dramatic changes to the bill received a favorable report in the Senate Health Care Committee on June 15, 2017.

This proposed committee substitute will now move to the Senate Rules and Operations Committee.



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