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.

School nurses are an unfunded mandate for schools, which are picking up more of their cost as health department budgets shrink

Marion County nurse Renee Schooling helps
Levi Hardin, a Marion County first grader with
diabetes, check his blood sugar. (Lebanon
Enterprise Photo by Stevie Lowery)

Kentucky school nurses are stretched thin across the districts they serve and the budgets to pay for  them are stretched even thinner, because of budget cuts in the state Department of Public Health.

School districts are picking up the load, but often not all of it, because of their own financial challenges. "Basically it's one of the many unfunded mandates," Editor Stevie Lowery writes for The Lebanon Enterprise.

Lowery reports that the Marion County Schools currently share the cost of nurses with the Lincoln Trail District Health Department, with the schools paying 58 percent, or $161,000 a yera, and the department paying 42 percent, $116,000.

In some counties, schools are bearing the entire cost, which in some cases has reduced the availability of nurses, but Thursday night, the Christian County school board voted to hire another nurse, giving it one at every school, Editor Eli Pace reports for the Kentucky New Era in Hopkinsville.

Marion County Supt. Taylora Schlosser told Lowery that while her district values the services nurses provide, she and the school board will need to keep evaluating who pays for that service. The district plans to compare the cost of its contract with the health department and the cost of hiring its own nurses, with a commitment to not allow the level of service to change, Lowery reports.

“We will always have school nurses because we are going to take care of our kids,” Schlosser told Lowery. “How we pay for school nurses might change.”

In Kentucky, if a student requires medical care in order to attend school, state law requires school districts to provide the care.  Districts may hire nurses, contract with the health department, or use the medical supervision and delegation of medical tasks to district staff by local medical professionals, Lowery reports.

School nurses take care of students and staff who are injured or not feeling well, care for students with special medical or dietary needs, administer medications, conduct screenings, give flu shots, provide nutrition and wellness education, certify and give immunizations, and train staff in CPR, first aid and emergency administration of medication, Lowery reports.

“We’re not just boo-boos and Band-Aids,” Keown told Lowery. "Our main goal is to keep kids in school and keep them healthy so they can get a better education. Healthy kids make healthy students.” (Read more)

In Christian County, nurses have been called on almost 13,000 times this year, nurse coordinator Megan Kidd reported to the school board Thursday night. She said many students in the district don't have primary-care physicians and are told by their parents to see the school nurse, Pace reports.

"Kidd said 11 out of the district’s 15 schools have at least one diabetic student who depends on insulin," Pace writes. "In addition to insulin injections, other common reasons for trips to the nurse include allergic reactions requiring EpiPens and asthma attacks. Seizures also seem to be on the rise, Kidd said.

"But even though most of the visits were related to fairly common issues, Kidd told a story of a school nurse who once saw a student starting to show signs of leukemia. The nurse didn’t diagnose the child with cancer — that’s something a school nurse would be not allowed to do anyway, Kidd said — but the nurse pushed the child’s parents to go to the doctor, and the child did in fact turn out to have cancer." (Read more; subscription required)

Harlan County Schools look for school-nurse help after county health department, which had done it for free, asks for $10,000

http://www.harlandaily.com/view/full_story/23219874/article-Board-tackles-nurse-issue?
Update: http://www.harlandaily.com/view/full_story/23250170/article-School-district-asked-to-pay-for-nursing-services?

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.

Weekly paper in Hazard says Beshear should expand Medicaid

Gov. Steve Beshear should expand the Medicaid program for the poor under federal health reform to improve the health and welfare of Kentuckians, The Hazard Herald said in its editorial this week.

"We’re tired of reading report after report listing the health of Kentucky’s people at the bottom nationally," the weekly newspaper said. "That is especially the case in Eastern Kentucky, where here in Perry County we ranked as the 119th unhealthiest county out of 120, according to a recent study. In fact, the vast majority of the bottom 20 counties are here in Eastern Kentucky. There are many dire needs in our region of the state, from jobs to education to better access to health care. Here is one instance where our government, which the people fund, can opt to very possibly improve the lives of its citizens."

