Haynes asks hospitals for a truce as they and state work through problems with managed-care Medicaid

Health and Family Services Secretary Audrey Haynes won a smattering of applause from Kentucky hospital officials Thursday as she called for "not a surrender, but a truce" as her cabinet continues to address the hospitals' complaints about the state's managed-care system for Medicaid, which recently entered its third year.

Haynes drew the ire of hospitals last month when she said some needed to change their business models to emphasize prevention and wellness, not cashing in on Medicaid payments for emergency-room care. Thursday, she said in a speech to the Kentucky Hospital Association in Louisville that she wants "to work more closely together, not only to improve your business practices," but to improve the health of Kentucky.

Haynes also called on the hospitals to join Appalachian Regional Healthcare and the University of Kentucky hospital in contacting past patients who lacked insurance and urge them to sign up for expanded Medicaid or private insurance on the state's Kynect website, under federal health reform. "I need your help," she said. "we're very excited about the opportunity for dramatic improvements in Kentucky's health status."

Also at the meeting, state Rep. Jimmie Lee, D-Elizabethtown, the House's health-care budget subcommittee chair, said he thought Haynes and the administration of Gov. Steve Beshear had largely resolved the "prompt pay" problems of hospitals not getting money they are owed by insurance companies. But Senate Health and Welfare Committee Chair Julie Denton, R-Louisville, called for more action on the subject, such as an independent review panel to review disputed claims.

Friedell Committee will consider what it will take for Kentucky to become a healthier state at meeting Sunday and Monday

What will it take for Kentucky to become a healthier state? That will be the question at the fall meeting of the Friedell Committee for Health System Transformation, at the Marriott Griffin Gate in Lexington Sunday, Nov. 10 and Monday, Nov. 11. Participants will examine how the committee can work with communities and individuals to create a Kentucky that is “healthier, wealthier, and wiser,” a possible motto for a campaign the committee is considering.

“We have learned that building a healthier Kentucky will depend largely on what we do beyond the health-care system,” said Richard Heine, executive director of the committee. ”Efforts to promote good health must take place in the environment where people live, work, and play. For Kentuckians to be healthier, we must address the factors behind the problem of poor health, such as lack of education, poverty, poor nutrition, lack of employment, violence, transportation, and housing.”

Topics at the meeting include the state Health Benefit Exchange, managed-care Medicaid, the state’s financial situation, successful local policy changes, and the prevention and control of Kentucky’s major health challenge: diabetes.

Lee Todd, former president of the University of Kentucky, will be the keynote speaker Sunday evening and will introduce components of the committee’s campaign for a healthier Kentucky, now being formulated. Monday’s morning sessions will focus on public health, with discussions of county health rankings, public health partnerships with communities, and opportunities for progress in the health of Kentucky. Afternoon sessions will look at education partnerships and Kentucky’s workforce.

This meeting is funded in part by a grant from the Foundation for a Healthy Kentucky. For a copy f the full agenda, click here. For more on the committee, click here.

Beshear says his managed-care plan is saving money and improving health outcomes; state points finger at hospitals

Six months ago, Gov. Steve Beshear applied an intensive plan to solve Medicaid managed-care implementation issues. On Thursday, he said the system is working more effectively for both providers and managed care organizations. He also said hospitals' complaints were overstated and some of them need to adapt to the new system, which will be two years old Nov. 1.

Gov. Steve Beshear

"There will still be a few—be they hospital or individual medical providers—who will say the program doesn't work, but it's tough to refute the facts," Beshear said at a news conference and in a press release. All but three states use managed care to save money and improve health.

Beshear asked each managed-care organization (MCO) to meet with every hospital in their networks to look over their accounts receivable to resolve billing disputes. "The final analysis—the MCOs and hospitals agreed that what was actually disputed and owed was a tiny fraction—just 2 percent of the original $346.6 million claim," the release says in boldface type.

The Kentucky Hospital Association said in a news release Friday, "The overwhelming majority of hospitals still report significant dollar amounts owed to them by the MCOs in unpaid claims. . . . While hospitals have seen a slight improvement in current claims processing and a slight decline in overall accounts receivables since the Governor issued his directive to the MCOs to clean up these claims, the amount of unpaid claims actually owed to hospitals (not billed amounts) is 60 to 70 percent higher compared to unpaid bills in October 2011 before managed care was implemented."

Beshear ordered that complaints about MCOs' payments be handled by the Department of Insurance instead of the Department for Medicaid Services. He said it has closed or nearly closed two-thirds of the 1,935 complaints it received. "Most complaints were related not to prompt pa y— which is what hospitals alleged — but instead related to claim denials, prior authorization disputes or unsatisfactory settlement offers," the release says.

The Insurance Department said MCOs often failed to offer a good explanation for denying claims. The Medicaid agency "sent corrective action plans to Coventry and Wellcare," the two MCOs operating outside the Louisville region. They will report progress each quarterly.

In general, the reviews didn't find that MCOs were holding payments on a regular basis, but concluded that Coventry Cares did not follow the state law requiring prompt payment if insurance claims. The Insurance Department has proposed that the company pay a civil penalty of $9,000.

Managed care has reduced "unnecessary ER use and inpatient hospital days in favor of more consistent disease management and prevention," Audrey Tayse Haynes, secretary of the Cabinet for Health and Family Services, said in the release. Kentucky has many people who go to the ER 10 times or more in a year, contributing to total ER expenses of $340 million for Medicaid. Unfortunately, Haynes said, some hospitals have used ERs to create revenue to support operations, "even advertising the average wait time in their ERs on their websites. For some communities, the ER has been the de facto primary care center." Haynes said hospitals have to put together a new business model that "dovetails with the goal of preventive care and wellness instead of high-cost emergency treatment."

The hospital association said it supports the state's efforts to reduce ER abuse, but "That project does not and will not solve the ongoing problem of WellCare and Coventry continuing to pay hospitals only $50 for emergency room care by reclassifying, on average, 50 percent of all ER patients, as non-emergency — under criteria they refuse to share with hospitals."

