Five health insurance organizations were appointed Monday to share contracts totaling $ 6 billion annually for the provision of health care under a privatized state program, Medicaid, aimed at low-income, disabled and elderly residents, who should start providing health care coverage in November.

The announcement represents the largest financial expense in the history of the Department of Health and Social Services, and will change the way the Medicaid program has been operating for decades. Instead of paying doctors and hospitals for the work done, the state will now pay independent insurers a fixed monthly fee for each covered patient so that organizations can share the benefits if they maintain minimal costs, but will be financially responsible for any cost overruns.

This approach to care management, already adopted by most other states, was made mandatory in North Carolina in 2015 by the state legislature in response to chronic budget overruns and allegations of mismanagement.

Nevertheless, this announcement has frustrated some advocates for the rights of low-income residents. The state health department has rejected a Medicaid contract application from North Carolina's 12 largest hospital networks, but has signed multi-billion dollar contracts for three to five years. , to foreign candidates, including at least one insurer, Centene Corp. ., with a controversial record.

"I was very surprised that the hospitals bid was rejected and that two plans without real North Carolina experience and bad track records in other states were accepted," said Douglas Sea, a lawyer. at the Charlotte Center for Legal Advocacy, in an email.

The winners of the contract for Medicaid services at the state level are AmeriHealth Caritas, Blue Cross and Blue Shield, UnitedHealthcare and WellCare. There is also a regional insurer: Carolina Complete Health – a consortium of the N.C. Medical Society, the N.C. Community Health Center Association and the insurer Centene Corp. It will operate regionally in two of the planned zones for launching phase two in February. Sea was particularly concerned about the choice of AmeriHealth, based in Centene, Missouri, and New Jersey.

Centene is the largest health insurance provider in the country under the Affordable Care Act. Fortune 500 and its subsidiaries have been charged and punished in more than a dozen states, resulting in at least $ 23.6 million in penalties, according to a report. Des Moines registry investigation.

News & Observer could not contact Marcela Manjarrez-Hawn, spokesperson for Centene, by email for comments.

Brendan Riley, Policy Analyst at the NC Justice Center in Raleigh, said the contract applications were not made public. It is therefore difficult to assess the situation of residents of North Carolina in the context of the privatization of Medicaid, where the majority of beneficiaries are weak. income and children under 18 years.

"Some of the old concerns remain," said Riley. "We will take a close look at some of these plans in other states. We hope the health department will oversee and ask these organizations to do a good job. "

The new version of Medicaid will be rolled out in stages, with the Triangle in the first wave, the DHHS said Monday. Counties of Wake, Durham, Johnston, Chatham and Orange are part of an area of ​​14 counties with 300,000 Medicaid beneficiaries, where the privatization of Medicaid will be tested prior to its scale-up deployment. State in February. The other test region includes 13 counties in western North Carolina and 265,000 Medicaid beneficiaries.

Most people covered by Medicaid will be able to keep their doctor and choose one of five new Medicaid private insurance options their doctor is taking part in, said Richard Richard, Assistant Secretary of State for Medicaid, on Monday. during a conference call. Doctors can participate with all Medicaid contractors in their area, with only a few, or they can give up.

"The vast majority of recipients will continue to rely on their provider," Richard said. "Some providers may choose to leave Medicaid because of this transition, and others may choose to enter."

DHHS secretary Mandy Cohen said the announcement on Monday paves the way for the five groups of insurers to set the amount they will pay to doctors and hospitals for the treatment of Medicaid patients. The new system is designed to foster competition, so that each of the five Medicaid award winners attempts to develop the most comprehensive vendor networks possible to bring as many patients together as possible.

"As of today," Cohen said in a conference call with reporters, "people will approach doctors and hospitals to negotiate contracts."

Three Medicaid candidates were not accepted and Cohen said they could appeal and have 30 days to do so. They are national insurers Aetna and Optima Health, as well as My Health by Health Providers, a consortium of Presbyterian health services in New Mexico and 12 health care systems in North Carolina, including UNC Health Care in Chapel Hill , Duke University Health System in Durham and WakeMed Health & Hospitals in Raleigh.

My Health spokesperson, Cathy Rothey, could not be contacted for comment by phone or email.

The privatized version of Medicaid will mean big changes for 1.6 million of the 2.1 million people registered in the federal program. In June, Medicaid residents in both tested regions, including the Triangle, will receive information about insurers provide Medicaid health coverage in their area, so that they, their parents or guardians, can choose the right insurance plan in July, which includes their usual doctors. Their coverage will begin in November.

Cohen assured the public that the new payment system, under which insurers will have to pay for cost overruns, will not encourage private Medicaid contractors to skimp on medical services as part of a strategy to limit losses or increase profits.

She said Medicaid contracts impose strict quality measures and other standards on organizations receiving Medicaid funds. For example, a provision called medical claims ratio requires that 88% of Medicaid's public funds be spent on medical services, and only 12% can be spent on administrative functions.

Monday's announcement did not appease supporters of Medicaid recipients.

"Nobody had previously taken care of Medicaid-managed care in North Carolina," Corye Dunn, director of public policy for Disability Rights NC, said in a phone interview. "There is an inherent tension between those who want to know the state and those who know about managed care."

Approximately 500,000 Medicaid clients in North Carolina are considered medically complex patients and are among the most expensive to treat. They will remain on the traditional Medicaid program, in which the state government pays doctors and hospitals for the services provided – a system known as "pay-to-service" (paid service), regardless of cost. These patients suffer from mental illness, developmental or addiction disorders and will not be privatized for years until the new system is better understood.