The federal government would pay the costs of expanding Medicaid to people in households with incomes up to 138 percent of the poverty level from 2014 through 2016. The state would pay 3 percent in 2017, rising to 10 percent in 2020. The editorial noted critics' warnings about costs, and a study predicting that expansion would increase the state's total Medicaid costs only 6.3 percent. "But, in truth, this is simply a monetary argument from interests on both sides of the debate," the paper said. "We feel the greatest interest belongs to the people of Kentucky. We feel the greatest priority should be placed on improving the health and welfare of our people." (Read more)

If Republican governors are agreeing to expand Medicaid after lobbying by hospitals, can Beshear be far behind?

By Al Cross
Kentucky Health News

Florida Gov. Rick Scott's surprising announcement that he would use federal health-care reform money to expand the Medicaid program to households earning up to 138 percent of the poverty level "means the dominoes are falling," says Ron Pollack, executive director of Families USA, a consumer group that lobbied for the law. And another domino seems likely to be Democratic Kentucky Gov. Steve Beshear, without involvement by the state legislature.

Beshear has said he will expand Medicaid if Kentucky can afford it, and has mentioned that the state can reserve the right to pull out of the deal in 2017, when it must start paying a small but increasing share of the cost, reaching 10 percent in 2020. Scott used the same qualification.

Pollack told The New York Times that the message sent by seven Republican governors' acceptance of the deal is  “Even though I may not have supported and even strongly opposed the Affordable Care Act, it would be harmful to the citizens of my state if I didn’t opt into taking these very substantial federal dollars to help people who truly need it.” The GOP governors (of states outlined in Times map below) have said they will expand the program partly to protect rural hospitals and the poor.

"The change of heart for some Republican governors has come after vigorous lobbying by health industry players, particularly hospitals," the Times notes. "Hospital associations around the country signed off on Medicaid cuts under the health care law on the assumption that their losses would be more than offset by new paying customers, including many insured by Medicaid. . . . Every few days, state hospital associations and advocates for poor people issue reports asserting that the economic benefits of expanding Medicaid would outweigh the costs." (Read more)

Kentucky Hospital Association President Michael Rust said the trade group is for "universal coverage" by whatever means but is not lobbying Beshear for Medicaid expansion. "We assume he is" going to expand it, Rust said in an interview today. He said the association has not taken a position on bills that would require legislative approval of expansion and the health-insurance exchange being set up under the reform law. The legislation, Senate Bill 39 and SB40, passed the Republican-controlled Senate on party-line votes today, and are expected to die in the Democratic-majority House.

Senate Majority Floor Leader Damon Thayer said the bills were aimed at reining in "big daddy government." Here's a video from cn|2:

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.

Health agencies in Rockcastle, Jackson, Clay, Harlan to lose 14 employees, some environmental and food-safety inspections

In the latest example of Medicaid changes' impact on local health departments, environmental and food-safety inspections will be reduced by layoffs in four counties served by the Cumberland Valley District Health Department, Nola Sizemore of the Harlan Daily Enterprise reports. Health departments in Harlan, Rockcastle, Clay and Jackson counties will lose a total of 14 employees later this month. (Enterprise photo: Harlan County Health Department)

Health Department Interim Director Lynett Renner told Sizemore said the layoffs, along with furlough days, are a result of decreased funding and the "advent of managed care organizations" in November 2011. The agency has almost $1 million in outstanding accounts because payments from those organizations have been slow to come in. "Also, one of the things that affected the health departments tremendously is we’re the only provider in the state required to pay a Medicaid match, which means for every service we provide for a client who has Medicaid, we have to pay the state back 20 percent and that recently increased to 28 percent," Renner said.

Renner told Sizemore that environmental services and restaurant health inspections would be most affected, adding that public health is often taken for granted by the local community. "So much is done behind the scenes to ensure the health and safety of every citizens," she told Sizemore. "My fear is they're reducing the ability of the public health infrastructure to be able to maintain that level of service that provides protection." (Read more)

Expanding Medicaid in Kentucky would add 5 percent to the state's cost over the next 10 years, national study predicts

Expanding Medicaid to people making up to 138 percent of the poverty level under federal health reform and its heavy subsidies would cost Kentucky about 5 percent more for Medicaid over the next 10 years than doing nothing, the Kaiser Family Foundation said in a state-by-state analysis today.

According to the study done by the Urban Institute for the foundation's Commission on Medicaid and the Uninsured, the state would spend $25.1 billion from 2013 to 2022 if it and no other state expanded the program. If all states expanded it, Kentucky's cost would be $26.4 billion, the study estimated.

