State and companies were unprepared for quick move to managed care, state auditor concludes

Kentucky officials and the companies in charge were unprepared for the switch to Medicaid managed care, State Auditor Adam Edelen said Wednesday.
He sent the Cabinet for Health and Family Services 10 recommendations to improve the system, which provides health care for 560,000 Kentuckians who are poor, disabled or elderly.

Since the legislative session began, providers and patients have bitterly complained that the three new managed-care companies are “too slow to reimburse providers” and have “cumbersome pre-authorization processes to allow treatment,” reports Beth Musgrave for the Lexington Herald-Leader. The state moved to managed care Nov. 1, a move meant to save the state $1.3 billion in three years.

In addition to the recommendations, Edelen said he will form a Medicaid auditing unit designed to improve the system. He recommended: hiring more managed-care staff to fix backed up claims payments and treatment authorizations, developing a system to measure whether providers are receiving payments in a timely way, and considering removing mental health services from the contracts. Kelly Gunning of the National Alliance on Mental Illness told lawmakers last week that she had asked mental health to be removed from the contracts in January, saying it had not worked in other states either. The companies are reportedly asking psychiatric patients to switch medications, even if the ones they are already on are working. The move has “meant that more people with serious mental illness have had to return to state psychiatric treatment centers,” Musgrave reports.

Edelen said Kentucky officials “did not learn from the 1997 launch of Kentucky’s first managed care contract — Passport in the Louisville area — and seemed ill-prepared to monitor and enforce the three new managed care contracts,” Musgrave reports.
Under managed care, the companies are paid a predetermined per-patient, per-month amount regardless of what care is needed. Because they won’t be paid using a fee-for-service model — believed to be more costly — and will try to streamline care, managed care is meant to save money. (Read more)