CMS Approves New Flexibilities for the NC Medicaid Reform Section 1115 Demonstration Project

Includes flexibilities related to Tailored Plans and Healthy Opportunities Pilots

On July 7, 2023, Centers for Medicare & Medicaid Services (CMS) approved an amendment to North Carolina’s Medicaid Reform Section 1115 Demonstration. The demonstration, originally approved in 2018, gave North Carolina flexibility needed to embark on the transformation of its Medicaid program and create an innovative health care delivery system that integrates physical and behavioral health, and invests in non-medical interventions.  

The amendment, which will be in effect through Oct. 31, 2024, authorizes important changes to the demonstration that will support ongoing managed care implementation efforts, in addition to expanding eligibility for and strengthening community capacity to implement the Healthy Opportunities Pilots.  

Behavioral Health and Intellectual/Developmental Disability (I/DD) Tailored Plans 

As part of its transition to managed care, North Carolina is planning implementation of Tailored Plans, which are specialized managed care plans that will provide integrated services to Medicaid enrollees with significant behavioral health needs, I/DD and traumatic brain injuries. The demonstration amendment authorizes North Carolina to make two changes to Tailored Plan design as the State prepares for launch: 

  1. Ensuring Tailored Plan Members Maintain Access to Critical Residential Services 
    Once implemented, Tailored Plans will cover certain residential services that are not covered by Standard Plans. To ensure that enrollees maintain access to these vital services, North Carolina now has authority to require that Tailored Plan members in one of the following groups obtain their Medicaid benefits through a Tailored Plan with no option to enroll in a Standard Plan: 
    • Individuals who reside in an intermediate care facility for individuals with intellectual disabilities (ICF-IID),
    • Individuals who participate in North Carolina’s Transitions to Community Living,  
    • Individuals who are enrolled in the Innovations or TBI 1915(c) waiver, and
    • Individuals who receive services/supports in a state-funded residential treatment facility (i.e., individuals receiving services to support them in their residence/house setting, including services provided in group homes or non-independent settings such as group living, family living, supported living, and residential supports).
  2. Clarifying Tailored Plan Eligibility for Dually Eligible Individuals with Significant Behavioral Health Needs and I/DD 
    The demonstration amendment clarifies that individuals who are dually eligible for Medicare and Medicaid, only those enrolled in the Innovations or TBI waivers will enroll in Tailored Plans; all other dually eligible individuals, including those with significant behavioral health needs and I/DD, will continue to obtain Medicaid services through NC Medicaid Direct.  

Healthy Opportunities Pilots

Since March of 2022, the Department has been testing the impact of providing services to address non-medical drivers of health through its Healthy Opportunities Pilots program. North Carolina’s 1115 demonstration authorizes the State to spend up to $650 million in Medicaid funding to deliver evidence-based housing, food, transportation, and interpersonal safety services for qualifying individuals over the course of the demonstration.  

Of the $650 million, up to $100 million can be spent to build the capacity of entities participating in Medicaid for the first time—Network Leads and Human Services Organizations (HSOs). The State requested critical changes to the demonstration in support of the State’s goal to deliver Pilot services effectively and efficiently to North Carolinians with qualifying physical or behavioral health conditions who are hungry, have unstable housing, lack reliable transportation or who have experienced interpersonal violence. Specifically, the amendment permits the State to modify the Pilots as follows:  

  • Expanding Pilot Eligibility to Members in NC Medicaid Direct in Pilot Regions
    Until recently, only individuals who received Medicaid through a health plan—a Standard Plan, Tailored Plan or the Children and Families Specialty Plan—were eligible to participate in the Pilots. The waiver amendment expands Pilot eligibility to include NC Medicaid Direct populations in Pilot regions in addition to those who receive Medicaid coverage through managed care. The Department is developing a plan for phasing NC Medicaid Direct populations into the Pilots based on Department-determined readiness of Pilot implementation partners and will release additional information as it is available.  
  • Increasing Access to Capacity Building Funding
    Previously, Network Leads and HSOs were only permitted to access Pilot capacity-building funds during the first two years of Pilot operations. The amendment allows Network Leads and HSOs to access critical Pilot capacity building funds throughout the remainder of the demonstration.  
  • Providing Additional Flexibility for Program Updates
    The waiver amendment provides the State with additional flexibilities to make changes to key program areas such as Pilot value-based payment and program integrity design, based on “on-the-ground” experience.  
  • Aligning Operational Details with Program Implementation
    The waiver amendment updates Pilot-related requirements to align more closely with real-life implementation and entity roles and responsibilities (e.g., providing additional clarity around which Pilot entity pays invoices for Pilot services rendered).  

NCDHHS will continue to collaborate with managed care plans, care management entities, Network Leads, HSOs and other vital partners to fully implement the current demonstration. The Department is also working with its partners to prepare an application to renew the demonstration and will share an update later this summer.  

To learn more about the Healthy Opportunities Pilots, please visit the Healthy Opportunities Pilots webpage or the Healthy Opportunities Frequently Asked Questions.  


NC Medicaid Contact Center, 888-245-0179  

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