The North Carolina Department of Health and Human Services (DHHS) submitted the Section 1115 Demonstration Waiver application (waiver application) to the Centers for Medicare and Medicaid Services (CMS) on June 1, 2016, meeting a deadline established by the North Carolina General Assembly. DHHS released the draft waiver application on March 1, and from that time hosted 12 public hearings across North Carolina and conducted a formal public comment period for 34 days, ending on April 18, 2016. The submission of the waiver application to CMS continues North Carolina’s transition from a Medicaid fee-for-service system to a capitated Medicaid managed care system.

The waiver application contains some notable differences from the original draft and clarifies some sections based on public comment. Specifically, the changes and clarifications included in the waiver application and the DHHS’ Response to Public Comments include:

While the submission of the waiver application is an important milestone, it is also important to remember that the transformation process remains in its early stages. CMS will begin its review process to determine whether to approve or deny the waiver application. This will likely involve substantial negotiations between CMS and DHHS, and may lead to other revisions or changes before the waiver application can be approved. Another key step will involve DHHS’s development of the Request for Proposal to procure PHPs, along with developing the PHP contracts. These contracts are important because they will need to address the details regarding implementation and operation of the program. This will include topics such as network adequacy standards and value based purchasing requirements. Also, DHHS needs to continue its work to develop the North Carolina Health Transformation Center (formerly known as the Innovations Center), and develop a long-term strategy to cover dual eligibles through capitated PHP contracts.

Even though DHHS is not anticipating approval of the waiver application from CMS for approximately 18 months, a significant amount of work remains to be done to keep the transformation moving forward. Providers and those impacted need to continue to monitor any developments.

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