Study finds Medicaid managed care works, even with expansion; providers still struggle with it, prompting legislation

By Melissa Patrick
Kentucky Health News

After an additional 400,000 Kentuckians signed up for Medicaid under health reform in 2014, it wasn’t certain that the Medicaid managed-care system started in late 2011 could handle them, but a recent study found it managed quite well.

The study, in three annual stages, looked at the impact of managed care on health care access, quality, costs and health outcomes in Kentucky between 2010-13. It was conducted by the Urban Institute, the University of Kentucky and Georgia State University. It was funded by the Foundation for a Healthy Kentucky.

“Our aim was to foster candid conversations about this important transition and to use what has been learned to support more effective functioning of Medicaid managed care in the commonwealth,” foundation CEO Susan Zepeda said in a news release.

Kentucky changed to managed care from a traditional fee-for-service model to save money and improve care. In managed-care systems, states pay companies a negotiated fee for each Medicaid client they handle.

The study of the first year found “significant problems,” including financial difficulties for plans, increased administrative and financial burdens on providers, and not enough oversight of the program.

The second year found that many of these issues had been resolved and noted a stronger financial position for the remaining plans, fewer provider-payment problems, implementation of case management, increased state oversight and increased patient access to care. It also found that lack of access to behavioral health services continued to be a problem.

The third year of managed care came with major policy changes. Through the Patient Protection and Affordable Care Act, Kentucky expanded Medicaid to include those with incomes up to 138 percent of the federal poverty level, which added about 400,000 people (a fluctuating number) to the Medicaid rolls. It also added several new managed-care organizations, and the nonprofit, Louisville-based Passport Health Plan expanded to the entire state.

The final study report, released Feb. 23, found that Kentucky managed the expansion “with little disruption.” The study found there was a reduction in Medicaid spending for both adults and children who had been covered for a year or more, and fewer emergency-room visits, which managed care is supposed to discourage.

The study also found reductions in inpatient hospital stays and some increases in outpatient hospital units and and community health centers. It also found increases in preventive care among adults and a reduction in avoidable hospitalizations and hospital readmissions.

Surprisingly, the research found mixed results in preventive visits for children, with one report showing a decrease in these visits, which it says “runs counter to the theoretical predictions typically associated with managed care.”

It also found mixed results for quality measures of mental health: positive results for mental health services, but a decrease in prompt follow-up following a mental-health hospital discharge for adults.

“These findings indicate both potential improvements and declines in care through 2013 under Medicaid managed care relative to the prior fee-for-service delivery system,” Genevieve Kenny, co-director of the Urban Institute’s Health Policy Center and lead researcher for this study, said in the news release. “However, because 2014 was a time of substantial change in Kentucky’s Medicaid program and in the behavioral health system, the measures tracked in this report may have changed since 2013. Moving forward, these results suggest the need for continued monitoring of enrollee utilization patterns.”

Providers are still complaining

The report said providers still complain of late payments, denial of services and increased administrative fees in the reimbursement process.

And though the second report says that many of these issues were resolved, ongoing complaints from providers prompted the Cabinet for Health and Family Services to renegotiate the managed-care organizations’ contracts last July. Those contracts are up July 1 but are eligible for four renewals.

State Sen. Ralph Alvarado, R-Winchester, a physician, says providers are still struggling with the same issues that they have had from the beginning.

“I would venture to say that things are not better for medical providers since the new contracts were signed in July, 2015,” Alvarado said in an e-mail. He said he believes Health Secretary Vickie Yates Brown Glisson “is aware of the dissatisfaction from the Medicaid provider base and she appears to be taking the necessary initial steps to begin holding Kentucky’s Medicaid insurers accountable.”

For the second year, Alvarado has sponsored bipartisan legislation (Senate Bill 20) that would allow a provider who has exhausted the internal appeals process of a managed-care organization to request an administrative appeals hearing by the cabinet. SB 20 has passed the Senate and now resides in the House Health and Welfare Committee.

House Bill 118, sponsored by House Speaker Greg Stumbo, D-Prestonsburg, is a similar bill that has passed the House and now resides in the Senate Appropriations and Revenue Committee.

Alvarado said HB 118 “has old language that will draw opposition from the cabinet. Senate Bill 20 is more of a compromise that has the approval of all stakeholders. . . . I certainly hope that House leadership appreciates the urgency and need for an MCO appeals process in Kentucky. I hope they will expedite the passage of Senate Bill 20.”

A fiscal note from the Office of the Attorney General, originally named to adjudicate the appeals in SB20, says, “According to data from the CHFS Division of Administrative Hearings, there were 62 Medicaid provider appeals between February 1, 2015, and December 16, 2015. Data from the Department of Insurance demonstrates that the year-to-date number of Medicaid prompt pay complaints for the last six months is 294.”

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