The implementation of the managed health care plan has saved money and improved health care, Beshear said. Per-patient costs are below predicted amounts and new enrollment is the same or declining. In November 2011, budget analysts predicted that the state would save $1.3 billion in the next two years, and "to date, Kentucky is still on target to meet that savings amount," the release said.

Statistics about health show the improvements to the system. For example, there has been a 93 percent increase in consultations to stop smoking, a 33 percent increase in flu vaccines for children, huge increases in mammograms and screenings for heart problems, and a 17 percent decrease in amputations (often because of untreated diabetes), and nearly an 11 percent decrease in CT scans.

Judge OKs Medicaid expansion and health insurance exchange

A judge upheld Gov. Steve Beshear's decisions to expand Medicaid and set up the state's health-insurance exchange under federal health reform, but his adversaries say they will continue to fight in court.

Franklin Circuit Judge Phillip Shepherd's two rulings mean that implementation of the Patient Protection and Affordable Care Act, through Medicaid expansion and the health exchange will continue as planned, at least for now.

Circuit Judge Phillip Shepherd

Tea Party activist David Adams filed a lawsuit in April challenging the governor's legal authority to create the insurance exchange, which is called Kynect and begins enrollment Oct 1, without first seeking approval from the General Assembly.

Shepherd said Beshear is simply implementing a section of a federal law that has been upheld by the U.S. Supreme Court, reports Tom Loftus of The Courier-Journal. Adams said he will appeal both the Medicaid expansion and exchange orders directly to the Kentucky Supreme Court, attempting to bypass the Court of Appeals.

Republican Sen. Julie Denton of Louisville, chair of the Senate Health and Welfare Committee, told Loftus she expects major problems to occur if the administration proceeds with Medicaid expansion.

"My overriding concern from the beginning is that Medicaid is not being run well now; they’ve never gotten their hands around managed care,” said Denton. “Do we really want to expand a broken system? And do we want the government to take on another new project like the health-care exchanges?”

Beginning next year, most Americans will be required to have health insurance, and Kynect is designed to help as many as 640,000 uninsured Kentuckians get coverage through private insurance plans. The online service will allow individuals and business to shop for plans, compare benefits and determine eligibility for payment assistance or tax credits.

Beshear announced Medicaid expansion in early May

Adams challenged the constitutionality of a state law mandating that Kentucky use all available federal funds for Medicaid. Shepherd said the legislation was a clear step towards achieving a state objective, to expand health care benefits to "indigent citizens," Loftus reports.

“The Kentucky Supreme Court has held that this legislative power may be delegated to the executive branch of government in these circumstances, so long as there are standards governing the exercise of discretion, and the legislature retains the authority to withdraw the delegation,” Shepherd wrote. “Those conditions are clearly met here.”

The law calls for expansion to cover people under 65 in households up to 138 percent of the federal poverty level -- currently $15,856 for an individual or $32,499 for a family of four. The federal government will pay all the cost of newly eligible Medicaid patients from 2014 to 2017, when Kentucky will increasingly pick up part of the tab, rising to 10 percent by 2020.

Auditor Edelen says Medicaid providers 8 percent fewer under managed care; cabinet says report is limited, outdated

The number of people relaying on Medicaid will increase dramatically in 2014, as Kentucky expands it to include people with incomes up to 138 percent of the federal poverty level, but there is more concern than ever about the availability of health-care providers to treat them.

A review released Wednesday said the number of Medicaid providers in Kentucky declined 8 percent in the first six months of a managed-care system that has been unpopular with providers. Roger Alford of The Associated Press reports that some hospitals in border states have already stopped accepting Kentucky Medicaid, which went to managed care in November 2011.

After the Patient Protection and Affordable Care Act goes into effect Jan. 1, an additional 300,000 Kentuckians may be added to a program that already serves nearly 800,000. State Auditor Adam Edelen raised concerns whether Kentucky's rural hospitals could continue to deal with Medicaid's slow reimbursements under managed care. He said, "Managed care is designed to save taxpayer dollars, but it can't be at the expense of the health of our citizens."

A clinic on Main Street in Frankfort recently joined Medicaid.

State Cabinet for Health and Family Services spokeswoman Jill Midkiff told Alford the auditor's review was "limited and somewhat outdated" and said it "doesn't fully and accurately reflect" the status of the managed-care system.

Edelen told Kentucky Health News that the audit ran only through May 2012 because his office typically deals with fiscal years. State fiscal years end June 30. He said he believes the trends have continued.

Midkiff said "The overall number of Medicaid providers has actually grown under the managed care program," Alford reports. "She cited a 20 percent increase in dentists, a 150 percent increase in certified nurse practitioners, and a 300 percent increase in physician assistants." She said, "The cabinet firmly supports managed care as the best way to deliver needed medical services to a vulnerable population while also providing good value to Kentucky's taxpayers."

She also said, "The move to managed care was not simple or painless, but our records show evidence of health-care providers and managed care organizations working together to adapt to the new Medicaid system and that Medicaid members are receiving prompt, effective medical services with measurable improvements in health outcomes." (Read more)

"Midkiff said Tuesday other issues cited in Edelen’s report are not the result of managed care because they existed before its implementation, including the adequacy of medical providers in Kentucky, and it does not belie the need to expand Medicaid services, Ronnie Ellis of CNHI News reports.

Edelen made several recommendations, including:
• Establishing a formal advisory panel of members and stakeholders
• Requirements for retaining claims records
• Establishment of an approval process for subcontracts with MCOs, including third party providers for dental, vision and behavioral health services
• Improved monitoring of MCO accounts payable
• Establishing a way to estimate the cost savings of managed care for the state.

School boards across Ky. realign school-nurse programs, squeezed by budget cuts and Medicaid payment issues

School districts in Kentucky have long relied on county health departments for school nurses, but state budget cuts and problems with Medicaid reimbursements have squeezed the health agencies, and they in turn have put the squeeze on the schools for more money and other measures.

Despite some concerns, the Russell County Schools board voted to approve a contract with the Lake Cumberland District Health Department to provide school nursing services. Corbin Independent Schools did not continue its normal contract with the Whitley County Health Department for these services, and has employed its own nurses this year instead. Fayette County Schools will coordinate a hybrid, scaled-back program with the Lexington-Fayette County Health Department, rather than relying solely on the department for services.