Under the Patient Protection and Affordable Care Act, the federal government would pays the full cost of the expansion from 2014 to 2016. The federal government’s share would drop to 95 percent in 2017 and to 90 percent by 2020. In the 2013-14 fiscal year, the state budget calls for $1.48 billion in state funds to be spent on Medicaid benefits. The federal government pays about 72 percent of the program's cost in Kentucky.

In human terms, the report says the law will reduce the number of people in Kentucky without health insurance in 2022, no matter what happens. It says that if the act had never passed, 740,000 Kentuckians would have been uninsured in 2022. It will reduce that number to 513,000 even if Medicaid is not expanded anywhere. If all states expand Medicaid, the number of uninsured Kentuckians would drop to 332,000, the study estimates.

The Kaiser report is an update of a study done before the U.S. Supreme Court ruling ruled that the law was constitutional but made Medicaid expansion optional for states. So far, eight states have indicated their unwillingness to participate in the expansion, though more are expected to opt out but are waiting until legislatures return in January to discuss the matter.

See the entire report here.

Facing budget shortfalls, many county and district health departments cut hours and staff

Reduced hours and staff will be the new reality for many health departments across Kentucky starting in July as they deal with funding shortages and changes.

Though the total amount of state funding to local health departments has not gone down, the way it is allocated has changed. “Part of the new formula took into account the population served and percentage of population below the poverty level,” reports Beth Musgrave for the Lexington Herald-Leader. Counties that serve more “working poor” — people who are employed but don’t have insurance — were hit the hardest by the reformulation.

Kentucky’s move to managed care for its Medicaid recipients also affected funding because reimbursement rates went down. Meanwhile, retirement and health insurance costs continue to go up.

There are 59 county and district health departments in Kentucky, all of which are funded partly by local property taxes, ranging from 1.8 cents to 4 cents per $100 worth of property. With the recession, local tax revenues have decreased, contributing to funding shortfalls.

Musgrave reports of furloughs, staff cuts and program cuts in various counties surrounding Lexington. Local news outlets should look at what is happening to health departments in their areas. (Read more) 

Herald-Leader dislikes mental health agency's 'clubby glow'

In an editorial today, the Lexington Herald-Leader criticized the "clubby glow emanating from the inner circle" of the Bluegrass Regional Mental Health-Mental Retardation Board, whose financial status was featured in Sunday's issue of the newspaper.

Though the paper didn't take issue with top executives earning large salaries, it did have a problem with the makeup of the board and its staff. First, the current CEO, Shannon Ware, is married to the former CEO, Joseph Troy. Troy's son-in-law is director of information technology. And at least eight of the 25 members of the board have served since the 1980s. Another three have served since the 1990s.

"Collectively, these offer the potential for an organization where the status quo is rarely challenged," the editorial reads. The editorial board took particular issue with the nepotism in place: "While it is theoretically possible that a supervisor might treat a family member exactly the same as an unrelated employee, in reality it is hard to imagine. Regardless, the very appearance of favoritism can be damaging to an organization." (Read more)

Bluegrass mental-health nonprofit flush with cash, despite cuts in public health; spends big on executive pay and lobbying

The new Eastern State Hospital being built in Lexington. The
Bluegrass Regional MH-MR Board runs the existing facility
and wants to run the new one. (Pablo Alcla, Herald-Leader)

Despite deep cuts in state public-health funding, the non-profit Bluegrass Regional Mental Health-Mental Retardation Board, which serves 17 counties in central Kentucky, is flush with cash, making some critics question whether it is transparent enough with its finances.

"In 2011, it reported having $33.7 million in cash reserves and similar assets — more money than 10 of the state's 13 other regional mental health boards had in their entire budgets," reports John Cheeves for the Lexington Herald-Leader.

The board spends freely in executive pay (four top executives collected nearly $2 million in 2010 for compensation), political lobbying (since 2008 it has spent nearly $500,000 to pay four lobbyists in Frankfort) and real estate (it bought a $295,000 home near Lake Cumberland for its senior management team to use when in Somerset).

"We have received some concerns regarding the Bluegrass board in the last few days, and we're going to be looking into those," state auditor spokeswoman Stephenie Steitzer told Cheves.

