Does North Carolina's direct-access-to-obstetrician-gynecologists law apply to women on Medicaid, including women in Medicaid's Carolina Access primary-care program or in a Medicaid HMO?
Plain-English summary
Barbara Matula, then Director of the Division of Medical Assistance, asked the AG whether the 1995 General Assembly's new direct-access-to-OB-GYN statute (§ 58-51-38, House Bill 773) reached Medicaid recipients, including women enrolled in Medicaid's Carolina Access primary-care program or in Medicaid HMOs.
Senior Deputy AG Ann Reed and Assistant AG Claud Whitener answered no.
The reasoning ran along three tracks:
Track one: where § 58-51-38 sits in the code. The statute was enacted by Chapter 63 of the 1995 Session Laws and placed inside Chapter 58, the Insurance Law. Chapter 58 sets out the duties of the Commissioner of Insurance, including the approval of insurance policies and plans. The statute requires "health benefit plans" to let female participants age 13 and older access an OB-GYN within the plan without prior referral, and to give written notice that no referral is required. Both "health benefit plan" and "benefits" are defined by cross-reference to § 58-50-110(11) and § 58-50-115. Section 58-50-115 applies the Insurance Code's small-employer and self-employed-individual scope: "a health benefit plan is subject to this Act if it provides health benefits for small employers or self-employed individuals" and meets specified conditions. Medicaid does not fit that definition; it is "a cooperative federal-state program for providing medical assistance to certain classes of needy persons" under 42 U.S.C. § 1396 and N.C.G.S. §§ 108A-54 to -56.
Track two: the federal single-state-agency rule. Federal Medicaid law, 42 C.F.R. § 431.10, requires the single state agency administering the Medicaid plan to retain full administrative authority. The agency cannot delegate the issuance of policies, rules, and regulations to outside parties, and other state or local agencies cannot change or disapprove the agency's decisions. North Carolina's State Plan designates DHR (specifically the Division of Medical Assistance) as the single state Medicaid agency. Applying § 58-51-38 to Medicaid would effectively allow the Department of Insurance to override DMA's administrative decisions about primary-care referral architecture, which the federal regulation forbids.
Track three: program design vs. insurance product. The opinion implicitly distinguishes Medicaid managed care, where the state is the purchaser shaping program design through capitated contracts and waivers, from commercial managed care, where individuals or employers buy a regulated insurance product. The direct-access statute was about consumer protection within the regulated insurance market; it was not intended to dictate Medicaid program architecture.
The practical result. DMA could continue denying Medicaid claims for OB-GYN services that bypassed a Carolina Access primary-care referral, where the program required referral. DMA could continue contracting with HMOs on capitated terms that incorporated referral requirements. § 58-51-38 was the Department of Insurance's tool against commercial health plans only.
Currency note
This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. Federal law on women's preventive services (including the Affordable Care Act and HHS rulemaking on OB-GYN access in federally funded plans), CMS guidance on Medicaid managed care, and North Carolina's own Medicaid managed care transformation have substantially reshaped what direct-access rules now apply. Anyone looking at this question today should consult current Medicaid State Plan provisions, federal CMS regulations, and any superseding North Carolina statute, not this 1996 letter.
Background and statutory framework
The mid-1990s were a flashpoint for state legislative responses to managed care. Patients and providers around the country pushed back against gatekeeper models that required primary-care referrals for specialist visits. Direct-access laws for OB-GYNs were among the earliest of these state responses, targeted at the perceived burden of routing women's reproductive-health visits through a primary-care physician.
North Carolina's 1995 General Assembly enacted Chapter 63 (codified as § 58-51-38) in that wave. The bill drafters placed it in the insurance code rather than in a freestanding "Patient Bill of Rights" or in the Medicaid statute. That placement, which the AG opinion makes the linchpin of its analysis, signaled legislative intent to reach commercial insurance plans, not government programs.
