Lawmakers were told last week that managed-care Medicaid has helped save Kentucky taxpayers $50 million in its first six months. That's good news.
Lawmakers were also told that one of the three companies the state hired to manage Medicaid has already lost $50 million on the deal, which is not so good.
If investor-owned insurance companies are losing money on Kentucky Medicaid contracts, they will flee as soon as the contracts end and others will be reluctant to compete for Kentucky's Medicaid business.
It's critical for the Beshear administration, the managed-care companies and Kentucky's medical community to keep working out the bugs.
Anyone who wants to understand the challenges should study U.S. Senior Judge Karl Forester's opinion issued last week, along with an injunction that, for now, will protect Medicaid recipients from being, in his words, "thrown under the bus."
Medicaid is a federal-state program for the poor, elderly and disabled. About 70 percent of the funding in Kentucky comes from the federal government; the state is responsible for the rest.
Kentucky, like 36 other states, has turned over at least part of the management of Medicaid to private companies, which now enroll more than a half-million Kentuckians. They are required to provide access to an adequate health care network.
Both the Beshear administration and U.S. Centers for Medicare and Medicaid Services, which oversees Medicaid, have insisted that it's possible to have an adequate network in Southeastern Kentucky without Appalachian Regional Healthcare.
Forester blew that assertion out of the water.
In a region desperately short of all forms of medical care, ARH with its eight hospitals and array of providers is both the safety net and health care backbone.
Coventry, one of the three managed-care organizations, moved to dump ARH, basically to protest what it says is underpayment by the state. Another of the companies, Centene's Kentucky Spirit, never included ARH in its network.
As the insurers seek to avoid paying for the sickest patients and to "cherry pick" the healthiest, Forester wrote, it's inevitable that the third company, WellCare, will also seek to dump ARH. This would make it difficult or impossible for poor people to get preventive care, resulting in more expensive and complicated illnesses. Not the way to save money or make people healthier.
Coventry and the state produced evidence that even without ARH, Medicaid recipients were no more than a 60-minute drive from a hospital or 45 minutes from primary care, as required by state regulation.
Forester, who said he drove all over Eastern Kentucky as a lawyer and federal judge in Pikeville, called the driving times calculated by Coventry "grossly incorrect and entitled to no weight."
Forester also took the state to task for considering only whether patients would be within a 45-mile radius of another hospital "as the crow flies." Forester notes that the "Cabinet objects to the characterization that its 45-miles radius is 'as the crow flies.' Technically, the Cabinet is correct. A crow could not fly in a line that straight."
Whether Forester's ruling will withstand appeal, we don't know. We do appreciate his reminder that Kentucky's "neediest of the needy" live in isolated places where winding mountain roads are just one obstacle to access to health care.
Forester also pointed out that Coventry has only two people on the ground to educate and assist 64,000 Medicaid recipients.
Forester vividly described shortcomings in Medicaid managed care. Now it's time to fix them.