Scott Gould, who chairs the 25-member Bluegrass MH-MR Board, said "there has been no inappropriate practice or action taken by any board member, CEO or staff member."

But one former employee, Eleisha Kiefer, said the company cuts costs in unfair ways, saying there was a weekly lunch budget of $100 at a therapeutic rehabilitation program for about 20 mentally handicapped adults in Harrison County. "We had a lot of soup beans and corn bread," she said.

Gould disputed the allegation, saying there has "never, ever" been a weekly budget placed on client meals.

Mental health experts praise the work Bluegrass does. "I'd have to put them high up on the star chart in terms of what they provide their consumers and their family members," said Sheila Schuster, executive director of the Kentucky Mental Health Coalition. "It's one thing to deliver quality care, but I feel that Bluegrass goes the extra mile."

Though is it chiefly funded by the Cabinet for Health and Family Services, Bluegrass considers itself part of the private sector. Its executive pay reflects that approach. In 2010, its current and previous chief executive officers — who are married to each other —"took home more than $1 million in total compensation," Cheeves reports.

Comparatively, Howard Bracco, the recently retired CEO of the mental health board in Louisville, Seven Counties Services, made $179,868. "We had different cultures," Bracco said. "They operate on a business model, a corporate model, versus the social model. I think, frankly, they were better business people than many of us. They lobbied hard to win contracts, they fulfilled those contracts, and they've been very successful." (Read more)

Appalachian Regional Healthcare asks federal judge to make managed-care firm keep it under contract

Appalachian Regional Healthcare, a hospital chain in Eastern Kentucky and southern West Virginia, is seeking an emergency injunction by a federal judge ordering Coventry Cares to let its Kentucky members continue receiving services from the hospitals, and to avoid widespread layoffs the chain says will happen if the judge doesn't intervene, reports Bill Estep of the Lexington Herald-Leader. Coventry Cares is one of three state-approved companies to provide managed care services through Medicaid. It said it would cancel its ARH contract after Friday, which would affect about 25,000 Medicaid recipients.

With a few exceptions, Coventry members would lose access to treatment or have to travel long distances to get to other facilities approved by the company, which ARH and officials in affected counties say would be difficult for most because they don't have money or reliable transportation to make the trip. Coventry spokesman Matthew Eyles said the company would continue paying for some services at ARH hospitals, including ob-gyn services to women who are more than 12 weeks pregnant and have a relationship with an ARH doctor.

The state switched to managed-care last year as a way to save money, but as Estep reports, the move has been "rocky." Providers have complained about delayed payments from the companies and their cumbersome pre-approval processes for treatments. ARH sued Coventry and Kentucky Spirit, another provider, claiming the companies owed more than $18 million for services ARH had provided.  Estep notes, "The state allowed another managed care provider not to include ARH in its network, which meant a lot of higher-risk, higher-cost patients ended up covered by Coventry, the company said." The company also said the state failed to implement a method to assess risks that would adequately compensate managed-care providers who have more high-risk patients."

ARH and its Coventry patients think the company is trying to get more money out of the state. Many of ARH's patients are covered by Coventry, and ARH spokeswoman said about 300 to 400 jobs would be cut if Coventry cancels its contract. State officials are encouraging continues negotiation between ARH and Coventry. (Read more)

Meanwhile, Bardstown pediatrician and Passport Health Plan board member James Hendrick wrote a letter to the editor of The Courier-Journal offering Passport's services to "help the state get Medicaid back on track." He said he's been very impressed with the nonprofit's "strong and engaged provider network, and an intense focus on delivering services at a cost that doesn’t diminish quality," adding that because Passport is a nonprofit, it's not concerned with appeasing shareholders. Passport has been managing Medicaid in the Louisville region for several years.

Beshear vetoes parts of budget, but health spending is intact

Though Gov. Steve Beshear vetoed 45 parts of the state budget yesterday evening, health-related spending was safe from the cut.

The budget will help reduce caseloads for social workers who investigate child abuse and neglect, funds colon cancer screenings for 4,000 uninsured Kentuckians, substance-abuse treatment for Medicaid recipients and includes funding for an elder abuse registry to protect senior citizens from unscrupulous caretakers.

