A state administrative law court judge has turned down legal appeals by three medical groups that were denied participation in the latest Medicaid waiver initiative.

Medicaid recipients in a 13-county section of the Triad and Northwest North Carolina, along with a 14-county section of central North Carolina that includes Alamance County, are scheduled to start service through prepaid health plans, or PHPs, in November. Medicaid recipients in the rest of the state are scheduled to start in February.

Medicaid serves 2.1 million North Carolinians. Of that total, 1.6 million will be enrolled in managed care under a federal waiver approved in October 2018.

PHPs represent a major overhaul in how the state pays for Medicaid patients’ care. Currently, health providers are paid under a fee-for-service system.

PHPs, by contrast, will pay providers a set amount per month for each patient’s costs. The N.C. Department of Health and Human Services will reimburse the plans.

On June 26, Administrative Lawn Judge Tenisha Jacobs denied requests to stay the rollout filed by My Health by Health Providers, Aetna Better Health of North Carolina and Optima Family Care of North Carolina Inc.

The rulings came nearly five months after the DHHS announced on Feb. 5 that it had selected AmeriHealth Caritas North Carolina, Blue Cross and Blue Shield of North Carolina, UnitedHealthcare of North Carolina, and WellCare of North Carolina to serve as statewide PHPs over MyHealth, Aetna and Optima.

MyHealth was formed by 12 North Carolina health-care systems, including Novant Health Inc., Wake Forest Baptist Medical Center and Cone Health.

On April 9, MyHealth appealed the DHHS decision four days after the department denied MyHealth’s bid protest that would have added it to the PHP provider list.

MyHealth officials could not be immediately reached for comment on the rulings.

The DHHS also chose just one of three potential provider-led entities, or PLEs, even though N.C. General Assembly approved having up to 12 such groups last year. Each of the six state regions could have had up to five PLEs providing services.

‘Flawed design’

MyHealth has described the DHHS format as a “deeply flawed design and evaluation process.”

“My Health is requesting that Medicaid patients be given the choice of a provider-led entity operated by North Carolina’s most experienced health systems and its 15,000 physician partners, instead of out-of-state insurance companies with little or no Medicaid experience in North Carolina.

“This is the choice the General Assembly intended,” My Health argued.

Jacobs said in her ruling that the DHHS’ evaluation committee “determined that MyHealth was the sixth-ranked” applicant — behind Aetna — based on its evaluation format.

Jacobs said MyHealth “is not likely to succeed” in showing that state regulations require the DHHS to award six regional contracts even though legislators allowed for up to 12.

The judge said “it is not likely” MyHealth could prove the DHHS “erred in failing to consider it for regional contracts.”

Jacobs used similar language in her denials of the Aetna and Optima appeals.

MyHealth claimed in its motion that the request for proposal format was “biased against” PLEs. Jacobs determined that MyHealth would not succeed in challenging the DHHS’ request for proposal processes.

“Although MyHealth may disagree with the scores that the evaluation committee awarded its proposal on discrete questions, absent MyHealth showing that DHHS abused its broad discretion or erred in some other manner, there is no basis for this tribunal to disturb the scores awarded by DHHS,” Jacobs wrote.

Other factor in play

Although the three groups’ stay requests were unsuccessful with their stay requests, the rollout of the waiver initiative still could grind to a halt or face a lengthy delay — a ripple effect from dispute over the 2019-20 state budget.

On June 28, Democratic Gov. Roy Cooper vetoed the state budget compromise passed by the Republican-led legislature.

Cooper is insisting that a form of Medicaid expansion be included in the state budget, while key GOP legislative leaders are pushing back hard against the request.

The Medicaid rollout is dependent upon $218 million in start-up funding in the 2019-20 state budget.

According to the office of N.C. Senate leader Phil Berger, a Republican from Eden who represents Rockingham County, that money would go toward patient enrollment-broker contracts, provider credentialing, data analytics and other program-design components.

“Funds needed to keep our disaster response moving forward are in jeopardy,” said state Rep. Donny Lambeth, R-Forsyth, a key House budget writer.

“Our Medicaid reform plan will stop and be unable to move forward on our timeline, risking major improvements in care to Medicaid patients who need medical care,” Lambeth said.

DHHS called the prepaid health, or PHP, plan initiative the largest procurement in its history. The PHP contracts will represent a $6 billion expense annually for three years, followed by two one-year options, so the total contract could be worth $30 billion.

Medicaid recipients were scheduled to begin enrollment in PHPs this month. If a recipient does not choose a PHP by Sept. 30, one will be chosen for them.

In most instances, recipients will be able to be seen by the same providers they have now.

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Richard Craver is a senior reporter for the Winston-Salem Journal. he can be reached by email: rcraver@wsjournal.com.

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