Cabinet must ‘wield the stick’ to get managed care under control, state auditor says

Though the state has a solid contract “filled with all the mechanisms you need for enforcement, from the carrots to the sticks,” the Cabinet for Health and Family Services has to be more aggressive in cracking down on the managed care organizations (MCOs) that run the state’s $6 billion Medicaid system, state Auditor Adam Edelen says.

Edelen, who has been in office a little over four months, discussed managed care with Ryan Alessi, host of cn|2‘s “Pure Politics.” Edelen is reviewing the new system and submitted 10 recommendations for improvement to the cabinet in February.

“The issues have been enormous — providers not being paid in a timely manner, a lack of communication between the cabinet and the MCOs and the providers, has created a system in which there is a lot of uncertainty and a lot of people are being squeezed out,” Edelen said.

Couple that with the fact that Appalachian Regional Healthcare, which serves more than 25,000 Medicaid patients, sued two of the three MCOs in charge of the state, claiming they are owed $18 million for services that have been provided. Last week, ARH and MCO CoventryCares came to an agreement after being ordered by a federal judge to negotiate.

Edelen pointed out the broader ramifications of the situation. “If our largest Medicaid provider in the part of the state that needs it most for some reason is not able to operate within the system because they can’t manage their relationship with Coventry or vice versa, that represents a structural threat to the system,” he said. “We’ve got to figure out a way to make it work.”

In order to do so, Edelen said “the cabinet has got to be willing to wield the stick” and is able to do under the terms of its contracts with the MCOs, which allow the cabinet to cancel contracts, “sanction and punish” the MCOs and make changes to the system. He said new cabinet Secretary Audrey Haynes has a tough job ahead and said “strong leadership” is critical.

When asked if his review looks into what work is being accomplished by the state’s 200 employees who used to handle Medicaid — work that is now being managed by the MCOs — Edelen said it hasn’t. (Read more)

Meanwhile, the Lexington Herald-Leader weighed in on the lawsuit between ARH and CoventryCares, saying in an April 24 editorial, “Coventry should keep working with Haynes and ARH on solutions. The editorial also stated, “Beshear, a former corporate lawyer, should bring the weight of the governor’s office to bear and get busy making his Medicaid managed care contracts work.” (Read more)