Overhaul of Kentucky Medicaid program takes effect Nov. 1

Move expected to save $375 million in 3 years

bmusgrave@herald-leader.comOctober 29, 2011 

Gov. Steve Beshear spoke at the podium during an unveiling event at Woodford Co. High School in Versailles, Ky., on Wednesday, Aug. 24, 2011. Photo by Pablo Alcala | Staff

PABLO ALCALA | STAFF

FRANKFORT — An overhaul of the state's Medicaid program is set to go live on Tuesday, state officials said this week.

Earlier this year, the state entered into contracts with three managed-care companies and continued a contract with Passport Health Plan to serve more than 560,000 people on the state-federal health plan for the poor, aged and disabled. The move, expected to save $375 million over the next three years, was initiated to keep costs down in the more than $6 billion program.

So far, 68 acute-care hospitals, including a handful of out-of-state hospitals, have signed on with at least one of the three managed-care companies, said Jill Midkiff, a spokeswoman for the Cabinet for Health and Family Services. That number does not include hospitals that have signed on within the last week, she said.

Excluding the Louisville area, which is served by Passport, there are 96 acute-care hospitals in Kentucky.

In Lexington, hospitals that have signed a contract with a managed-care company include Central Baptist Hospital and UK HealthCare, Midkiff said. St. Joseph Health System has not yet signed a contract with a managed-care company, but it plans to before Nov. 1, hospital spokesman Jeff Murphy said Friday.

"A significant number of hospitals have signed in the last couple of weeks, and we anticipate that these numbers will continue to grow," Midkiff said. "The (managed-care companies) have also agreed to pay the other acute-care hospitals as out-of-network providers. So, if any member wants to go to another hospital and the hospital agrees to it, the member can receive treatment at out-of-network rates."

The Cabinet for Health and Family Services, which oversees Medicaid, announced last month that it was delaying implementation of managed care from Oct. 1 to Nov. 1, citing concerns from the state's hospitals. The state's contracts with the three managed-care companies — Coventry Cares of Kentucky, Kentucky Spirit Health Plan and Wellcare of Kentucky — allowed the cabinet to delay implementation until Nov. 1.

During an interview with the Herald-Leader editorial board earlier this month, Gov. Steve Beshear said the switch to managed care will go forward as planned on Tuesday.

Delaying the move by another month could have cost the state about $9.2 million in projected savings, according to the cabinet. The current fiscal year's budget relies on projected savings in the Medicaid program.

The state now pays a set fee for services provided to each Medicaid patient. By moving to managed care, the state will pay companies a set amount per patient, regardless of how many procedures or services the patient needs.

Passport Health Plan has been serving Jefferson and the surrounding 15 counties for 14 years using a managed-care model.

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