The Russell County board had tabled its contract with the Lake Cumberland department last month due to concerns about a lack of provisions allowing for reimbursement if the nurse ever had to take time off, reports John Thompson of The Times Journal in Russell Springs. Superintendent Michael Ford said the health department was unwilling at this time to accept such provisions, but that it has not been a problem in the past.

Ford also said the district would get the same services if it hired its own school nurse. So, in the face of concerns from many members, the board voted last week to continue providing school-nurse services through the department, Thompson reports.

On the other hand, Corbin is hiring its own nurses. Its health-department contract ended in May because the department went months without receiving Medicaid reimbursements for school-nursing services, and the department had no financial resources to continue them, reports Jeff Noble of The Times Tribune.

Citing cuts in federal funding, Fayette County Schools has scaled back its school-nurse program. The joint program between the school system and the local health department will go from having 30 registered nurses for school services to operating with 13 registered nurses and 14 licensed practical nurses, reports Jim Warren of the Lexington Herald-Leader.

Fayette Superintendent Tom Shelton said last week that the plan is to supplement the nurses with other health care providers or additional help from the department; school personnel will also help by administering some medication.

This is a temporary solution to meet school nursing needs to give the schools time to develop a permanent solution, Shelton told Warren. Shelton said he wants to develop a completely new model for providing nursing services after next year.

Kentucky among states selected to study, address expensive problem of 'superusers' of emergency rooms

Kentucky is one of a few states teaming up with the National Governors Association to address the expensive problem of uninsured or Medicaid-covered "superusers" who over-use hospital emergency rooms or other costly health services instead of lower-cost alternatives like primary care.

“I’m proud Kentucky has been chosen to participate in this important program,” Gov. Steve Beshear said in a news release. “Across the nation, an understanding has been growing that we must focus our efforts on providing the best in coordinated care, helping to direct individuals who may be using more expensive, less effective services to more cost-efficient preventive services that provide better health outcomes in the long run. It’s by achieving these outcomes that we will build a healthier future for Kentucky.”

Kentucky, Alaska, Colorado, Kentucky, New Mexico, Puerto Rico and West Virginia will participate in a policy academy designed to help them create systems for these "superusers", enabling state officials to confront rising Medicaid expenditures while improving quality of care and health, says an NGA release.

These "superusers," sometimes called "super-utilizers" or "frequent flyers," often go to a hospital or emergency room for recurring health issues that can be treated more effectively and less expensively in other ways. Kentucky Medicaid spent more than $219 million on emergency-room use in 2012, and 4,400 Medicaid recipients used ERs 10 or more times during that year, says Beshear's release.

“There’s a handful of people who drive most of our spending,” Dan Crippen, the executive director of the governors’ association, told Kelsey Miller of Kaiser Health News. While the median ER visit cost $615 in 2009, an office-based visit with a physician cost $361, according to the federal Medical Expenditure Panel Survey.

“Kentucky has too long lagged behind in health rankings, and now is the time for us to begin truly moving the needle in the right direction,” said Cabinet for Health and Family Services Secretary Audrey Tayse Haynes. “By participating in this national effort, we can learn what has worked for other states and share Kentucky’s experiences as well.”

State leaders will first meet as a group with consultants from various health-care sectors, then officials will spend 18 months implementing the plans in their communities, says Miller. Funding for the effort is provided by the Robert Wood Johnson Foundation and the Atlantic Philanthropies.

Rushed transition to managed care is cautionary tale for other states, especially those with large rural populations

Since Kentucky's abrupt change to a Medicaid managed-care system in 2011, problems have been widespread among patients and providers, highlighting the dangers for other states, and especially rural ones, about a rushed transition to this model without sufficient preparation or oversight. Such problems could spread as Kentucky and some other states expand Medicaid under Obamacare.

“The Kentucky case is a harbinger of what can happen when states don’t allow enough time and devote sufficient resources to strengthen the Medicaid agency’s oversight capacity and systems — or develop strong contracts and care-monitoring systems from scratch if they haven’t contracted with managed care plans before,” Debra Lipson, a senior researcher at Mathematica Policy Research, told Jenni Bergal of Kaiser Health News, writing for The Washington Post.

Kaden Stone and mother, Angelina Alcott (Photo by Julie Bergal)

Patients in Kentucky's managed-care system complain of being denied treatment or having to drive long distances to find doctor's within their plans network. That's especially true of people in rural areas, such as Darlene VanHoeve in southeastern Kentucky, Bergal writes. VanHoeve has a son who needs treatment for autism at a center an hour away, but managed-care firm WellCare of Kentucky wouldn't pay for these services despite a physician's order, saying the center wasn’t in its network. In Greensburg, 8-year-old Kaden Stone loves playing baseball and riding his bike, but as a result of congenital bowel problems that have required dozens of surgeries and procedures, he needs PediaSure, his mother told Bergal. Yet, managed-care firm Coventry Cares stopped paying for it last fall, saying it was not “medically necessary.”

Hospitals and doctors have continuously voiced complaints about denied or delayed payments from managed care companies. Kentucky health officials admit there have been problems related to the speedy switch to managed care in 2011, writes Bergal, but they insist that claims are now being paid promptly. They also insist that providers meet with managed-care companies to claim outstanding payments and that care quality has improved in the state.

Advocates for the mentally ill argue that the care system for them has deteriorated, saying plans have denied patients' long-standing prescriptions, forcing some community mental health centers to limit or cancel programs, says Bergal. “The whole thing has been a mess,” Sheila Schuster, executive director of the Kentucky Mental Health Coalition, told Bergal.

As Medicaid rolls expand, those already in the program could be shut out of some of the key preventive services included in the new health law, says a recent study published in Health Affairs.

States that have phased in managed care more slowly have been more successful, so Kentucky's story is a cautionary tale for other states. “It was a significant challenge,” Michael Murphy, chief executive of Aetna-owned Coventry Cares, told Bergal. “Obviously, we learned a few lessons in Kentucky.” Perhaps this tale will keep other states from having to learn lessons too.

