June 11, NCMGMA hopes that the specific comments provided below assist DHHS during the transition in North Carolina to Medicaid Managed Care.

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1 June 11, 2018 VIA NC Department of Health and Human Services Division of Health Benefits 1950 Mail Service Center Raleigh, NC RE: Comments Regarding Medicaid Managed Care To Whom It May Concern: The North Carolina Medical Group Management Association (NCMGMA) appreciates the opportunity to comment on the North Carolina Department of Health and Human Services (DHHS) Medicaid Managed Care Proposed Policy Papers regarding Prepaid Health Plans in North Carolina (issued May 16, 2018) and Supporting Provider Transition to Medicaid Managed Care (issued May 18, 2018). Since 1971, NCMGMA has grown to more than 700 members representing medical practices across North Carolina. Our membership includes executives and managers of private group practices, academic medical centers, integrated delivery systems, and companies that support medical provider organizations. NCMGMA strives to maximize the value and effectiveness of medical group leaders through educational programs, information exchange, networking, advocacy, and professional development opportunities. With the transition of Medicaid in North Carolina to a managed care structure, NCMGMA shares the goal of DHHS of creating a sustainable system that improves health, supports providers, and provides predictable costs. A particular priority of NCMGMA during this transition is DHHS efforts to ease the administrative burdens on providers. Specifically, NCMGMA supports DHHS efforts to, among others, (1) standardize and simplify administrative processes and standards across PHPs, (2) ensure transparent and fair payments for PHPs and providers, and (3) offer contract guidance to providers. NCMGMA hopes that the specific comments provided below assist DHHS during the transition in North Carolina to Medicaid Managed Care. PHP Procurement Currently, as described in Section IV of the Proposed Policy Paper regarding Prepaid Health Plans, DHHS expects to maintain three prepaid health plan (PHP) contracts to provide coverage to

2 North Carolina Medicaid beneficiaries statewide. In addition, DHHS expects up to twelve PHP contracts to provide coverage through provider-led entities (PLEs) for pre-defined regions throughout the state. Furthermore, DHHS leaves open the possibility for PHP contracts with an additional twelve unique PLEs within each county. NCMGMA is concerned that, based on these figures and the regions developed by DHHS, a provider could be faced with upwards of separate contracting entities in each region. NCMGMA believes that the number of possible contracting entities in the current proposed structure would greatly increase the administrative burden on providers throughout North Carolina. While recognizing the need for sufficient choice for Medicaid beneficiaries, NCMGMA recommends imposing a cap on the number of regional PLEs that are awarded contracts by DHHS within a given region. An informed cap on PLE contracts in each region would support DHHS goals of providing sufficient access to care for beneficiaries while at the same time reasonably controlling the administrative burden borne by providers under this new structure. Specifically, NCMGMA recommends that DHHS award no more than three (3) contracts, whether CE or PLE, in each region. Such a cap offers adequate choice to beneficiaries and provides adequate enrollment for PHPs to maintain financial viability. PHP Financial Management If DHHS intends to set a per member per month capitation rate, NCMGMA recommends delaying the withhold program during the first two years of operation. The spread between a target 88% medical loss ratio (MLR) and the capitation rate, if reduced by a 5% withhold, as suggested in the policy paper, could damage the entity s cash flow needs during the critical start-up years. If the withhold causes a PHP to withdraw from the market, then any previous efforts to establish the market allocation of beneficiaries would have been for naught. Furthermore, if the MLR truly is intended for payment to the provider panel, any savings (i.e. amount less than the MLR), should be allocated as gain sharing to the providers who actually enabled the savings. Such a structure would incentive providers to reduce costs through aggressive care management. PHP/Provider Mandatory Contract Language In order to ease the administrative burden on providers following the transition to Medicaid Managed Care, NCMGMA supports the use of a DHHS-approved template for contracts between PHPs and providers. Even with a cap on the number of regional PLEs as described above, providers still will be faced with the prospect of entering into and managing a number of different contractual relationships with PHPs. Therefore, NCMGMA recommends the use of a single DHHS-approved template for PHP/Provider contracting. Use of standard contract terms, provisions, and

3 language in a standardized template will assist providers in managing relationships with PHPs and being able to devote necessary time and resources to Medicaid beneficiaries. With respect to specific standard contract provisions, NCMGMA supports a requirement that PHPs include the applicable standard contract provisions as required in commercial insurance provider contracts and set forth in Title 11 North Carolina Administrative Code In addition, Section VI of the Policy Paper regarding Prepaid Health Plans describes the proposal that any entity that holds a capitated contract with NC DHHS must also hold a PHP license issued by NC DOI. The proposal, thus, would create a state-licensed PHP that assumes financial risk and functions as a health maintenance organization ( HMO ). Therefore, DHHS should ensure that all contracting rules and regulations applicable to any state-licensed HMO, such as prompt pay laws and other applicable provisions within North Carolina General Statutes Chapter 58, also apply to PHPs. Provisions of the contract template where the text is prescribed should include claims submission, prompt pay, renewal and termination of the contract, claims adjudication, utilization review, and provider appeals. NCMGMA supports the claims submission and prompt pay guidance included in Section IV of the Policy Paper regarding Prepaid Health Plans and recommends that the following language be included in a DHHS-approved contract template: The Provider shall submit all claims to the PHP for processing and payment within ninety (90) days from the date of covered service. However, the Provider s failure to submit a claim within the aforementioned time will not invalidate or reduce any claim if it was not reasonably possible for the Provider to submit the claim within that time. In such case, the claim should be submitted as soon as reasonably possible and, in no event, later than one (1) year from the time submittal of the claim is otherwise required. The PHP must send acknowledgement of receipt of electronic claims within forty-eight (48) hours of receipt. Within eighteen (18) processing days of receiving the claim, the PHP must notify the Provider whether the claim is clean or if more information is needed. If the claim is clean, the PHP must pay or deny the claim within thirty (30) days of receipt. If more information is needed from the Provider, the PHP must provide notification to the Provider requesting the additional information within eighteen (18) processing days of receiving the claim. If the PHP fails to pay a clean claim in full within thirty (30) days of receipt, the PHP will be required to pay the Provider interest and penalty. Payments will bear interest at the annual rate of eighteen (18) percent beginning on the date following the day on which the claim should have been paid or was underpaid. Failure to pay a clean claim within thirty (30) days of receipt will result in the PHP paying the Provider a penalty equal to

