The Kentucky General Assembly has taken an important step in passing, with strong bipartisan support, legislation that addresses a critical issue involving Kentucky's Medicaid managed care program.
Kentucky began a statewide Medicaid managed care program just over a year ago, creating a system under which three private organizations provide health coverage for more than 550,000 Medicaid patients. Since then, Kentucky hospitals have documented several significant issues with the implementation of the system by these out-of-state corporations.
The legislation enacted in the closing days of the 2013 General Assembly, House Bill 5, is an important first step toward providing meaningful oversight of the system and requiring the private managed care organizations, known as MCOs, to pay the millions of dollars they currently owe Kentucky hospitals for treatment provided to Medicaid patients.
In short, the legislation simply requires the MCOs to follow the same prompt payment laws as all other health insurers in Kentucky, and it requires the Kentucky Department of Insurance to enforce those laws with respect to MCOs as it does with private insurers.
Earlier in the session, we shared information about the impact that the MCOs' payment practices were having on hospitals, which are essential care providers for Kentuckians in every part of the state. According to provider reports, MCOs frequently are not paying hospitals on time, and payments are taking more than a year in some cases. This has placed a significant financial strain on hospitals, forcing some to lay off employees.
Hospitals aren't the only providers facing such challenges. Recent news accounts have detailed similar issues for public health departments and mental health centers.
And Kentucky Auditor Adam Edelen, in releasing his statewide audit of the commonwealth last week, noted several issues with the managed care program, including those associated with payment of claims. As the auditor noted: "We can outsource the functions of Medicaid, but we cannot outsource the oversight. There are more people on Medicaid than there are children in our public schools. We have to get this managed care system right."
The General Assembly got it right in passing HB 5 with a vote of 99-0 in the House and 37-0 in the Senate. This legislation is critical to the financial health of Kentucky hospitals and their 79,000 employees. We strongly urge Gov. Steve Beshear to allow it to become law.