Kissner, six Medicaid directors from other states picked for national institute

State Medicaid Commissioner Lawrence Kissner is one of seven state program directors to participate in the year-long Medicaid Leadership Institute, which Gov. Steve Beshear said will help Kissner's ability to deliver high-quality, cost-effective health care services to Kentuckians.

The Medicaid Leadership Institute was developed in 2005 to enhance strategic thinking and leadership skills among Medicaid directors, and it is managed by the Center for Health Care Strategies and funded by the Robert Wood Johnson Foundation.

The institute is directed by Carolyn Ingram, the center's senior vice president and a former New Mexico Medicaid director. Ingram said in a news release, “Each of these seven Medicaid directors is essentially the CEO of one of the largest health insurers in his or her state. . . . Commissioner Kissner and the other Medicaid directors chosen bring a diverse array of experiences to the Institute and will spur each other to take full advantage of opportunities to transform the nation’s health care safety net.”  Click here to read more or here for more information about the Medicaid Leadership Institute.

Kissner was named commissioner of the Department for Medicaid Services in June 2012.  He is a graduate of the University of Notre Dame with a bachelor’s in business administration and has nearly 30 years of experience in the private insurance industry.  He most recently served as president and CEO of Magnolia Health Plan in Jackson, Miss. He was president of UnitedHealthcare of Kentucky from 2004 to 2006, according to the department's website. 

Kentucky Spirit leaves the state; cabinet assigns company's clients to other Medicaid managed-care firms

By Molly Burchett
Kentucky Health News

About 125,000 Medicaid patients in Kentucky have a new insurance company, with Saturday's departure of Kentucky Spirit from the state.

The state Cabinet for Health and Family Services reassigned Kentucky Spirit's clients to Coventry Cares or WellCare, and sent letters to the clients last week notifying them of the reassignment. They will have 90 days to change companies if they are not satisfied with their new one.

The letters were conditional, because the state was still in a legal battle trying to keep the company in the state for two more months. Cabinet officials told Beth Musgrave of the Lexington Herald-Leader that Kentucky Spirit stopped serving Kentucky clients shortly after midnight Saturday, and that the cabinet will file a lawsuit seeking damages because Kentucky Spirit breached its three-year contract that began in 2011. "If successful, the state could win millions of dollars from Kentucky Spirit, a subsidiary of St. Louis-based Centene Corp.," Musgrave notes. The company alleges that it lost money because the state gave it incomplete information.

"We are staffed up and as prepared as we can be," said Michael Murphy, CEO of CoventryCares, in an interview with Kentucky Health News Wednesday. He said the company is planning to take on about 67,000 new members from Kentucky Spirit, and will cover them according to our existing contract with the state.

One of the biggest challenges will be coordinating transition efforts with pharmacies, because the state was unable to give Coventry the Centene data until the company actually left Kentucky, said Murphy. "We expect there to be a fair amount of confusion and chaos, he said, but CoventryCares is automatically authorizing a 3-day supply of medications while the systems get updated with new member information."

Cabinet spokeswoman Jill Midkiff said, "While we are disappointed that Kentucky Spirit has defaulted on its contract with the state and abandoned its members, both Coventry Cares and WellCare have agreed to work closely with the cabinet, providers and members to make this transition as smooth as possible."

Judge refuses to stop Kentucky Spirit from leaving the state, saying health cabinet has had plenty of time to prepare

A Kentucky Court of Appeals judge refused on Monday to stop Medicaid managed-care firm Kentucky Spirit from leaving the state on Friday, July 5. Chief Court of Appeals Judge Glenn E. Acree denied the Cabinet for Health and Family Services' emergency motion to require the company to stay through August.

Read more here: http://www.kentucky.com/2013/07/01/2700062/court-refuses-to-block-kentucky.html#storylink=cpy

Last week, a Franklin Circuit Court judge said  the state can't require Kentucky Spirit to keep serving Medicaid beneficiaries two months beyond its July 5 exit date. When filing the emergency motion last week, Cabinet officials said that if Kentucky Spirit leaves the state without a two-month transition plan, it will “jeopardize the health” of 125,000 people.

However, Acree said the cabinet has had plenty of time to prepare for the company's departure, reports Beth Musgrave of the Lexington Herald-Leader. Furthermore, Kentucky Spirit said the state has refused to work with it to ensure an “effective” transition, and Franklin Circuit Judge Thomas Wingate said last week that the state has “been repeatedly cautioned by this Court to prepare for this contingency, and a lack of preparation at this junction does not warrant a grant of the extraordinary remedy of injunctive relief” requested by the state.

The cabinet argues that Kentucky Spirit did not communicate its intentions to leave, despite Wingate's May 31 ruling until the cabinet took Kentucky Spirit back to court earlier this month, reports Musgrave. However, Kentucky Spirit said in October 2012 that it was pulling out of Kentucky's managed-care system because it was losing too much money covering the 125,000 Medicaid enrollees contracted to the company.

So what will happen now? The cabinet has argued that the two other Medicaid managed care companies — Coventry Cares and WellCare — would take on the Kentucky Spirit beneficiaries and letters have been sent to Kentucky Spirit's clients and to health care providers.  A May ruling said Kentucky Spirit could face fines if it terminates its three-year contract before expiration in July 2014; Kentucky Spirit's appeal in that case is still pending. 

Kentucky Spirit still plans to leave state July 5; judge rules that state can't require company to stay for two-month transition

In the latest development in the saga of the state Cabinet for Health and Family Services and Medicaid managed-care firm Kentucky Spirit, the company appears to be the victor, at least for now, because a Franklin circuit judge this week that the state can't require it to keep serving Medicaid beneficiaries two months beyond its July 5 exit. Cabinet officials have appealed the decision, saying that if the company darts out of the state without a two-month transition plan, it will “jeopardize the health” of 125,000 people.

A May ruling said Kentucky Spirit could face fines if it terminates its three-year contract before expiration in July 2014. The company appealed. On Wednesday, it said it intends to leave Kentucky July 5, just as it made clear last year. The state appealed Thursday, and unless the court's decision is reversed next week in the Kentucky Court of Appeals, Kentucky Spirit will be able to bolt out of Kentucky on July 5, despite the damages it may face, reports Tom Loftus of The Courier-Journal.

