Kentucky already has done what Kansas is getting ready to do: It hired three managed care companies to run most of its Medicaid system.
Medicaid is the state and federal program that provides health coverage for the poor and disabled. In Kentucky, there are about 885,000 people enrolled in it. In Kansas, there are about 380,000.
Kentucky Gov. Steve Beshear, a Democrat elected to his second term in 2010, said the for-profit companies’ business-like approaches would save the state and federal governments hundreds of millions of dollars over a three-year period. At the same time, he said, the state’s health outcomes would improve.
Kansas Gov. Sam Brownback, a Republican, said much the same when he announced KanCare, his plan to remake the state Medicaid program.
But Kentucky's transition to a fixed-rate managed care system, which began only a few days before Brownback announced his plan in November, has been plagued by problems during its first seven months of operations.
More states have been shifting to fixed-rate Medicaid managed care plans as policymakers look for ways to contain growing program costs. Kentucky has had more trouble than most. One observer called it "the poster child for managed care growing pains."
Learning from mistakes
Adam Edelen, the Kentucky state auditor, told KHI News Service that Kansas officials should pay close attention to what has happened in his state to perhaps learn from its mistakes.
“Shortly after I came into office (in January), I started getting phone calls from (Medicaid) patients who were frustrated because they couldn’t get in to see the doctors they were used to seeing,” Edelen said. “Then I started hearing from providers who’d gone 90 days without being paid. Kentucky is much like Kansas. We’re a small, rural state, and many of our practitioners and family practices are like small businesses. When their accounts receivable are 90 days in arrears, they’re in a real cash crunch.”
Edelen said when the problems began, he called a “very respected” banker friend to find out if small-town doctors truly were having to borrow money to keep their doors open.
“He said, ‘Adam, that’s all that bankers in Kentucky are talking about.’”
Edelen’s office, Auditor of Public Accounts, is an executive branch agency independent of the governor’s office and the state legislature. Edelen, also a Democrat, launched a quick review of the policies governing the new Medicaid system.
He said he soon learned that the new system relied on telephones, fax machines and paper copies. It was meant to be slow.
“I don’t have a problem with managed care,” he said. “But I have real problem with a system designed to create logjams in order to slow payment (to medical providers). The notion that (payment) authorizations could be denied via the mail is absurd.”
He also found that between November 2011 and February 2012, the managed care companies had “taken $708 million from taxpayers and paid (providers) $420 million. That’s not acceptable.”
Edelen put together a list of 10 recommendations to improve the new system and in February announced that “sweeping audits” of the managed care companies would be completed by year’s end.
There are other reasons Kansas officials might want to closely watch Kentucky’s Medicaid experience.
The three insurance companies brought in to run Kentucky’s Medicaid program – WellCare, Centene and Coventry – are among the five bidding on the Kansas Medicaid contracts, which were let in November and are scheduled to be signed by July.
The Brownback administration's plan is to hire three of the companies to operate statewide, providing services to virtually all of the state's Medicaid clients, including long-term services for the elderly, physically disabled and ultimately the developmentally disabled. Those three Medicaid subgroups generally are considered the most expensive and problematic to include in managed care. They were left out of Kentucky's new managed care system.
Edelen said he had several bits of advice for Kansas policymakers:
• “Slow down until you know you have it right, because the gaps you have in your system at the time of a premature rollout will only be exacerbated – I promise you that.” He said Kentucky spent less than six months assembling its reform package. In hindsight, it should have spent a year to 18 months.
• “Like President Reagan used to say: Trust but verify.”
• “Unless you have elected representatives who are in a position to provide vigilant oversight, things will get out of control. In fact, it’s their very nature to get out of control.”