Ongoing problems with NC's managed care transition, and how to address them
In mid-2011, the NC legislature passed a bill that would dramatically change the way the state of North Carolina provides services for people with developmental disabilities, mental illness, and substance abuse (MH/DD/SA) issues. The state would shift from a fee-for-service system to a managed care system.The Arc originally opposed the move to a managed care system and still has significant reservations about the design. However, the political reality is that managed care is here to stay, and The Arc is committed to ensuring that NC's managed care system effectively meets the needs of people with disabilities.
A year and a half after the initial move towards managed care, we are feeling the impact of the plan’s short-sighted design and hasty implementation. Across the state, many of the entities responsible for implementing the shift to managed care (generally referred to as LME/MCOs) are struggling to make the managed care transition and are behind schedule. The effects of these transition problems can be felt throughout North Carolina.
In Mecklenburg County, the state first found that MeckLINK, the LME/MCO responsible for MH/DD/SA services in the area, had not achieved the necessary milestones to switch to a managed care model by its February 1st deadline. The state then re-assigned the responsibility to implement the new managed care system in Mecklenburg to a LME/MCO already operating under the managed care system, Cardinal Innovations Behavioral Healthcare. This decision meant that millions of dollars of public money MeckLINK spent preparing for the new managed care system would be wasted, and Mecklenburg County would adopt the new managed care system several months later than planned.
On January 23, DHHS, now under the leadership of Governor McCrory’s administration, gave MeckLINK a new target date of March 1st, providing it meets its “readiness benchmarks.” This change occurred just eight days before Cardinal Innovations was to take over.
In the southeast corner of the state, Coastal Care, the LME/MCO responsible for MH/DD/SA services for 5 counties including New Hanover, will miss its deadline to convert to the new managed care system by February 1st. While this came to light recently and details are scarce, for whatever reason the LME/MCO is not prepared to switch to the managed care system on schedule, which will result in a significant loss in savings.
Large overruns and implementation controversies are nothing new to NC’s managed care transition. Starting in January 2011, Western Highlands Network, the LME/MCO that manages MH/DD/SA services in 8 counties in the western part of the state, ran a monthly deficit of over $500,000.
Not every LME/MCO has made headlines with its transition to managed care. Many have made the transition largely out of the limelight, but questions remain about their readiness and the effectiveness of current operations.
Obviously, there have been significant problems with North Carolina’s transition to a managed care system for MH/DD/SA services. Now is the time for state leaders to learn from these controversies and make reasoned decisions about the future of our system, and the people it serves.
The Arc believes problems with the state’s transition to managed care stem from an overzealous rush to find savings, rather than a thoughtful and deliberate approach to system design. The operationally arbitrary deadlines for management entities to convert to the managed care waiver are a key example. Converting to a managed care system is not easy- it is expensive and disruptive. We must be sure that LME/MCO’s are truly ready to begin before they turn the switch.
The struggles of LME/MCOs the state deemed ready to move forward to the new system, including Western Highlands Network, prove that the prior notion of what ‘ready’ means is insufficient and needs to be re-examined. Clearly, LME/MCOs must prepare business systems capable of dealing with the large volume of claims, payments, and calls they will receive. It is also important that they are prepared to implement any new services available under the managed care system, respond to people with disabilities and their families about their concerns, and have a well-trained provider network that understands the intricacies of the new system.
Our system’s focus should be on the needs of individuals it is meant to support and the providers working within the system, rather than dreams of short term savings. Getting it right the first time with a well-measured, steady approach will lead to efficiency, cost containment, and higher satisfaction among consumers, providers, and LME/MCOs.
The Arc believes we must adhere the following basic principles if we are to make this transition to Managed Care successful.
Speaker of the NC House Thom Tillis has formally requested that Governor Perdue convene a Special Session of the General Assembly in order to address the looming 