The state's appeal aims to keep the company in Kentucky until August to grant the cabinet enough time to switch the 125,000 people covered by Kentucky Spirit to the other two managed-care firms. Cabinet officials say this transition time is vital, especially for a more vulnerable population, because transferring Medicaid recipients to Coventry Cares or WellCare will take time.

“A sudden cessation of services by Kentucky Spirit would jeopardize the health of its approximately 125,000 members, particularly those who require uninterrupted treatment or care which their new MCO would be unable to coordinate without advance notice,” said the emergency motion filed by the cabinet on Thursday, reports Ryan Alessi of cn|2's "Pure Politics."

Kentucky Spirit says the state has refused to work with it to ensure an “effective” transition, and it's now the state's responsibility to do so. Franklin Circuit Judge Thomas Wingate, who no longer has jurisdiction on the matter since Kentucky Spirit appealed, said the state has “been repeatedly cautioned by this Court to prepare for this contingency, and a lack of preparation at this junction does not warrant a grant of the extraordinary remedy of injunctive relief” requested by the state.

Regardless of what happens, Medicaid beneficiaries assigned to Kentucky Spirit shouldn't worry because their coverage will be honored by providers, cabinet spokeswoman Jill Midkiff told Alessi. In an earlier report, Midkiff said providers may feel the blow of this disruption, but Medicaid beneficiaries won't. “There won’t be disruption of services to members,” Midkiff told Loftus, “But there will be a disruption ... confusion with providers and paperwork and who they bill.”

Kentucky Spirit, a subsidiary of St. Louis-based Centene Corp., announced in October 2012 that it was pulling out of Kentucky's managed-care system because it was losing too much money covering the 125,000 Medicaid enrollees contracted to the company. Kentucky Spirit argues in its lawsuit that the state rushed to privatize Medicaid in 2011 and provided incorrect cost information to the bidders, causing the firm to lose about $120 million. It made the lowest bid, and on average, gets about $100 less per month for each patient than the other two managed-care companies in the state.

The school health services gamble: Ky. health departments could win on the state's bet against Kentucky Spirit's appeal of ruling

By Molly Burchett
Kentucky Health News

Kentucky’s health departments may soon get money for school nurses, based on a court ruling in May that said Medicaid managed-care firm Kentucky Spirit must pay for treatments provided by the nurses. The money wouldn't be coming from Kentucky Spirit, at least immediately, but from funds the state is withholding from the company, betting the payments on a court victory.

Circuit Judge Phillip Shepherd of Frankfort ruled in May that Kentucky Spirit must pay $8 million for services provided by school nurses, and the state has been withholding payment to the managed care company until it complies with the ruling, reports Ronnie Ellis, Frankfort correspondent for Community Newspaper Holdings Inc. On Monday, Shepherd told attorneys for the Cabinet for Health and Family Services and Kentucky Spirit that he is “inclined” to order the state to pay the health departments out of those withholdings.

The cabinet wants Kentucky Spirit to post bonds to cover the disputed payments during the company's appeal process. If the state made payments directly to the health departments, it would be gambling at its own risk, reports Ellis. If Kentucky Spirit wins its appeal of Shepherd’s earlier ruling, the state would have to refund the money, and the health departments would keep the payment.

This lawsuit originally came about when Kentucky Spirit stopped providing coverage for school health services last summer. The company said its state contract didn't require payment for such services, even though the state's Medicaid program has always paid for these services and other managed care companies were providing coverage for them. The court ruled that Kentucky Spirit must pay health departments, and the company appealed the decision.

Regardless of the source of funds, health departments and school districts could find some relief if payments are made because many school nurse programs were threatened by cutbacks and closings as a result of Kentucky Spirits failure to pay for school services.

Shepherd will allow attorneys for the state to respond to the motion and hear arguments on July 25, Ellis reports.

Kentucky Spirit appeals court ruling that it can't quit Kentucky early

By Molly Burchett
Kentucky Health News

Centene Corp. announced Monday that it has appealed the Franklin Circuit Court ruling in May that said its managed care subsidiary, Kentucky Spirit, cannot terminate its contract with the state a year early. The company said it plans to be out of the state by September. Click here to view the appeal.

This move represents the continuation of a long, tumultuous relationship between Kentucky's Cabinet for Health and Family Services and Kentucky Spirit, one of three companies hired by the state in November 2011 to manage health care for more than 540,000 Medicaid recipients.

First, Kentucky Spirit announced in October 2012 that it was pulling out of Kentucky's managed-care system because it was losing money, and the company also filed a formal dispute with the cabinet for damages incurred under the contract. Centene said in its annual report that Medicaid beneficiaries were retroactively assigned to the plan and non-inpatient claims receipts were higher than anticipated, leading to a $38.8 million loss in the second quarter of 2012.

"Since the inception of the contract, we have been in discussions with the cabinet about our concerns with the Medicaid managed care program but have been unable to resolve our differences," Jesse Hunter, Centene’s executive vice president of operations, told St. Louis Business Journal in October of last year. In response CHFS Secretary Audrey Haynes said, “I am deeply frustrated that this publicly traded, Fortune 500 company has chosen to put profits above people and will not honor the terms of its contract."

Next, Franklin Circuit Judge Thomas Wingate ruled that the company could face fines if it terminates its three-year contract before expiration in July 2014, and Centene said it would consider an appeal. Now, as Michael Neirdorff told investors on Monday, Centene is appealing that decision, reports Samantha Liss of St. Louis Business Journal.

“After a few months of operations, it became clear that our financial performance was much different than our projections based upon the data provided by the Commonwealth during the bid process. Our analysis concluded that inaccurate and incomplete data led to actuarially unsound rates for our health plan,” said Nerdorff at Monday's Investor Day event.

All managed-care companies received the same information, and Centene made the lowest bid. Kentucky originally signed a three-year contract with Centene in the summer of 2011, and the company was estimated to service about 180,000 Medicaid beneficiaries, generating an annual revenue of $700 million. Instead, it serves 140,000 recipients and lost $38.8 in one quarter.