"This is the most difficult budget I have ever drafted, and it will also be a challenge to implement and manage over the next two years," the governor said in a statement.

In the two-year, $19 billion budget, Beshear voted more than three dozen line-item appropriations, including "portions of the General Fund budget that limited his ability to manage the state's budget or spent money that doesn't exist," reports Beth Musgrave of the Lexington Herald-Leader.

He also cut some earmarks, including $100,000 for Actors Theatre of Louisville and $150,000 for the International Mystery Writers' Festival in Owensboro. "I am vetoing these parts because they identify new spending earmarks yet the General Assembly failed to appropriate additional funds to finance them," Beshear said. (Read more)

Health departments face more cuts as demand for services grows

More cuts to Kentucky's public-health system have been proposed at a time when the demand for services is growing, officials say. In his state budget proposal, Gov. Steve Beshear suggested public health cuts of 8.4 percent in each of the next two budget years, the same cut he recommended for most other state agencies.

"It's going to have an impact on us being able to provide services (for poor patients)," Dr. Steve Davis, the acting public health commissioner, told the House human services budget subcommittee.

The cuts will mean "the 58 health departments that serve Kentucky's 120 counties will have fewer resources to provide services such as immunizations, cancer screening, diabetes care and maternal and child care," reports Deborah Yetter for The Courier-Journal. Public health will also likely be cut at the federal level. This budget year, public health received $239 million in federal funds. It received $59 million for its General Fund from the state, which would drop to about $56 million if the cuts pass.

Davis said there are no plans yet for how to absorb the cuts. "Every single program we have is going to be on the table," he said. (Read more)

Independent pharmacists say managed care costs them money

Because two of the three new Medicaid managed-care companies have slashed the dispensing fee they will pay them, independent pharmacists are in danger of going out of business all over the state, pharmacists told the interim joint Health and Welfare Committee yesterday.

But one managed-care firm said that's the cost of saving money for the taxpayers, the reason the state implemented managed care statewide. "We recognize ... there's a big change here for everyone," said Barb Witte, CEO of CoventryCares. "All health care providers are going to have to tighten their belts."

Under the traditional Medicaid system, "pharmacists were paid a 'dispensing fee' per prescription of $4.50 to $5 plus reimbursement for their actual cost of the drug based on an industry formula called the 'maximum allowable cost,'" reports Deborah Yetter of The Courier-Journal.

But the dispensing fee of CoventryCares is only $1 to $1.50. WellCare increased its fee to $3 from $1.50, but cut reimbursement for cost, making the increase only worth about 80 cents. Kentucky Spirit is still paying $4.50 to $5.

Because the maximum allowable cost fluctuates on a monthly basis, pharmacists don't know their return until they file a claim. Often, "pharmacists find they are being paid less than it cost them to buy the drug from a wholesaler," Yetter reports.

"How long will I be able to stay in business losing money?" asked Mayfield pharmacist Sam Willett. "Not very long."

Rep. Tom Burch, D-Louisville, told the MCOs and pharmacists to come to an agreement. "There must be a way to work this out," he said. (Read more)

Medicaid's move to managed care delayed until Nov. 1; hospitals need more time to sign contracts

The move to managed care, which the state has touted as the answer to improve the quality of its Medicaid system and solve a budget deficit, has been delayed by a month in response to the Kentucky Hospital Association saying hospitals need more time to sign contracts and prepare for implementation.

"We have made great progress in Medicaid managed care since we first announced the contract awards in July," said Janie Miller, secretary for the Cabinet for Health and Family Services. "Thousands of providers have signed up with the managed care organizations ... but we still need the hospitals to sign contracts before we can implement managed care across the commonwealth."

Mike Rust, president of the KHA, said of about 100 hospitals that will be affected by the changes, only about 20 have signed contracts so far, reports Deborah Yetter of The Courier-Journal.

Four managed-care organizations, including the previously established Passport Health Plan in Jefferson and surrounding counties, will take over health-care management of the state's 730,000 Medicaid recipients. The companies will be paid a per-patient, per-month amount set by contract negotiations. Because they won't be paid using a fee-for-service model — believed to be more costly — and will try to streamline care, the move is expected to save $1.3 billion in the next three years, Miller has said.

