Daily Independent (Ashland, KY)

May 14, 2013

State’s managed care system drawing complaints

By RONNIE ELLIS
CNHI News Service

FRANKFORT — Kentucky’s change to a managed care system of delivering Medicaid services continues to rile lawmakers even though they’re the ones who demanded cost-savings measures for the health care system for the poor and disabled.

Rep. Bob Damron, D-Nicholasville, vowed Tuesday to lead a legislative revolt if the administration of Gov. Steve Beshear and Medicaid Commissioner Lawrence Kissner are unable to resolve complaints about late payments from the managed care organizations (MCOs) to medical providers by January.

“I want to put the cabinet (for Health and Family Services) on notice,” Damron told Kissner during a meeting of the Administrative Regulations Review Subcommittee. “that if you don’t get this worked out by next Jan. 1, you’ll be under directives from 138 members of the legislature.”

He wasn’t alone.

Rep. Johnny Bell, D-Glasgow, a co-chair of the subcommittee, complained of calls he gets from medical providers, especially those providing mental health services in Barren County, and said the MCOs “have destroyed — they have destroyed mental health in Barren County and Glasgow, Ky.”

Kissner, however, said managed care is driving improvements in health for Medicaid clients, saving the state money and the cabinet will ultimately resolve the complaints of providers.

Two years ago, the state faced two options in the face of spiraling Medicaid costs: it could cut reimbursement rates to providers by 35 percent to meet budget requirements or it could preserve rates while moving to a managed care system, Kissner said.

The administration and lawmakers chose the second option, but problems arose almost immediately. The state signed contracts with three companies, MCOs, paying them a contracted amount annually to serve enrolled Medicaid clients rather than paying providers fees for each individual medical procedure or service – what is commonly called a “fee-for-service” system.

But almost as soon as the system began operating, hospitals, doctors, pharmacies and others complained of late payments, sometimes for as much as eight or nine months.

The 2013 General Assembly passed a bill sponsored by House Speaker Greg Stumbo, D-Prestonsburg, to establish a grievance review system of those complaints through the Department of Insurance. But Beshear vetoed the bill while at the same time saying he recognized the problem and was implementing the aims of the bill.

Those, Beshear said at the time and Kissner reaffirmed Tuesday, include meetings with every hospital and provider in the state to go “line by line through their accounts receivable.”

At the time of his veto, Beshear displayed charts indicating hospitals often claimed unpaid amounts they never expected to receive, comparing it to the difference between an initial hospital bill versus the amount the hospital agreed to be paid by a private insurance company.

In one example, a hospital showed $15 million in unpaid claims but never expected to be paid more than $5 million. In other cases, some providers failed to file actual claims for portions of bills it claimed were delinquent.

Kissner said Tuesday meetings between the MCOs and providers continue and he expects the problems and disputes to be resolved by January, Damron’s deadline.

None of that, however, satisfied Damron, Bell and some other members of the subcommittee. They declared a regulation sought by the cabinet deficient after Kissner declined to accept an amendment proposed by Damron.

Damron wanted to require MCOs, specifically one of them, CoventryCares, to utilize criteria for mental health services called “interqual” by many providers nationally. CoventryCares uses criteria by MH Net, an organization which determines which medical procedures or services are “medically necessary.”

But Damron said MH Net is owned by CoventryCares and therefore is “not at arm’s length” from CoventryCares.

Company representatives testified by speaker phone that the criteria are used in several states and are designed specifically for mental health services. But they are guidelines, the company representatives said: ultimately decisions are made by clinical physicians.

Under the administrative regulation process, the amendment could not be considered unless the cabinet agreed to it and Kissner declined. That prompted the subcommittee to declare the regulation “deficient.”

Under Kentucky law, Beshear and the cabinet can still implement the regulation which can then be overturned only by statute passed by the General Assembly next January. Essentially, that was the deadline Damron set out.

Late Tuesday the cabinet released a letter from Michael Murphy, CoventryCares CEO, to Beshear which indicated the MCO had reviewed 5,500 claims since April 1 and scheduled meetings with nearly all of the hospitals in its service network.

Accompanying the letter was a spreadsheet indicating the dates of the meetings with providers, who attended, and a breakdown of accounts receivable claimed by the hospital.

Jill Midkiff, spokeswoman for the cabinet, said the letter and spreadsheet will be shared with lawmakers, including those on the Administrative Regulations Review Subcommittee.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.