Medicaid recipients with disabilities at risk of losing their doctors if health care providers don’t sign contracts

People who use Medicaid and have severe mental illness, substance use disorders or developmental disabilities soon might have to switch doctors if their health care providers don’t sign on with new managed care plans.  

These providers include many of the state’s large health systems, major hospitals and their physicians’ offices. They have been slow to sign on to Medicaid managed care networks that the state calls “tailored plans.” These plans are supposed to cover both the physical and mental health needs of people with behavioral health or cognitive disorders.  

If their doctors don’t join these new managed care networks, patients could soon be forced to change doctors or pay out of pocket.   

About 2.9 million people in the state use Medicaid as their health insurance. Of those, 1.8 million people are enrolled what the state calls “standard plans.” Roughly 200,000 are expected to be covered under the new tailored plans.

The state has already delayed the launch of tailored plans once, pushing the date from Dec. 1, 2022 to April 1.  

Earlier this month, Dave Richard, deputy director of Medicaid at the NC Department of Health and Human Services, acknowledged in a brief interview that health systems are concerned about signing on to the regional mental health offices’ managed care plans.  

The health systems include hospitals, doctors’ offices and other practices. “We need them to be a part of it,” Richard said. “We don’t want to disrupt any of the relationships that individual members have with their physicians.”

Under federal law, tailored plans are required to ensure that 95% of people enrolled have medical care close by.

Six regional offices, formally called Local Management Entity/Managed Care Organizations, operate the tailored plans. The offices use Medicaid money and state and local funds to hire companies that provide care for people with mental illnesses, substance use disorders, or intellectual or developmental disabilities.  

Contract negotiations turned out to be harder than anyone thought, Richard said, but he expected more hospital systems to sign on this month. In early February, ECU Health reached an agreement with Trillium Health Resources, a regional office that serves residents of eastern and southeastern counties.

“Frankly, it’s just a lot of work and trying to get through all of that is harder than I think we all imagined,” Richard said.

Health systems have been reluctant to sign on for several reasons, NC Healthcare Association spokeswoman Cynthia Charles said in an email earlier this month. One is a foundational question: whether it’s a good idea to have tailored insurance plans for people with severe mental illnesses and developmental disabilities separate from standard plans for almost everyone else. 

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“NCHA is growing concerned that the design and implementation of the tailored plans continues to carve-out this vulnerable population and does not really integrate physical and behavioral health in a way that will improve the patient’s health outcomes,” she wrote.

Snags in a new state payment system

In July 2021, the state changed the way it paid for health services for most people who use Medicaid. Rather than pay for every doctor’s visit or procedure, the state switched to managed care. Under that system, insurance companies are paid a set fee per person.  

Four insurance companies offer managed care plans for people enrolled in Medicaid, and another group, a partnership between the NC Medical Society and a health insurance company, covers 41 counties.

Charles, spokeswoman for the NC Healthcare Association, a group that represents hospitals and health systems, said it supported managed care and the move to comprehensive care for behavioral health patients.

But treating people using Medicaid who are not enrolled in managed care plans requires less administrative work. Hospitals and health systems are already worried that they aren’t being paid properly under the standard plans, she wrote. Insurance companies deny about 20% of hospitals’ claims, Charles wrote.

“Hospitals and health systems understand the importance of serving this Medicaid population and desire to be in-network with as many Medicaid Managed Care plans as possible,” Charles wrote. “There are concerns that the tailored plans do not have the standard processes expected of payers to support providers. NCHA members are concerned about payments not being received from standard plans and the extensive administrative burden when compared to Medicaid direct.”

Who has tailored-plan contracts with health care providers and who doesn’t

Over the last three weeks, Policy Watch called and emailed all six of the regional managed care offices, as well as Atrium Health, Novant Health, Duke Health, UNC Health, ECU Health, Cape Fear Valley Health, and HCA Mission Hospital.

Representatives from Atrium Health, a dominant health care provider in populous Mecklenburg and Forsyth counties, did not return repeated calls and emails. Nor did Novant Health.

As of late January, two regional mental health officers said they were negotiating with Atrium but did not yet have contracts: Alliance Health, which manages mental health services for Mecklenburg County residents, among others, and Partners Health Management, which serves people from Union and Rutherford up to Surry, Yadkin and Forsyth counties. 

As of Feb. 1, UNC Health did not have contracts with any of the regional offices to be an in-network provider but remains in “active discussions,” according to an email from spokesman Alan Wolf. 

Duke Health spokeswoman Sarah Avery said in an email on Feb. 9 that it did not have a finalized contract with any tailored plan but hoped to reach an agreement with at least one of the local organizations.

Cape Fear Valley Health did not have contracts with any tailored plan as of last week, spokeswoman Chaka Jordan wrote in an email. “Negotiations are still underway and mainly revolve around the claims policies to ensure coverage for medically necessary services,” she wrote.

Nancy Lindell, spokeswoman for HCA Healthcare, the company that owns Mission Hospital in Asheville and other hospitals in western North Carolina, said in an email last week that it had tailored plan contracts with Partners Health Management and Vaya Health, the regional managed care office for more than 20 western counties. HCA Healthcare intends to sign contracts with the other tailored plans, Lindell wrote.

In addition to HCA Mission Hospital, Vaya Health has contracts with Novant, Cone Health, Duke LifePoint Healthcare, Granville Medical Center, and others, Vaya spokeswoman Allison Inman said in an email. Vaya is in the final stages of negotiations with two more major health systems and expects to sign contracts by the end of the month. “Vaya is currently meeting the Department’s network adequacy requirements, but we are striving to contract with as many willing providers as possible to minimize disruption for members,” Inman’s email said.

Regional mental health offices have made more progress signing community hospitals to managed care contracts, but say they are working to further build their health care networks. 

Eastpointe, the regional office that covers 10 counties in eastern, south-central and north-central North Carolina, has a contract with Wilson Medical Center. That center is part of a community hospital network that includes a facility in Vance County.

“Eastpoint is continuing to negotiate as aggressively as possible with the remaining health care systems in the service area,” spokesman Mike Kondratick said in a phone call last week. That includes with UNC Health, Novant, Atrium, and ECU Health, he said.

The Sandhills Center, which covers counties in central North Carolina from the Virginia to the South Carolina border, has contracts with Alamance Regional Medical Center, Cone Health System, Duke LifePoint Healthcare, which includes community hospitals, and others. Sandhills spokeswoman Heather Odendahl told Policy Watch in an email that it is still finalizing contracts with Atrium Health, Novant Health, Cape Fear Valley Medical Center, UNC Hospitals, among others.   

Along with the ECU Health contract, Trillium in southeastern North Carolina also has a contract with Novant to provide physical health care, Chief Operating Officer Cindy Ehlers said last week. The office is working to sign on more hospitals and health systems, she said.

“We’re doing everything we possibly can,” Ehlers said. “This negotiation is complex, at the very least. 

“It’s change that is complex. It is transformative. It does cause everyone to pause and say ‘How does this really work?’ All sides want it to work.”