Carolina Access, the program named in the request, was North Carolina's primary-care-case-management model for Medicaid. Enrollees in some rural areas had a designated primary care provider whose authorization was needed for specialist or hospital services to be paid by Medicaid. The model was a federal-waiver program, approved by HHS under section 1915(b) or section 1115 of the Social Security Act depending on the version. Medicaid HMOs operated as full-risk capitated contractors under separate contracts with DMA.
Applying § 58-51-38 to Carolina Access or Medicaid HMOs would have created an irregular structure: the Department of Insurance would have a regulatory veto over DMA's Medicaid program design, even though DOI has no authority over Medicaid. The single-state-agency rule and the placement of § 58-51-38 in the insurance code both pointed to the AG's conclusion.
The opinion is also notable for what it does not address: federal Medicaid law's own access requirements (which protected the right of recipients to receive necessary medical care, but did not specifically guarantee direct OB-GYN access under the 1996 federal framework). The AG opinion was about the reach of one specific North Carolina statute, not about whether some other source of federal or state law required direct OB-GYN access for Medicaid recipients.
Common questions
Could a Medicaid HMO voluntarily allow direct OB-GYN access?
Yes. Nothing in the opinion forbade a Medicaid HMO from designing its product without an OB-GYN referral requirement. The opinion only said the state statute did not compel it. DMA could (and over time did) build direct-access requirements into its Medicaid managed-care contracts as a matter of program design.
Did this opinion apply to commercial HMOs serving Medicaid recipients?
The question is more about whether the entity is operating its commercial line of business or its Medicaid contract. A commercial HMO with a Medicaid contract has two product lines. The commercial product is bound by § 58-51-38; the Medicaid product is not. The opinion's reasoning would extend to any non-Medicaid product the same insurer sold.
What about Medicare?
The opinion does not address Medicare directly, but the same logic would apply. Medicare is a federal program with its own access rules and a separate federal regulatory framework. State insurance-code provisions like § 58-51-38 generally do not reach Medicare plans (though Medicare Advantage plans were not yet a major presence in 1996).
Could a Medicaid recipient sue under § 58-51-38?
The opinion's reasoning would foreclose such a suit. Standing under the statute would require being a participant in a covered health benefit plan, and Medicaid recipients are not such participants for purposes of the statute. The opinion did not address whether some other federal or state cause of action might exist.
How does this interact with EPSDT and family planning?
The opinion does not discuss EPSDT (Early and Periodic Screening, Diagnostic, and Treatment) or family planning services. Both have their own federal access protections under the Medicaid statute and regulations. Family planning services in particular are subject to a federal "freedom of choice" provision (42 U.S.C. § 1396n(a)(23)) that limits the state's ability to restrict the choice of provider. The 1996 opinion's holding (that § 58-51-38 does not apply to Medicaid) is consistent with, but does not address, those federal protections.
Source
- Landing page: https://ncdoj.gov/opinions/medicaid-services/
Citations
- N.C. Gen. Stat. § 58-51-38
- N.C. Gen. Stat. § 58-50-110
- N.C. Gen. Stat. § 58-50-115
- N.C. Gen. Stat. § 108A-54
- N.C. Gen. Stat. § 108A-56
- 42 U.S.C. § 1396
- 42 C.F.R. § 430.10
- 42 C.F.R. § 431.10
Original opinion text
April 22, 1996
Barbara D. Matula, Director
Division of Medical Assistance
North Carolina Department of Human Resources
1985 Umstead Drive, Kirby Building
Raleigh, North Carolina 27603-2001
RE: Advisory Opinion; Application of House Bill 773 to Medicaid Services; N.C.G.S. § 58-51-38, N.C.G.S. § 58-50-115 and N.C.G.S. § 58-50-110
Dear Ms. Matula:
You request our opinion whether N.C.G.S. § 58-51-38 applies to any Medicaid recipients, including Medicaid's Carolina Access Program enrollees or Medicaid recipients enrolled in HMO's under contract to the Division of Medical Assistance. For reasons which follow, it is our opinion that N.C.G.S. § 58-51-38 does not apply to any Medicaid recipients, including Carolina Access enrollees or Medicaid recipients enrolled in HMO's under contract to the Division of Medical Assistance.
