Managed-care firms and legislators do another ‘Groundhog Day,’ but changes might be coming; Passport objects to recent cuts

By Melissa Patrick
Kentucky Health News

FRANKFORT, Ky. — Medicaid managed care organizations and others in the health-insurance industry spent the first half of a three-hour meeting bragging about their work, and the second half being told by lawmakers that their version of events isn’t reality.

“All these numbers and all these rosy pictures that you’ve been painting — that’s not the reality of where we are with the MCOs, and the most vulnerable people are the ones paying the price for this,” Sen. Danny Carroll, R-Paducah, said at the Feb. 23 meeting of the legislature’s interim joint health committee. “You can tout how great you are all you want, it’s not reality and we have got to do better and you have got to do better in your organizations.”

Kentucky has five MCOs that manage care for most of the 1.4 million Kentuckians on Medicaid, which has a $11.5 billion annual budget. They are: Aetna, Anthem Blue Cross Blue Shield Medicaid, Humana Caresource and WellCare, all part of the for-profit health-insurance industry; and the Louisville-based nonprofit Passport Health Plan, which voiced concern at the meeting about the state’s recent cuts in its reimbursements.

Passport CEO Mark Carter said “the elephant in the room” was that his company could be facing bankruptcy by the middle of the year if Kentucky does not reverse the cuts. The state cut Passport’s reimbursements by 4.1 percent, while increasing others’ an average of 2.2 percent. The company has filed an appeal, but told the lawmakers they would prefer to work with the Cabinet for Health and Family Services to find a solution.

“It makes no sense for us to be in conflict with our primary customer,” Carter said. Passport provides Medicaid to more than 300,000 low-income people in Jefferson and surrounding counties. It has 65 percent of the market share in its region.

Sen. Ralph Alvarado, R-Winchester, co-chair of the committee, said Health Secretary Adam Meier would join Passport at the next meeting to discuss this issue. (Friday afternoon, Gov. Matt Bevin announced that Alvarado would be his running mate for lieutenant governor.)

Since 2011, Kentucky has used managed care, which pays participating organizations a set rate per member as an incentive to limit claims from members. Before then, outside the Louisville area, providers who cared for Medicaid patients were paid on a fee-for-service basis, meaning they billed for each service they provided. Since managed care replaced that, providers have complained about delayed and denied payments from the MCOs.

During the first half of the meeting, Stephanie Stumbo, acting executive director of The Kentucky Associations of Health Plans, a health-insurance lobby, told lawmakers that managed-care organizations have saved taxpayers upwards of $1.2 billion, including about $350 to $400 million in state dollars.

She said MCOs also better manage Medicaid members’ use of health services, and improve health-care quality and the coordination and integration of care.

Lawrence Ford and Sen. Stephen Meredith, R-Leitchfield

Lawrence Ford, chairman of the association and senior director for government relations for Anthem, said 90 percent of the money insurers get for patient care is spend on medical claims and quality improvement. He said 9 percent goes toward non-medical expenses, like technology, wages and administrative costs, and when appropriate, only 1 percent goes toward their profit margin.

“Kentucky is getting a better return today on its investment and its Medicaid program with its MCO partners than it was previously,” he said.

The second half of the meeting wasn’t so upbeat, with one lawmaker after the other either ranting about their issues with the managed care organizations or asking pointed questions that few stepped up to answer.

Sen. Stephen Meredith, R-Leitchfield, a former hospital administrator who has been vocal about his dislike for the managed-care model, was the first to rant, as Alvarado called it.

Meredith lectured the MCOs on the administrative burdens they place on providers; the lack of “fair and equitable” pay to their providers, particularly to rural hospitals; the length of time it takes for providers to become credentialed to participate in their programs; and the challenges of getting providers to work in rural communities, which he largely blamed on poor pay.

“You’re not doing things to reduce the regulatory burden for health-care providers at all, ” he said.

Ford said he agreed with many of the points Meredith raised, but reminded Meredith that they have “constraints” and are required to work within the rules set forth by the state and federal governments. He began to say that they would need more money in the budget to pay providers more, but Meredith interrupted him saying, ” I don’t think we have to put more money in Medicaid. I think the Medicaid budget is as big as it ever needs to be if we are spending our monies appropriately, but we’re not doing that.”

The discussion continued in the same vein for about an hour and a half.

Sen. Morgan McGarvey, D-Louisville, who is new to the committee but has spent four years on the Medicaid Oversight and Advisory Committee, said, “It feels like Groundhog Day,” the movie in which the same day was redone over and over, He said every year, MCOs make the same “infomercial” presentations and lawmakers say that’s not the reality, but nothing gets done about it.

McGarvey said what he hears from his providers and constituents is that “they are not getting payments and they are not getting their services.”

He said it’s past time to find out what the real story is, meaning that they all need to have honest conversations with each other. But when he asked, “Is there something different we can do that will help this problem out?” no one stepped up to answer.

Sen. Max Wise, R-Campbellsville, brought up the low rates that pharmacy-benefit managers, which contract with MCOs, are paying independent pharmacists. A report is expected to be released soon to detail these practices.

Carroll, who deals daily with MCOs through his non-profit agency that provides therapy and medical-based child care, came with a list of questions. He said that he, as a provider, has had to deal with the same issues of delayed and denied payments “over and over” again and that this is standard.

“You know, all the MCOs paint a rosy picture, and the reality of how the system is actually working is that that is a false picture,” he said.

Carroll asked the highest-ranking person from each MCO to stand up to answer the question, “Is there a systematic approach to delaying or denying claims on a regular basis to manage your cash flow, to manage your revenue?” All said no.

Committee Co-Chair Rep. Kim Moser, R-Taylor Mill, said that if these issues can’t be worked out behind the scenes then, “My solution will be to file legislation to hold the providers accountable.”

So far, two bills that deal with MCOs have been filed, both by Meredith.

Senate Bill 42 would cut the number of MCO contracts in the state to three. It would also require that rural health-care providers be reimbursed at least at the median amount paid to urban providers in the nearest metropolitan area, with penalties for noncompliance.

Senate Bill 39 would require all MCOs to provide quarterly all payment schedules for reimbursements to the Medicaid Oversight and Advisory Committee.

Alvarado, a family physician who has been vocal about his frustrations with MCOs was unusually quiet during the meeting. He said that in the interest of time, he would submit his concerns in writing.

But he did say there had been improved transparency and responsiveness from MCOs over the years and they and the state have made real changes. He asked the MCOs to be good partners to make the changes that still need to be made so that legislation doesn’t have to be filed.

“Things have gotten better,” he said. “But we’re still a long way from where we need to be.”