Kentucky’s Medicaid managed care system — with 700,000 patients and counting — has improved considerably two years after a rocky start, Gov. Steve Beshear said Thursday.
Beshear launched a six-part effort in April to resolve a number of billing disputes between medical providers and managed care organizations. The governor said his approach has led to faster complaint resolutions and better communication with the groups involved.
“There were some bumps in the road in the beginning,” Beshear said. “That was to be expected when you tackle such a huge, long-standing problem like an inefficient health care delivery system that’s more expensive than it needs to be.”
Kentucky shifted from a fee-for-service system to managed care for, at the time, 560,000 Medicaid
patients in November 2011.
The move was made to bridge a $142.4 million gap in the biennial Medicaid budget, and the state awarded three-year contracts to CoventryCares of Kentucky, Kentucky Spirit Health Plan and WellCare of Kentucky. Budget analysts projected a two-year savings of $1.3 billion — $390 million in state dollars — and Beshear said the state should meet those estimates.
Issues with managed care arose shortly after.
Hospitals and local health departments complained of delayed or denied payments from managed care organizations. Eight percent of health care providers have left the system since its inception, with 586 general hospitals — seven in the state — no longer serving Kentucky Medicaid patients, according to an audit released July 31 by Auditor Adam Edelen.
Kentucky Spirit ended its contract with the state a year early in July, and a legal battle has ensued on whether the company violated terms of the agreement.
The General Assembly passed a bill aimed at resolving prompt pay issues between medical providers and managed care organizations during this year’s regular session, but Beshear vetoed the legislation, saying it might have interfered with contractual rights. The governor instead announced an effort to address lawmakers’ concerns.
Under Beshear’s plan, complaints against managed care providers were moved from the Department for Medicaid Services to the Department of Insurance. Since the Department of Insurance took over in April, about 1,300 of 1,935 complaints have been resolved with $223,518 — plus $16,515 in interest — awarded to providers.
Beshear also mandated that managed care organizations meet with network hospitals to rectify late or denied Medicaid payments. Hospitals that participated in the talks reported a collective $346.6 million owed, but the sides found $59 million had already been paid, $26.5 million had never been billed and $7 million in claims should have been approved, Beshear said.
The Department of Insurance is now responsible for monitoring prompt pay issues, and the agency has proposed a $9,000 civil penalty against CoventryCares for failing to comply with prompt pay laws, Beshear said.
“The facts show that the prompt pay problem isn’t as bad as critics say it is, but the MCOs know that we’re watching closely,” he said.
The governor also highlighted the improvement in Kentucky’s health statistics since Medicaid managed care launched. Heart screenings have increased dramatically, 4,538 more women received mammograms and 93 percent more patients could receive tobacco cessation consulting, among other data.
Some have raised questions about the state’s readiness to expand Medicaid to more than 300,000 Kentuckians under the Affordable Care Act. In his audit, Edelen said the state lacked an adequate number of providers to accommodate its current Medicaid population.
Beshear said he’s confident the managed care system, which is used by 47 other states, will handle future Medicaid recipients. So far, about two-thirds of the 26,174 individuals signed up for insurance through Kynect, Kentucky’s health benefit exchange, are new Medicaid patients, Beshear said.
“That number’s going to grow somewhat slowly,” he said of the current Medicaid population. “We’re not going to dump an entire 308,000 people into the system tomorrow. It’ll take some time for people to identify that they qualify for Medicaid, so the system will have time to adjust as we go along.”