Can KanCare Live Up to Its Promise?

On December 27, 2012, CMS approved KanCare, the mandatory managed care demonstration project proposed by Kansas Governor Sam Brownback (R). The premise behind KanCare is that the state will limit its costs by making capitated payments to managed care organizations (MCOs), who will improve health outcomes and make a profit without cutting eligibility, services, or payment rates.  Lt. Governor Jeff Colyer says the state will save at least $1 billion over the five years of the demonstration.

In prior posts, we have questioned such optimistic predictions. And so have others. The Kansas Health Institute (KHI) teamed up with Kansas Public Radio (KPR) to create a five-part series on KanCare and the state’s implementation of Medicaid managed care. Until recently, Medicaid managed care programs have focused on low-income families with children, not the elderly or people with disabilities. The overwhelming majority of Medicaid beneficiaries are children and low-income parents, but most of them have low needs for health care. On the other hand, according to KHI and KPR, the Medicaid payment for nursing home care is 10 times the average payment for children and families, and the costs for other individuals with disabilities can be even higher.

Proponents of KanCare say there is a potential for huge savings if people with chronic illnesses get preventative care, case management or other services that keep them out of the hospital. Carole Romm, a nurse who directs the quality and accountability programs at the Oregon Medicaid agency, told KHI about a woman with congestive heart failure whose breathing difficulties landed her in the hospital whenever the weather was hot. Her Medicaid MCO solved the problem by buying her an air conditioner—an expenditure that the state Medicaid program couldn’t have made. But Columbia Professor Michael Sharer told KHI that there is little evidence in the published literature that Medicaid MCOs save money. He said that studies with favorable results were paid for by the MCOs and, therefore, were likely to be less objective than those of academicians.

Some people, including advocates for beneficiaries, worry about the decisions a managed care company might make when it must answer to shareholders. And the problems implementing managed care in Kentucky don’t reassure them. In addition to the delayed and denied payments we’ve reported previously, there are continuing concerns about inadequate networks, especially in rural areas with few providers.  Both the state and CMS, which was recently added to the lawsuit between Coventry and Kentucky officials, appear to have learned from the Kentucky catastrophe.  The agency imposed several conditions on the KanCare waiver and denied or delayed some terms the state had requested. For example, the state agency must monitor the MCOs’ implementation of the care plans for beneficiaries receiving long-term care and must approve any reduction in services to these individuals. Cost savings in the long-term care program must be earmarked for expanding the number of slots available in home and community-based services (HCBS) waiver programs. The program must have an Ombudsman not affiliated with the MCOs or the Medicaid agency to address consumers’ concerns. Both the state agency and the MCOs are held accountable for achieving milestones. And Kansas will hold back $500 million of the contract payments, which the MCOs must earn by reaching its goals for savings and health outcomes.

Do you think these precautions will resolve the concerns of providers and beneficiaries’ advocates?