Earlier this month, Kentucky got the green light from the federal Centers for Medicaid and Medicare Services to proceed with the transition to managed care. (Read more)

Health secretary tells legislators Medicaid budget has been balanced by moving all beneficiaries to managed care

The switch to managed care organizations has fixed Kentucky's Medicaid shortfall, with Janie Miller, secretary of health and family services, calling the budget "balanced." She said the projected savings from moving to managed care will take care of the $97 million funding gap caused by a lack of anticipated federal funding.

The Courier-Journal's Deborah Yetter notes that the shortfall was the most contentious issue for the legislature this year, with Gov. Steve Beshear wanting to plug the hole by moving to managed care and Senate Republicans wanting to make across-the-board budget cuts. After a special session, Beshear got his way and 560,000 Medicaid members are slated to move into managed-care organizations starting Oct. 1. Those in the Louisville region have been in one, Passport, for several years. Passport has a one-year contract with the state; Coventry Health Care Inc., Centene Corp. and WellCare Health Plans Inc. have three-year contracts. "They have every incentive to be successful," Miller said. "They are making a huge investment in this state."

Asked by skeptical legislators how the savings can be assured, Miller said they are guaranteed by the contracts. "To achieve savings, Medicaid will pay each company a fixed rate of about $345 per month per person. In turn, the company will be responsible for all costs of the person's health care," Yetter reports. "It's got a lot of potential," said state Rep. Jimmie Lee, D-Elizabethtown. "I have faith that if it's managed right, it could work." (Read more)

Program serving young, blind children hit hard by state budget cuts

A program that helps educate blind preschoolers throughout Kentucky has had its state funding drastically cut. Louisville-based Visually Impaired Preschool Services, also known as VIPS, will only receive $10,000 from the state this year, compared to $80,000 three years ago, The Courier-Journal's Deborah Yetter reports. (C-J photo by Michael Hayman)

The program provides free, at-home education for children who are considered legally blind until they turn 4. "The impact is that we won't be able to serve them as often," said Diane Nelson, the program's executive director. "It's so sad."

While the cut will not affect VIPS' preschool in Louisville, it will affect parents and children in more rural parts of the state because fewer specially trained teachers will be sent from Louisville and Lexington to help them. The program serves about 300 children in Kentucky and southern Indiana. Last year, about 50 of those children were outside Louisville and Lexington. This year, only 22 rural children are being helped. "We don't have the money to go out and find these kids," Nelson said.

The funding reduction is the latest in a series of cutbacks that have affected Kentucky public health in the past several years. All told, public health funding has been cut $12 million in recent years. (Read more)

Louisville's University Hospital limits care for non-local patients

University Hospital in Louisville has been forced to stop providing some free or deeply discounted care to patients who live outside Jefferson County. The number of low-income patients coming to the hospital from surrounding counties created a $20 million shortfall last year, "jeopardizing University's primary obligation to treat Louisville's poor," The Courier-Journal's Patrick Howington reports.

Out-of-town patients who want elective procedures such as colonoscopies now have to pay up to 70 percent of the charge. They also must show that they tried to get care in their home county first and may have a longer wait than Jefferson County patients. The changes do not affect patients who come seeking care for trauma, high-risk pregnancies, strokes or cancer care.

University Hospital is generally the facility of last resort for low-income patients in the region. The training hospital for the University of Louisville, it receives extra state funding to help pay for patients who can't pay for themselves. Last year, the university got nearly $69 million to cover indigent care, but that care cost it $89 million. The $20 million shortfall is five times higher than 2005's shortfall of $3.7 million.

Last year, University gave treatment to 767 Hardin County patients, compared to 441 five years ago; 221 Warren County patients compared to 134 in 2005; and 200 Hart County patients, almost twice the number from 2005. (Photo of patient DeEdra King and physical therapist Cathy Gerrish by Aaron Borton) The economy is likely to blame, Howington reports. "The economic downtown cost many people their jobs, and thus their health insurance, and contributed to a surge in uncompensated care at many Kentucky hospitals." (Read more)

State awards Medicaid managed-care contracts to 4 firms, including Passport; networks to be established by Oct. 1

In an effort to save $1 billion in the next three years, and fill a hole in the current state budget, Gov. Steve Beshear announced Thursday that Kentucky's Medicaid program will be run by four companies, including the beleaguered Passport Health Plan. (Associated Press photo by Ed Reinke)

The move will affect 815,000 Kentuckians who qualify for Medicaid, a program for the poor and disabled. Despite the changes, they will not see a cut in services, and the moves are expected to create nearly 550 jobs, Beshear said. For his press release, click here. For audio of his press conference, go here. He plans to fly around the state Friday to get the word out about the changes, the Lexington Herald-Leader reports.