However, Centene's $38.8 million quarterly loss in 2012 came alongside $2.2 billion in revenue, and the company's publicly-traded shares surged 11 percent after it announced that it was leaving the state. In April of this year, Centene raised its full-year forecast for premium and service revenue to $10.1 billion to $10.4 billion, Reuters reports.

State officials tell health-care providers to meet with managed-care companies to get paid, say new system is improving health

By Molly Burchett and Al Cross
Kentucky Health News

At the latest in a series of forums on Medicaid managed care, state officials said the new system has improved the quality of care, but you could cut the tension with a scalpel in the packed auditorium at the University of Kentucky as they fielded complaints and questions and urged the providers to work out the problems with managed-care companies themselves.

Gov. Steve Beshear and the Cabinet for Health and Family Services say the forums are designed to improve relations between providers and the managed-care organizations, but reactions from capacity crowd of health care providers and staff -- reactions that included a roomful of laughter about the MCOs' low count of transferred phone calls from providers -- suggested that the state’s solutions to providers' problems with the companies aren’t quite the solutions sought by providers.

Kentucky's transition to Medicaid managed care

In 2011, Kentucky was faced by spiraling Medicaid costs that gave the state two options: cut reimbursement rates to providers by a third or moving from a fee-for-service model to a managed- care system, in which MCOs get a specified fee for each patient they manage and use the money to pay providers, said Lawrence Kissner, commissioner of the Department for Medicaid Services.

The change is driving improvements in health for Medicaid clients while saving the state money, said Kissner: It has increased well-child visits for children aged 3-6 from 2 percent to 53 percent, has increased diabetes testing from 6 percent to 59 percent, and has improved adult access to preventative and ambulatory health services.

MCOs also have numerous quality initiatives underway, said Kissner, including one in improving anti-depressant medication management and compliance.  One company, Wellcare, has worked to improve oral health through a campaign that offered $10 gift cards for dental visits, but no one hears about this, he said.

What we've heard are complaints from physicians, hospitals, pharmacies and other health-care providers who aren’t getting some claims paid in a timely manner, or at all. Providers say manage care's complicated pre-approval process, designed to limit costs, delays critical treatment for patients and adds unsustainable administrative burdens.

Read more here: http://www.kentucky.com/2012/02/08/2061060/health-care-providers-say-medicaid.html#storylink=cpy

State officials' response: meet with the MCOs

Kissner said the new system denies 6 percent of providers' requests for pre-authorization, compared to the fee-for-service model that only denied 1 percent of such requests, but he says that's about the same as other states that use managed care.

About 20 percent of providers' claims have either been denied or suspended. In the first 14 months of managed care, 22 million of the 28.3 million claims, or 78 percent, were paid within 30 days. Kissner said 4.9 million (17 percent) were denied in 30 days and 1.2 million (4 percent) were suspended; he did not mention  the monetary amount of the denied or suspended claims.

Kissner speaks to crowd at UK; Cabinet Secretary Audrey Haynes looks on from first front-row seat.

When an audience member questioned the lack of payment for hospice services, Cabinet Secretary Audrey Haynes replied, “There are some providers around the state that have been quite vocal about how much we owe them, but when there’s been an attempt to sit down and work it out with them, they will not make an appointment.” She said it is a provider’s responsibility to reach out to MCOs about the payments they are owed.

“It is about you going to each one of them and setting an appointment for them to work out with them you’re accounts receivable," Haynes said. “If you really want to get paid and if you are really owed, and I believe most of you are, then let’s get an appointment set” with the MCO.

“We want this worked out,” said Haynes. “The time has come and gone for us to still be having problem getting payment if your contract says you deserve payment. These folks know they are on the hook. Let's all work together to get it fixed.”

Meetings with MCOs are part of the plan Beshear outlined after vetoing House Bill 5, which the last session of the General Assembly passed to help providers receive prompt payments from MCOs. The plan also requires the state Department of Insurance to investigate payment complaints and to conduct audits of this process. The department began this work in April and says it does not yet have statistics about 'clean claim' approval rates.

However, audits by the state's managed-care branch have shown Kentucky Spirit and Coventry Cares to be deficient in their financial management, and the state has implemented "corrective action plans" to address those deficiencies, said Kissner.
  
Providers' response to dispute-resolution plan

It may be an unwelcome change for providers as they now may have to set up consultations with MCOs to receive the money owed to them. They may ask: How many other business-to-business contracts require the service provider to meet face-to-face with the payor in order for the provider to be paid for contracted services that have already been provided? They argue that delayed payments and fee cuts could stretch medical practices and hospitals so thin that those needing care might be at more risk.

One provider in the audience addressed this concern, asking how general dentists are supposed to continue giving high-quality care to all patients if their fees are getting cut, but our expenses are going up? None of the officials on the panel answered the question.

Another audience member asked about provider fee cuts, and after the microphone was passed around to Kissner, he said the reductions are a part of the transition process to managed care, which was initiated to avoid a 35 percent Medicaid rate cut.

"When managed care enters into a a fee-for service environment, there's savings in a variety of pockets," Kissner said. "How do they control costs and try to make a profit in the system?"

The forum wrapped up with question from another skeptical audience member: Will this really make a difference?

"Well, you tell me, said Haynes. "And I'm sorry for those of you that feel like it will not make a difference because everyone in this room would have seen a 35 percent cuts in your rate, in all rates, had we not gone to managed care.  Not only that, our folks were not getting healthier, and we have proof of that." In her opening remarks, she said the state has spent billions of dollars on health care for the poor without seeing an improvement in the state's health status, so a different approach was needed.

Future forums

Kissner said the forums between the MCOs and providers are expected to resolve disputes by January, the deadline given to the cabinet by Rep. Bob Damron, D-Nicholasville, during a meeting of the joint Administrative Regulations Review Subcommittee. Damron and other legislators have "vowed to lead a legislative revolt" if the administration doesn't fix these late payment issues between providers and MCOs by then, reports Ronnie Ellis of CNHI News Service.

