Herald-Leader says state running out of time to fix Medicaid managed care, with decision on expansion looming

A recent editorial in the Lexington Herald-Leader called for swift legislative action to fix the problems of Medicaid managed care. Timely action is even more necessary since the state is considering expanding the program, some critics have said.

Fifteen months ago the administration of Gov. Steve Beshear made a quick transition to managed care that privatized Medicaid for 550,000 poor, elderly and disabled people and was projected to save Kentucky $375 million in three years.  If the state expands Medicaid, that number of covered individuals could grow to more
than 1 million — or roughly a quarter of all Kentuckians.

Although Medicaid is encouraging preventive care, such as more well-child visits and diabetes testing, providers haven’t been paid for some of their services. The state recently granted the managed care companies a seven percent rate increase, and the companies have said they’re losing money here and one is pulling out in July. But at the end of the first eight months of managed care Medicaid, the state had paid $500 million more to the companies than the companies had paid to providers.

“The delay and denial of payments are creating financial crises for providers and pharmacies and forcing small hospitals to lay off employees, deplete reserves and default on bonds,” the editorial said. “This is creating a massive transfer of wealth from Kentucky medical practices and hospitals to for-profit companies based in other states. . . . For patients, the companies are putting up barriers to care that would be illegal in the private sector. The new burdens that have been placed on vulnerable Kentuckians and their medical providers threaten to unravel not just the safety net but, in some places, the whole health care system.”

The editorial called on the General Assembly to pass legislation to curb abuses such as “the stiffing of hospitals that provide emergency care as required by federal law. . . . House Bill 299 and Senate Bill 178 would also curb the false economy of severely limiting in-patient mental-health care for children while referring them to nonexistent out-patient care.”

The legislation would also require Medicaid managed care companies to:

• Meet the same provider network standards, including distance to hospitals and obstetrical care, as other insurers operating under Kentucky law.
• Decide claims based on nationally recognized clinical standards and provide specific reasons for denials so providers would know what’s allowable.
• Participate in an appeals process for denied claims.

Appalachian Regional Healthcare wants to sue the U.S. Department of Health and Human Services and others, alleging that the new system is out of compliance with federal law.

“The feds shouldn’t have to be dragged in,” the editorial says. “The federal government covers roughly 70 percent of Kentucky’s $6 billion Medicaid program. Expanding Medicaid to include more low-income people is a linchpin of federal health care reform,” and Beshear has said that he wants to expand Medicaid if the state can afford it. “Kentucky can’t wait much longer to get Medicaid right.” (Read more)