Medicaid expansion is now the law in NC, with implementation to start in weeks

With the passage of a state budget into law overnight, Medicaid expansion is on its way to North Carolina, and its implementation will soon start rolling out.

Implementation of expansion will begin on Dec. 1 with about 600,000 North Carolinians expected to gain health insurance, according to the state’s Department of Health and Human Services.

About 300,000 North Carolinians — largely those on a limited benefit family planning Medicaid program — will be moved into full coverage on Dec. 1, Democratic Gov. Roy Cooper said Sept. 25 during a press conference. The remainder, as they learn of expansion, will need to sign up for coverage.

County partners have been working to have their systems, processes and staff ready to help enroll those who did not immediately gain eligibility, DHHS Secretary Kody Kinsley said Sept. 25.

Medicaid expansion, a federal-health insurance program for low-income individuals, was signed into law by Cooper last March. But its implementation was tied by lawmakers in the Republican-controlled legislature to passage of the state budget.

Disagreements between the GOP-led House and the Senate, largely on the legalization of casinos, delayed passage of the state’s spending plan. But on Sept. 19, Republican leaders announced they had reached a deal on the budget that did not include casinos but that would trigger Medicaid.

The 625-page spending plan passed both legislative chambers, and Cooper announced minutes later that he would not sign or veto the budget but instead let it pass into law after 10 days. Those 10 days passed as Monday rolled into Tuesday, making the budget law and triggering expansion.

Prior to expansion, the income limit for eligibility under Medicaid for a parent or caretaker in North Carolina was 41% of the federal poverty level, or just over $8,000 yearly for a family of three.

Adults without children, save for those with disabilities or other qualifying exceptions, had no coverage.

People who did not qualify for Medicaid under the prior tighter parameters could apply for federal subsidies, but these were limited and many were not eligible. This meant many people fell into a coverage gap in which they earned too much to qualify for traditional Medicaid but too little to receive subsidies.

Under the expanded parameters, all adults with income below 138% of the federal poverty level, or who make about $20,120 a year, will gain eligibility.

Other policies in the expansion bill

Certificate of Need:The expansion bill will make some changes to North Carolina’s certificate of need (CON) rules, which regulate hospital expansions, medical equipment purchases and more. Debates over those rules were a big reason Medicaid expansion did not pass in recent years. (The Senate wanted to pass it with certificate of need changes, and the House did not.)

The expansion bill eliminates certificates of need for behavioral health beds and chemical dependency beds. For counties with a population of 125,000 or more, the bill eliminates certificate-of-need requirements for MRI machines and ambulatory surgical centers. These provisions would become effective years from now. These surgical centers in large counties would have a specific requirement for how much charity care they must provide.

Reimbursements:The expansion bill includes a mechanism for hospitals to get higher reimbursements through Medicaid, dubbed the “Healthcare Access and Stabilization Program.”

The federal government covers 90% of Medicaid coverage costs for the expansion population. The remaining 10% of costs under the expansion bill will be paid for by taxing hospitals.

To compensate hospitals, lawmakers included the HASP mechanism, which allows hospitals to take advantage of a federal program to get more funding. It is targeted at hospitals that have experienced losses. These increased reimbursements could begin at the start of the next fiscal-year quarter after the HASP program is approved by the federal government, and could be made for hospital services provided since July 1, 2022.

Temporary Savings Fund: The expansion bill establishes a fund to hold savings realized by the state’s health and human services department from enhanced federal benefits.

To encourage states that had not expanded Medicaid to get on board, the federal government, under the American Rescue Plan Act, increased the match rate it pays for the regular Medicaid population in those states by 5 percentage points over the span of two years after expansion took effect. This is what has typically been cited by lawmakers as a $1.6 billion or so “signing bonus” from the federal government. It’s an additional windfall for North Carolina on top of the much higher match rate for the expansion population.

As these funds become available, the budget lays out how they will be used. This includes funding for a new children’s behavioral health hospital in the Triangle, as well as for implementing a new partnership between ECU Health and UNC Health, which would help build new health clinics. Funding would also be used to expand health care programs at community colleges.

In addition to these provisions, the Medicaid expansion bill also directs the state health department’s Division of Health Benefits to provide Medicaid applicants with information about the Health Insurance Marketplace that includes contact information for the Navigators Consortium, a program to help people find the right coverage under the federal marketplace.

DHHS, in collaboration with the state’s commerce department, must also develop a referral plan for assessing the employment status and barriers to employment of Medicaid and other social service programs beneficiaries.

How to apply for Medicaid coverage in NC

Once expansion is implemented on Dec. 1, North Carolinians who are newly eligible will be able to apply for coverage.

After an application is submitted, county social services offices need to determine applicants’ eligibility. According to a 2022 report by the Fiscal Research Division, which provides analysis services for the General Assembly, the annual statewide percentage of Medicaid applications processed in a timely manner was 94%.

The statewide monthly average number of days to process all Medicaid applications ranged from 27 to 35 days, with an annual average of 30 days, according to the report.

The Medicaid expansion bill passed into law also allows the Health Insurance Marketplace to make Medicaid eligibility determinations for a temporary period of up to 12 months after expansion is implemented to decrease the Medicaid enrollment burden on county departments of social services.

There are multiple ways to apply for Medicaid coverage:

Visit the state’s DHHS website for more details on required documents and more. Questions? email [email protected] or call (888) 245-0179 or a local DSS office.

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