Bevin offers ‘transformative’ Medicaid program with premiums, incentives, work-oriented requirements; expansion at stake

“It’s not about the money for the premiums, it’s about the learning experience.” –Mark Birdwhistell, Medicaid adviser to Gov. Bevin (Lexington Herald-Leader photo by Charles Bertram)

By Al Cross and Melissa Patrick
Kentucky Health News

FRANKFORT, Ky. — Most Kentucky Medicaid recipients would have to pay premiums of $1 to $15 a month, and be more actively involved in their health care, under Republican Gov. Matt Bevin’s proposal to maintain his Democratic predecessor’s expansion of the program.

If federal officials approve, the program would no longer include some benefits, such as dental and vision care. However, recipients could gain access to those benefits, as well as non-prescription drugs and gym-membership subsidies, by enrolling in job training, volunteer work or health-related classes.

The changes would apply only to able-bodied adults, not pregnant women, the disabled or those deemed “medically frail.” Working-age adult members without dependents would be required to participate in volunteer work, have a job, look for one or take job training, on a gradually increasing scale, phased in by county.

At a 50-minute press conference in the Capitol rotunda, Bevin said the program would be “transformative.”

“There is nothing good or healthy or productive, long-term for the individual or for society as a whole, that comes from able-bodied, working-age men and women with no expectation of their involvement and no opportunity for that involvement,” he said. “So we are providing an expectation and an opportunity and a reward. . . . When they get out there and they get engaged and they start to realize the value that they add, it will change people’s lives.”

The proposal also asks for Medicaid funding of inpatient substance-abuse treatment, something Bevin said no other state has done, in an effort to address the state’s growing drug-abuse problems. This would be a demonstration project limited to 10 to 20 “high risk” counties that have not been chosen.

Bevin’s proposal says it “represents the terms
under which the Commonwealth will continue Medicaid expansion,” and he said that if federal officials don’t approve it, he would end the expansion, which provides largely free health care for about 400,000 Kentuckians.

But he said he was confident that federal officials would approve the request, which seeks a waiver of a wide range of Medicaid rules, because he and his aides have been in frequent contact with the Center for Medicare and Medicaid Services and its overseer, Health and Human Services Secretary Sylvia Burwell.

He said nothing in the proposal should be a surprise. “There’s nothing we’re asking them to do that has not been done or is not a stated goal of theirs in other programs,” he said. However, in granting some waivers, CMS has said it would not approve them in other states.

Bevin said during his campaign last year that the expansion was unsustainable, but his plan estimates a modest savings of $300 million to Kentucky taxpayers over the next five years, most of that apparently from tightening up on the managed-care organizations that deal directly with Medicaid members.

“This has been the most lucrative state in America for MCOs to operate,” with profit margins four to five times the national average, Bevin said. A recent report said MCOs in Kentucky turned an aggregate profit of 11.3 percent, much higher than any of the 38 other states with managed care.

The federal government is paying all bills for Medicaid expansion enrollees through this year. Next year the state would pay 5 percent, rising in annual steps to the federal health-reform law’s limit of 10 percent in 2020. The estimated cost of the state share in the two-year budget that begins July 1 is $257 million.

Bevin said saving money in near-term budgets is not as important as the long-term savings and quality-of-life improvements that can come from improving the health status of one of America’s least healthy states.

“It’s important to make sure that we have something that, above all else, creates better health outcomes,” he said, citing some of Kentucky’s poor health statistics. “Number two, we want to familiarize participants with the commercial insurance program” and be more engaged in their communities.

Proposed premiums for first two years. Those above FPL would pay $22.50 in Year 3, $30 in Year 4, $37.50 afterward.

The premiums would be based on income levels, designed to be less than 2 percent of income, and could be paid by third parties. For non-payment, members above the federal poverty line would be dropped for six months but could re-enter earlier by bringing their payments up to date and taking a financial or health literacy course. Those below the poverty line would incur lesser penalties.

Bevin’s proposal would eliminate $3 co-payments for doctor visits and other routine services. Advocates for the poor had said they liked premiums better, because they can be budgeted.

Bevin acknowledged that it would probably cost more to collect the premiums than they would generate, but he said “The savings come from having people who are healthier, who are more engaged. . . . It’s not about trying to save money. The money will come from doing the right thing. Better, healthier outcomes result in cost savings on health expenditures.”

Medicaid would have a $1,000 deductible, but it would be paid from a state-funded account. At the end of each year, half of the unused amount would be transferred into the recipient’s “My Rewards” account. That account would be built by enrollment in classes, job training or volunteer work and could be used to buy additional benefits.

“The deductible account and the My Rewards account empower individuals to be active
consumers of health care and make cost-conscious decisions, while simultaneously providing
incentives for members to improve their health and be active members of the community,” the proposal says.

If Medicaid members are employed and their employer offers health insurance, they and their children would be required to go on it after one year. The state would continue to cover services that are covered by Medicaid but not by an employer’s plan.

The plan also calls for a specific enrollment period for Medicaid, which now accepts enrollees year-round. It says making Medicaid more like private insurance will help the many people whose incomes fluctuate, making them eligible for Medicaid one year and federally subsidized health insurance the next.

The proposal opens a 30-day comment period, in which the state will hold three public hearings: in Bowling Green June 28, Frankfort June 29 and Hazard July 6. The administration hopes to finalize and submit its proposal to CMS around Aug. 1 and get approval by Sept. 30, said Mark Birdwhistell, a University of Kentucky health-care vice president who is Bevin’s special adviser for Medicaid.