4 one (1) percent per day of the total amount of the claim beginning on the date following the day on which the claim should have been paid or was underpaid. In addition, NCMGMA recommends inclusion of the following language regarding the renewal and termination of the PHP/Provider contract: Renewal: Upon the anniversary of each Term as defined herein, the Agreement shall automatically renew for additional one-year terms unless either party provides written notice to the other party at least forty-five (45) days prior to the end of the Term; provided, however, that the PHP shall provide written notice to the Provider of a proposed payment rate schedule at least ninety (90) days prior to the end of the Term. Termination without Cause: Either party may terminate this Agreement at any time without cause by providing written notice to the other party at least ninety (90) days in advance of such termination. Termination for Cause: Either party may terminate this Agreement immediately upon the other party s Default, as defined below, by providing written notice to the other party. The term Default includes any of the following: (1) Failure to comply with or to perform any provision or condition of this Agreement for ten (10) business days following receipt of the other party s written notice of such failure. (2) Failure to obtain or maintain any licenses, insurance, or certifications required by applicable law or regulation. The termination of this Agreement will not relieve the parties of any right or obligation accruing hereunder prior to such termination, or of any right or obligation to continue beyond the termination date as prescribed by state or federal law. With respect to the credentialing process, NCMGMA recommends that credentialing remain consistent with N.C. Gen. Stat Providers should not be required to navigate two or three different credentialing process as suggested in the concept and policy papers by DHHS. The process requiring providers to conduct multiple credentialing through NCTracks and submit applications with expanded questions to PHPs lacks justification or rationale, particularly when all other carriers regulated by the Department of Insurance operate well with the North Carolina Uniform Application. Not only would the multiple credentialing process place a heavy administrative burden and cost on providers, but it would also result in added cost and time to DHHS and the PHPs through the necessary development of new and different forms and paperwork. Provider Participation in PLEs

5 NCMGMA supports efforts by DHHS to address potential anti-competitive or self-dealing behavior. PHPs should be prohibited from paying more for services rendered by a provider or subcontractor that is related to the PHP, than for similar services rendered by a provider or subcontractor that is not related to the PHP. Furthermore regarding network adequacy, as capitation rates will be set by DHHS rather than by PHPs, DHHS must ensure the adequacy of such rates so as not to alienate experienced PHPs who may choose not to accept an otherwise inadequate rate. NCMGMA agrees with DHHS that exclusivity provisions in contracts between PHPs and Providers should be prohibited and that entities should negotiate in good faith. However, NCMGMA further agrees with other commenters that DHHS should recognize that all parties, including PHPs, must negotiate in good faith. In addition, NCMGMA recommends addressing PLE referral practices that are inconsistent with Network Adequacy guidelines. PLEs should monitor their assigned beneficiaries in order to identify those with more serious chronic diseases, or those requiring significant resources, that may negatively affect the financial viability of the PLE. PHP contract provisions and oversight tasks should require that PLEs retain these chronically ill patients rather than referring the patients to another PLE or CE for the primary purpose of reducing the financial impact on the referring PLE or CE. Finally, per Federal Trade Commission (FTC) guidelines, providers are prohibited from sharing with competing entities information related to fee setting or design of compensation methodology. Therefore, if a provider is an owner/member of multiple PLEs, then that provider should not be permitted to participate in any aspect of the PLEs financial oversight or decision processes. NCMGMA recommends that in order to appropriately evaluate PLEs, RFP responses should describe a PLE s evaluation of its FTC anti-trust risks and identify the PLE s policies and plans to operate within the FTC guidelines. Network Adequacy With respect to Appendix A, Table 5 of the concept paper regarding Network Adequacy and Accessibility Standards, many of the potential PHP bidders maintain a separate panel for behavioral health. However, the PHPs also use a fee schedule that discounts the same behavioral health service depending on the provider. Under this structure, for example, an internist treating depression may be paid more than a mental health provider treating the same diagnosis. Similarly, the different contracted panels affect the coordination of care between the different contracted providers. NCMGMA recommends that any fee schedule be uniform based on the service and not the diagnosis.

6 With respect to the Specialty Care Access Standards set forth in Appendix B, many of the listed specialties not only are hospital-based, but also have either exclusive service contracts or direct employment contracts with hospitals. As participating physicians may not be included in the typical template for hospital service contracts, PHPs should predicate the acceptance of a hospital contract on the hospital s ability to commit its specialty care providers to participation in the PHP panel. Such a requirement will avoid the conundrum of an enrollee s hospital being in network, but the provider services being out of network. Thank you again for the opportunity to comment on this matter. We look forward to receiving additional information regarding the issues described above and continuing to work with DHHS during and after the transition to Medicaid Managed Care in North Carolina. Sincerely, Sandra Jarrett 2018 NCMGMA President Melissa White Advocacy Committee Co-chair Cameron Cox Advocacy Committee Co-chair