Setback in Kansas Managed Care Implementation and Other Developments

Kansas Governor Sam Brownback still plans to implement mandatory managed care next January, six months from now, but the legal support for it is not yet in place. The program was to be approved through an innovation waiver under Social Security Act Sec. 1115. State officials submitted the application in April. However, on June 7, 2012, the application was withdrawn so that the state could comply with a statutory requirement to consult with Indian tribes and organizations. The law was included in the American Recovery and Reinvestment Act of 2009 (ARRA) (P.L. 111-5) and became effective July 1, 2009. Because new regulations became effective April 27, 2012, the state agency now must hold public hearings in addition to consulting with the Indian organizations. The hearings are scheduled for June 18 and 20 in Wichita and Topeka, respectively.

Folks in Kansas are worried. So the Kansas Health Institute recently consulted Kentucky state auditor Adam Edelin to find out what lessons were learned in Kentucky that might be helpful to Kansas. KHI reports that Edelin recommended slowing down, taking 12 to 18 months to prepare because any gaps in the system will be exacerbated by a premature roll-out. He also recommended vigilant oversight by elected officials, quoting President Reagan: “Trust, but verify.” It’s fine for private companies to make a profit, but they can’t focus only on the bottom line. Edelin told KHI, “When you outsource the administrative function of a public mission, you have to double down on accountability.”

KHI News Service reports that Kansas officials say they have been watching developments in other states and have included provisions iin the contracts designed to avoid the problems they faced. The state agency is working with a consulting firm to develop readiness reviews to assure compliance with state and federal regulations and “operational readiness.” Kari Bruffett, the director of the Division of Health Care Finance at the Kansas Department of Health and the Environment, told KHI that the state won’t implement if the reviews indicate that they’re not ready.

If Bruffett is committed to go live only when the agency and the managed care organizations (MCOs) are ready, it’s hard to see how the state could meet a January 1 deadline. The state plans to sign three of the five MCOs that applied, but the contractors haven’t been selected yet. The advisory committee has met twice since it was created by Governor Brownback in March.

Unlike Kentucky, Kansas program will include elderly individuals and people with physical or intellectual disabilities. These groups tend to use more, and more expensive, services than children and families do. The three MCOs that Kentucky signed are among the five vying for the Kansas contracts. If the MCOs are losing money in Kentucky, as Coventry is, how will they make a profit and assure that beneficiaries have access to quality care? After all, when Coventry demanded a risk adjustment, it claimed that its members were sicker and more costly than WellCare’s or Kentucky Spirit’s.

Updates on other state programs:

  • On June 12, at a hearing in the Appalachian Regional Healthcare (ARH) lawsuit, Kentucky officials supported Coventry’s contention that it could meet network adequacy requirements without the participation of ARH
  • Representative Michele Bachmann (R-Minn.) called for a federal audit of Minnesota’s Medicaid managed care plans
  • Molina and Centene, the two plans that protested the award of Ohio’s contracts to other bidders, prevailed and were awarded contracts. Molina’s stock price dropped precipitously when its earnings results were released, but it regained that value after it regained the Ohio contract