Medicaid Transformation: Medicaid Managed Care

What is Medicaid Transformation?

Medicaid Transformation is changing the way most people receive Medicaid services. In 2015, the NC General Assembly enacted Session Law 2015-245, which directed the Department of Health and Human Services (DHHS) to transition Medicaid and NC Health Choice from fee-for-service to managed care.

Under the fee-for-service model, DHHS reimbursed physicians and healthcare providers based on the number of services they provide or the number of procedures they order. This model will now be known as NC Medicaid Direct. Only a small number of people will stay in Medicaid Direct.

Under Managed Care, instead of contracting directly with providers, the State will contract with insurance companies, called Prepaid Health Plans or PHPs. These insurance companies will be paid a pre-determined set rate per person to provide all services, known as a capitated rate. This model is known as NC Medicaid Managed Care. Approximately 1.6 million of the current 2.1 million Medicaid beneficiaries will transition to Medicaid Managed Care.

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