All the managed-care forums follow the same agenda, which can be found along with additional information at the Medicaid website. The dates and locations of the remaining forums are:

• Region 2, June 20: Main Lodge, Pennyrile Forest State Resort Park (20781 Pennyrile Lodge   Road., Dawson Springs) 
• Region 3, June 24: Kent School of Social Work, University of Louisville Shelby Campus (312 N. Whittington Pkwy., Louisville) 
• Region 4, June 26: VP Henry Auditorium, Lindsey Wilson College (210 Lindsey Wilson St., Columbia) 
• Region 6, June 27: Student Union Building, Northern Kentucky University (20 Kenton Drive, Highland Heights) 
• Region 1, July 15: Curris Center, Murray State University (102 Curris Center, Murray) 

Kentucky Spirit can't terminate its Medicaid contract with the state a year early without facing fines, judge rules

By Molly Burchett
Kentucky Health News

A Frankfort circuit judge ruled Friday that Kentucky Spirit, one of three companies hired by the state in November 2011 to manage health care for more than 540,000 Medicaid recipients, cannot pull out of its contract with the state a year early with no financial penalty.

Kentucky Spirit, a subsidiary of St. Louis-based Centene Corp., announced in October 2012 that it was pulling out of Kentucky's managed-care system because it was losing money, but the company could face fines if it terminates its three-year contract before expiration in July 2014, Franklin Circuit Judge Thomas Wingate said in his ruling.

Kentucky Spirit argued in its lawsuit that the state rushed to privatize Medicaid in 2011 and provided incorrect cost information to the bidders, causing the firm to lose about $120 million. It made the lowest bid, and on average, gets about $100 less per month for each patient than the other two MCOs, Coventry Cares and WellCare.

The Cabinet for Health and Family Services replied that Kentucky Spirit had breached its contract with the state. Wingate said it had not, because it gave notice of early termination, but it will be subject to fines if it pulls out of the state before July 2014, reports Beth Musgrave of the Lexington Herald-Leader.

Kentucky Spirit had argued that its contract allows it to to be terminated with six months notice. The six-month provision could only be interpreted to mean six months prior to the end of the three-year contract, said Wingate, because there has to be enough time for the state to move hundreds of thousands of Medicaid patients from Kentucky Spirit to another managed-care provider.

Jill Midkiff, a spokeswoman for the cabinet, told Musgrave that state officials were thrilled with Wingate's decision. "The cabinet's priorities are the members who receive health care through Medicaid and the taxpayers who pay for the program," she told Musgrave. "This is the right decision for both."

Friday's decision came three days after another Franklin Circuit Court judge ruled that Kentucky Spirit must reimburse health departments for services provided by school nurses to Medicaid-eligible children, which is estimated include about $8 million in back payments.

Centene officials say they are considering options for both cases, which include appeals.

Kentucky Spirit's legal battles are part of ongoing tensions between health-care providers and managed-care companies, and providers have repeatedly complained that the companies are delaying payments for services. The cabinet is hosting a series of forums across the state designed to help providers resolve such issues with the managed care companies.

Judge orders Medicaid managed-care firm to pay for school health services, including $8 million in claims; appeal possible

Medicaid managed care company Kentucky Spirit must cover preventive care services provided by local health departments in schools, a judge has ruled.

Circuit Judge Phillip Shepherd of Frankfort said the company must pay $8 million for the services already provided by school nurses, which would be only .07 percent of its estimated profit for 2013, according to the updated earnings report of Centene Corp. of St. Louis, the parent company for Kentucky Spirit. The company is the only one of the five managed care organizations in Kentucky  that had disputed the coverage of school health services.

Kentucky Spirit stopped providing coverage for school health services last summer, saying its state contract didn't require payment for such services,but Shepherd noted that the state reimbursed health departments for school services before it transitioned to managed care, reports Tom Loftus of The Courier-Journal. “Kentucky Spirit is not free to disregard this longstanding interpretation of Medicaid eligibility and unilaterally re-interpret these to the detriment of local health departments,” Shepherd wrote.

Health departments and school districts will now find some relief because many school nurse programs were threatened by cutbacks and closings as a result of Kentucky Spirits failure to pay for services. “It’s great news because there have been dozens of districts that have had to either say they are going to cut back on nurses, or that they are going to close clinics, or that they are going to dip into their reserves to try to cover the additional costs,” Kentucky School Boards Association spokesman Brad Hughes told Loftus.

Gov. Steve Beshear said Kentucky Spirit had “sought a loophole” in its contract to avoid paying for school health services covered by Medicaid, writes Loftus. Centene released a statement later Tuesday saying that the company is reviewing options and considering an appeal.

This isn't the only payment Centene is trying to avoid. A ruling is expected soon in a lawsuit the company filed against the state last year seeking to end its contract a year early, saying the state rushed to privatize Medicaid in 2011 and provided incorrect cost information to the bidders, causing the firm to lose about $120 million.

Appalachian Regional Healthcare, the largest health-care system in Eastern Kentucky, filed suit in April of this year against Kentucky Spirit for $5.9 million in unpaid claims. This suit is still pending, and was filed just before Centene raised its full-year forecast for premium and service revenue to $10.1 billion to $10.4 billion, Reuters reports.

Beshear vetoes prompt-pay bill but takes several steps to address problems in Medicaid; he and Haynes say it's working

Gov. Steve Beshear has vetoed the bill designed to make Medicaid managed-care firms pay health-care providers more quickly, but is taking administrative steps to address the issue.

Beshear said he agreed with the intent of House Bill 5 but it might have interfered with the contractual relationship between the state and the four managed-care companies. The bill would have subjected that relationship to the state Department of Insurance's review and investigation process for private-insurance payment complaints. 

"That language would have resulted in excessive costs for state government and taxpayers due to the expansion of the review process beyond the current parameters used for private insurance," Beshear's office said in a press release.

Instead, Beshear ordered the department to take over responsibility for review of prompt-payment complaints from the Department for Medicaid Services. "If improper payment practices are discovered, DOI can impose sanctions," the release said. He also ordered the department to audit each of the managed-care firms operating statewide – Wellcare, Coventry Cares, and Kentucky Spirit – at their cost.

