Q&A: What to know about NC’s upcoming Medicaid expansion, pending passage of a budget

The North Carolina Medicaid expansion agreement signed into law in late March represents a momentous event, set to bring health insurance coverage to thousands after years of failed negotiations.

With the upcoming implementation of Medicaid expansion, which is pending passage of a budget by the state’s Republican-majority legislature, we’ve created a guide answering questions on what expansion would mean, timelines for implementation, the terms involved and more.

What is Medicaid?

Medicaid provides health insurance coverage to millions of low-income and needy individuals across the country. It is jointly funded by the federal government and the states.

The program was first signed into law in 1965 by President Lyndon B. Johnson and initially covered only certain categories of individuals. Over time, the federal government expanded eligibility.

What is Medicaid expansion?

In 2010, with the passage of the Affordable Care Act (ACA), the Medicaid program was expanded to cover all adults with income below 138% of the federal poverty level. For households with incomes between 100% and 400%, the ACA provided subsidies to help lower health insurance costs. Following a lawsuit by Republican attorneys general, expansion became optional and not all states have opted into it.

Ten states — formerly 11, with North Carolina — have not opted to expand Medicaid under the ACA, according to research by Kaiser Family Foundation. This means that in North Carolina, childless adults are not eligible for Medicaid, while the current income limit eligibility for a parent or caretaker is 41% of the federal poverty level.

North Carolina also provides coverage, within certain parameters, for children, people who are blind or disabled, over age 65 or pregnant.

What would expansion mean for North Carolinians?

Medicaid expansion would make 600,000 low-income North Carolinians eligible for the program as well as increase access to health care across the state, particularly in rural communities, according to the state Department of Health and Human Services.

Gov. Roy Cooper, following the closure of Martin General Hospital in Williamston, has also said expansion will help rural hospitals struggling to make profit, due in part to high levels of uncompensated care provided to patients without health insurance.

It would also help close what many dub the “coverage gap” which refers to people who do not qualify for Medicaid and make too little to receive subsidies to help them buy insurance on a federal marketplace.

What is the status of expansion in NC now?

For years, Republicans in North Carolina did not support expansion. Then, key Republicans shifted their stance, but a compromise could not be reached between the state House and Senate.

Disagreements between the two chambers centered on policy provisions affecting hospital competition, provisions granting high-level nurses more independence and more.

On March 2, House Speaker Tim Moore and Senate leader Phil Berger announced a breakthrough. They revealed they had come to an agreement on a compromise bill. By mid-March, the expansion bill had passed both legislative chambers with strong bipartisan support and had been signed into law by Cooper, who has been a longtime supporter of expansion.

But the passage of Medicaid expansion into law did not mean that expansion took effect.

The expansion bill was tied by lawmakers to funding within the state budget, which means if the budget does not pass, neither does expansion.

When would expansion take effect?

Medicaid expansion in the state will take effect when the budget becomes law and once the federal government approves a start date.

Lawmakers in the House and Senate, which both have Republican supermajorities, have not yet passed a budget, which is supposed to happen every odd-numbered year by June 30. Delays are not uncommon, whether because of arguments within a party or, as has been more common lately, between the two parties.

The state’s Department of Health and Human Services, a Cabinet agency that reports to Cooper, said in late July that it would move forward with expansion, with an Oct. 1 launch. But, to meet this date, DHHS said in July the General Assembly would need to separate expansion from the budget or enact a budget by Sept. 1. Neither happened. But top lawmakers say a budget deal is imminent and votes are likely as early as Sept. 13 and 14.

DHHS Secretary Kody Kinsley said the budget delay means implementation of expansion won’t happen by Oct. 1 and instead will be pushed to December or next year. Asked why it would take so long, Kinsley said several variables are involved, including quarterly cash flow issues and necessary technology change, as previously reported by The News & Observer.

What are the consequences of delayed expansion?

The delay means hundreds of thousands will have to wait to gain health insurance coverage. It also means that thousands will continue to lose coverage monthly as DHHS continues to review Medicaid beneficiaries’ eligibility.

During the COVID-19 pandemic, states that accepted increased amounts of federal matching funds for Medicaid service costs could not kick people off of the program. But, starting April 1, this non-withdrawal requirement ended and the state began the review process. To date, over 68,000 people in North Carolina have lost their coverage, including many who may be eligible under expansion.

How do I apply for Medicaid in North Carolina?

To apply for Medicaid, under the current parameters and once expansion kicks in, there are multiple ways:

• Via the ePASS Public Portal, a website run by DHHS. The site is available in English and Spanish.

• In person at a local Department of Social Services office.

• Via mail using a paper application that must be sent to a local DSS office.

• Via the federal government by applying through the HealthCare.gov website or by calling 1-800-318-2596.

Visit the state’s DHHS website for more details on required documents and more.

Questions? email Medicaid.Transformation@dhhs.nc.gov or call (888) 245-0179 or a local DSS office.

What’s in the Medicaid expansion bill passed into law?

Certificate of Need: The expansion bill will make some changes to regulations known as certificate of need (CON).

North Carolina’s certificate of need law regulates hospital expansions, new health care facilities, medical equipment purchases and more. The debate over that law was 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 certificate 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 down the line.

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. But 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.

What’s not in the bill?

SAVE Act: The expansion bill passed into law does not include provisions granting high-level nurses more independence.

A bipartisan group of lawmakers wanted to allow advanced practice nurses who meet educational and clinical practice requirements to diagnose illnesses, administer anesthetic and prescribe medicine without physician supervision.

Last year, the proposal was tacked on to the Senate’s Medicaid expansion bill, which did not pass.

Additional funding provisions: The compromise version also does not include a forgivable loan program for doctors and nurses, or a $50 million fund for counties for eligibility determinations and inmate medical costs. These provisions were in the House’s version.

Will Medicaid expansion bring money to NC?

Expansion would mean more federal funding for North Carolina. DHHS broke the numbers down as follows:

• $4.8 billion a year billed to Medicaid by health care providers on behalf of the newly insured.

• $3.7 billion or more a year in payments to hospitals via the stabilization program.

• A one-time $1.8 billion “signing bonus” that “can support behavioral health, public safety support, rural health care, and other needs.”

DHHS had also previously said they expected another $1.8 billion in “back payments” if expansion and the stabilization program were approved by June 30. In a follow-up, DHHS told the N&O that since this estimate had assumed expansion started June 2023, this number could change depending on when final HASP approval occurs.

A fiscal analysis of the House expansion bill estimates positive financial impacts on the state budget through 2027.

Expansion has opponents, too. One critic, Donald Bryson, president of the John Locke Foundation, told The N&O that the touted funds were “deficit spending” by the federal government that would hurt the state’s reputation for fiscal responsibility.

What is this signing bonus?

The federal government covers 90% of Medicaid coverage costs for the expansion population. It also currently covers 66% of costs for the non-expansion population in North Carolina.

To encourage states that had not expanded Medicaid to get on board, the federal government, under the American Rescue Plan Act, increased the state’s regular match rate by 5% over the span of two years after expansion took effect. This is what has typically been cited by lawmakers as a $1.8 billion or so “signing bonus” from the federal government.