N.C.G.S. § 58-51-38 was enacted by Chapter 63 of the 1995 Session Laws and is entitled "Direct Access to Obstetrician-Gynecologists." This particular statute was included in Chapter 58 of the North Carolina General Statutes, which Chapter is normally referred to as the Insurance Law. Chapter 58 sets forth the duties and responsibilities of the Commissioner of Insurance, including his responsibilities to approve certain insurance policies and insurance plans. Under the provisions of N.C.G.S. § 58-51-38, health benefit plans must "allow each female plan participant or beneficiary age 13 or older direct access within the health benefit plan, without prior referral, to the health care services of an obstetrician-gynecologist participating in the health benefit plan, within the benefits provided under that health benefit plan pertaining to obstetrician-gynecologist services." In addition, this statute requires that health benefit plans must inform their female participants and beneficiaries in writing that they do not need any prior referral by the plan.
Medicaid's Carolina Access Program requires recipients in some rural areas to be referred to an obstetrician, gynecologist or other physician specialist by their primary care providers who authorize payment by Medicaid. You question whether the Division of Medical Assistance may continue to deny payment of Medicaid claims for obstetric/gynecologic services that have not been authorized by the Medicaid recipient/enrollee's Carolina ACCESS primary care provider. You also ask whether N.C.G.S. § 58-51-38 applies to Medicaid recipients in general, and Medicaid recipients enrolled in full risk, capitated health plans under contract with the Division of Medical Assistance.
All states that participate in the Medicaid Program are required to submit a State Plan describing the nature and scope of that state's Medicaid Program. This plan has to be approved before there can be federal financial participation in that Medicaid Program. 42 C.F.R. § 430.10. This State Plan must designate a single state agency to administer or supervise the administration of the Medicaid plan for that state. 42 C.F.R. § 431.10(b)(1).
In order for an agency to qualify as the Medicaid Agency-
(1) The agency must not delegate, to other than its own officials, authority to-
(i) Exercise administrative discretion in the administration or supervision of the plan, or
(ii) Issue policies, rules, and regulations on program matters.
(2) The authority of the agency must not be impaired if any of its rules, regulations, or decisions are subject to review, clearance, or similar action by other offices or agencies of the State.
(3) If other State or local agencies or offices perform services for the Medicaid agency, they must not have the authority to change or disapprove any administrative decision of that agency, or otherwise substitute their judgment for that of the Medicaid agency with respect to the application of policies, rules, and regulations issued by the Medicaid agency. 42 C.F.R. § 431.10(e).
Under the State Plan for Medicaid, the North Carolina Department of Human Resources is the single State agency solely responsible for the regulation and implementation of the State/Federal Medicaid Program. As the division of the North Carolina Department of Human Resources solely responsible for the Medicaid Program, the Division of Medical Assistance and its policies, rules and regulations for the Medicaid Program are not subject to review clearance or regulation by the North Carolina Department of Insurance.
N.C.G.S. § 58-51-38 refers to N.C.G.S. § 58-50-110(11) for the definition of "health benefit plans." N.C.G.S. § 58-50-110(11) essentially defines "health benefit plans" as those plans which are subject to N.C.G.S. § 58-50-115. That statute states: "a health benefit plan is subject to this Act if it provides health benefits for small employers or self-employed individuals" and if a number of conditions are met. "Benefits" are defined in N.C.G.S. § 58-51-38 as "medical services or other items to which an individual is entitled under the terms of her contract with a health benefit plan, as approved by the Department of Insurance." Medicaid is not a health benefit plan for "small employers or self-employed individuals." Medicaid is a cooperative federal-state program for providing medical assistance to certain classes of needy persons. 42 U.S.C. § 1396 et. seq.; N.C.G.S. §§ 108A-54 to 56.
For these reasons N.C.G.S. § 58-51-38 does not apply to Medicaid recipients, Carolina Access enrollees or Medicaid recipients enrolled in HMO's under contract to the Division of Medical Assistance.
We hope the foregoing is helpful.
Ann Reed
Senior Deputy Attorney General
Claud R. Whitener, III
Assistant Attorney General