Meanwhile, the firms have agreed to meet with every hospital they have under contract to reconcile outstanding accounts.  "This effort will begin immediately and continue until every hospital’s accounts receivable has been reconciled," the release said.  "The results will . . . be made public, in order to provide transparency and accountability." The firms have  agreed to meet with any other provider who wants a meeting.

Also, the Cabinet for Health and Family Services will hold eight regional forums for providers, managed-care firms, and Insurance Department representatives to discuss concerns and how to improve the system. Part of this effort will focus on "emergency room management that meets community needs without an ER operating as a de facto primary-care office," the release said. "A key component of controlling costs and improving health in a healthcare system is to provide the right treatment in the most cost-effective setting."

CHFS Secretary Audrey Tayse Haynes said the switch to managed care, made in November 2011, is working. “We are already seeing a tremendous increase in the use of preventive services, which improve health-care outcomes, while also reducing the enormous costs for treating chronic health conditions” such as diabetes-related amputations, she said.

Beshear said his plan would solve "lingering implementation problems" with managed care "while preserving the significant improvements in patient care and health care cost savings."

"Getting our people healthy and keeping them that way is not just good health policy, it’s good economics," Beshear said. "That’s why we will never return to the old fee-for-service system.  This is a significant cultural shift in medical care that has already happened across the country in both the private insurance market and in the Medicaid system."

Will Kentucky expand Medicaid, and if so, how?

By Molly Burchett
Kentucky Health News

Kentucky is one of the last states to decide whether to expand Medicaid under federal health reform, and now that the General Assembly has gone home, Democratic Gov. Steve Beshear can turn his attention to the many questions that linger. Some Republican legislators think he will expand the program, but they worry about the cost when the state would have to start helping cover the new expenses, beginning in 2017.

Republican Gov. Bill Haslam of Tennessee decided Wednesday that he will not pursue Medicaid expansion, saying that it could put hospitals in financial jeopardy by giving them more patients on which they lose money, reports Michelle Kaske of Bloomberg. If he is right and the same logic applies to Kentucky, Medicaid expansion in the state could harm the rural hospitals and providers -- some of whom are already squeezed by the issues with the new managed-care system.

Along with Kentucky, 10 other states are undecided about Medicaid expansion: Alaska, Indiana, Kansas, Nebraska, New York, Oregon, Utah, Virginia, West Virginia and Wyoming. The map by The Advisory Board Company shows the lay of the land; for an interactive picture that outlines the research behind the map, click here.

Red=Not participating; Pink=Leaning toward not participating;
Gray=Undecided; Blue=Participating; Light Blue=Leaning toward participating

Only three states with Democratic governors are undecided; 18 Republican governors have rejected expansion. Kentucky is shown as leaning for it because Beshear has repeatedly said that he will expand Medicaid if the state can afford it. He has also mentioned that the state can reserve the right to pull out of the deal in 2017, when it must paying 3 percent of the cost of covering the newly insured, reaching 10 percent in 2020. Still, the questions about cost and affordability remain, and Beshear could be considering another option.

Tennessee has joined Ohio and Arkansas in negotiating with the Obama administration over plans to use federal Medicaid money to purchase private insurance for those who can't afford it but don't qualify for Medicaid now. However, Haslam's plan has been held up because the administration placed too many conditions on the money, writes Kaske. Republicans in other states, including Florida, Louisiana, Pennsylvania and Texas, have expressed interest in this option since Gov. Mike Beebe of Arkansas, a Democrat, ignited the wildfire of creating a hybrid of the two alternatives, reports Robert Pear of The New York Times.

The idea of privatizing Medicaid expansion appeals to many doctors and hospitals because they typically receive higher payments from commercial insurance than from Medicaid. However, many Kentucky hospitals and providers are concerned about the managed-care program that is run by three private organizations, and are calling for immediate action. Beshear has not said whether he will sign or veto a bill that would subject the managed-care firms to the prompt-payments and dispute-resolution rules of the state Department of Insurance.

"Action is needed to address the problems that patients and hospitals are experiencing with Medicaid managed care and to make the system work properly," wrote Harold "Bud" Warman, chair of the Kentucky Hospital Association, and Charles Lovell, chair-elect of the association, in a recent Herald-Leader article that laid out the various problems with the system. "And with the possibility that Medicaid will be expanded in Kentucky to include an additional 350,000 people, it is critical that these issues be addressed right away to avoid even greater problems in the future."

Either using federal dollars to buy private insurance in order to cover newly qualified individuals (the hybrid plan) under the health law's expansion  or expanding in the "traditional" way will not change the current managed care structure of Medicaid in Kentucky. Yet, it would mean that 350,000 more Kentuckians would be covered under managed care; Medicaid would cover those earning up to 138 percent of the federal poverty level, currently up to $15,856 a year for an individual.

The money that the federal government offers for expansion is very tempting. The question then may be, how will it be used?

Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Senate sends bill for prompt payment by managed-care firms to Beshear, who won't say whether he will sign or veto it

A bill aimed at resolving payment disputes between medical providers and Medicaid managed-care companies passed unanimously Monday in the Senate, and has been sent to Gov. Steve Beshear for his consideration.

House Bill 5, sponsored by House Speaker Greg Stumbo, D-Prestonsburg, would apply existing prompt-payment laws to managed-care firms and would set up an appeal process in the Department of Insurance to handle disputes between them and medical providers. Those claims are now handled by the Cabinet for Health and Family Services, which administers Medicaid and has had some problems with the bill.

Hospitals, doctors and other health-care providers have complained that the cabinet is not resolving their payment disputes with managed-care firms, putting many rural hospitals, clinics and health departments in serious financial binds.  Mental health centers have also reported cutting back services.

Asked last night what he would do with the bill, Beshear said the cabinet "has worked with the managed-care organizations and health-care providers to reduce problems during the change, and many concerns have been addressed.  However, I recognize that some issues persist.  I will review this bill carefully.”

Beshear has 10 days, excluding Sundays, to decide whether to veto the bill, sign it into law or allow it to become law without his signature. Stumbo said that if bill is vetoed it would likely be House Bill 1 in the 2014 session, reports Jessie Halladay of The Courier-Journal. The bill is a top priority for many health-care providers.