The companies are Coventry Health Care, based in Bethesda, Md.; WellCare Health Plans of Illinois; and Centene Corp. of St. Louis. As it has been doing already, Passport will serve Jefferson and 15 neighboring counties, but its contract was renewed for only one year. The other companies were awarded three-year contracts. Passport was the subject of a scathing audit earlier this year by state auditor Crit Luallen, who uncovered unnecessary spending. The other organizations operate in at least seven states each.

Now that the contracts have been awarded, the companies will start establishing provider networks, which they have until Oct. 1 to do, Jill Midkiff, spokeswoman for the Kentucky Cabinet for Health and Family Services, told Kentucky Health News. Initially, Medicaid recipients will be matched with a company based on what network their doctor is part of. "But if they don't want to stay with that company, they can change immediately or change after they've been with them for a little while," Midkiff said.

Unlike with Passport, Midkiff said, Coventry, WellCare and Centene will not be responsible for a specific number of counties; they will simply serve their in-network doctors, wherever they happen to be. "Which doctors are in which networks in which counties is not a question I can answer," Midkiff said. "It will be something the companies will be working to establish."

Moving to managed care is the Beshear's administration's answer to fill a $166 million hole in the Medicaid budget, created by a lack of expected federal funding. The federal government pays more than 70 percent of Medicaid costs, bringing the expected savings to $1.3 billion over three years.

Lawmakers vigorously butted heads over how to resolve the issue, making it the most contentious of this year's legislative sessions. The Democratic House sided with Beshear's plan, but the Republican-led Senate fought it, saying managed care would not save the money Beshear promised. They instead proposed making across-the-board cuts, even to the basic school-funding formula. The issue went to a special session, with Beshear warning that, without a compromise, Medicaid reimbursement to hospitals and providers would have to be cut 35 percent. When he promised House Democrats that he would line-item-veto the Senate's spending cuts, the House passed the bill and he made the vetoes.

The bill gave state officials had until July 1 to get contracts in place, a deadline they missed by almost a week. The plan must now be approved by the federal Centers for Medicare and Medicaid Services. The waiver was submitted to CMS June 11. CMS officials have 90 days to review and approve or disapprove the submission.

WHAT IS MANAGED CARE?

A managed care organization "in the broadest context is an organization that is responsible for managing patient care as opposed to just paying the bills that come in," explained Robert Slaton, who was executive vice president of University Healthcare, now known as Passport, from 1998 to 2006. In the traditional Medicaid setup, the doctor or hospital bills the state and the state pays the bills. "With an MCO, the doctor or hospital bills the managed care company and they have a lump sum from Medicaid and they pay the bills," Slaton explains.

Before the contracts were signed, Slaton said the MCOs likely studied Kentucky demographics carefully and came up with a lump sum they would like to be paid per patient based on the Medicaid members in the state. "Our experience was they had a very sophisticated information system and over time they were able to drill down to understand exactly where expenses were being incurred, more so than a total statewide system," Slaton said.

Because the lump sum it receives for each patient stays static, unlike in the fee-for-service model in which the state pays for whatever bills are incurred, there is incentive for the MCO to keep costs down. That can mean requiring more preventive care, like screenings or dental checkups, in order to save money in the long run; and analyzing care to prevent duplication of services. And it can involve sending case managers to visit repeatedly ill patients to help them get their health issues in check. "It's the kind of thing where it's doing the right thing and also, in the long run, saves money," Slaton said. "If someone who is a diabetic gets sick, you don't want to just pay for them to go to the doctor. You want somebody to help them figure out how to live a healthier lifestyle."

Because there is incentive for MCOs to keep costs down, does that also create incentive to deny care? Slaton said no. "It used to be probably true that there was too much emphasis on denying care," he said. "Now what they try to do is provide appropriate and necessary care, but eliminate duplication ... The old ways of cutting fees and denying care just won't fly. You'll have such a political backlash that you end up losing your contract."