As state works to secure Medicaid managed-care contracts, Senate passes bill to only allow three of them, down from five

Sen. Stephen Meredith presents SB 30 to limit Medicaid managed-care contracts to three. (Photo from Legislative Public Information Office)
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By Melissa Patrick
Kentucky Health News

FRANKFORT, Ky. — Only three firms would get multi-billion-dollar contracts to manage Medicaid in Kentucky under a bill that passed the state Senate Feb. 12.

Five managed-care organization now oversee care for most Medicaid beneficiaries, and seven have submitted bids for the contracts that will be awarded later this year.

Senate Bill 30, sponsored by Sen. Stephen Meredith, R-Leitchfield, would limit the number of MCO contracts to three. The bill went to the House on a 29-7 vote after Meredith argued it is needed to reduce administrative burdens for health-care providers.

“Let’s reduce the bureaucracy,” said Meredith, a retired hospital administrator. “We don’t need five managed-care organizations; they bring no value to the system whatsoever. All they do is deny and delay payment.”

The bill has an emergency clause to make it take effect immediately if passed into law. That would keep the administration of Democratic Gov. Andy Beshear, which is working to secure its MCO contracts, from signing more than three.

Those contracts have already been offered once. Just days before Beshear took office, then-Gov. Matt Bevin’s administration awarded the $8 billion in contracts to five insurance companies that excluded two companies with current contracts, Passport Health of Louisville and Anthem Inc., the state’s largest health insurer. Both had said they would appeal the the awards. Beshear has since cancelled the contracts and reopened the bidding process.

Meredith has long lamented the burdens of manged care, particularly on rural hospitals, because they have such tight budgets. He said the United States spends 30 cents of every health-care dollar on administrative fees, five times what other industrialized nations spend.

And to those who would say, just fix the existing problems, Meredith pointed to a 2018 law that was supposed to improve the MCO credentialing and enrollment process, along with requiring monthly reports that showed claims, denials, and grievances. All those issues still exist, he said.

Minority Leader Morgan McGarvey, D-Louisville, voted against the measure and said that while he understands providers’ ongoing frustrations, “My fear is that this bill wont’ fix those problems.”  He also did not like that this bill ties the hands of the executive branch.

Sen. Danny Carroll, R-Paducah, speaking for the bill, said that as someone who runs a small organization for children with disabilities, he battles with MCOs “every day” over wrongly denied claims and delays in payments. He said it would be helpful to only have to deal with three sets of rules, instead of five.

“It will make it less complicated. It will save money,” Carroll said. “At a time when Medicaid reimbursements are so low, I think we owe it to providers at every level to allow them to save money wherever they can, and reducing administrative cost by limiting these numbers … will allow money to be saved.”