FRANKFORT — After hearing concerns from Kentucky hospitals, the state announced this week that it will delay implementation of an overhaul of the state's Medicaid program until Nov. 1.
The state announced in July that it was hiring three companies to manage care for 560,000 people on the health insurance program for the poor and disabled. The controversial move is expected to save the state $375 million during the next three years.
Managed care was scheduled to begin Oct. 1 in Kentucky.
Cabinet for Health and Family Services Secretary Janie Miller said the Kentucky Hospital Association requested the delay so it would have more time to sign contracts with the three managed-care companies. Hospitals are crucial in any managed-care company's provider network.
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"Thousands of providers have signed up with the managed-care organizations and successful readiness reviews have been conducted, but we still need the hospitals to sign contracts before we can implement managed care across the commonwealth," Miller said in a statement.
Calls left with the Kentucky Hospital Association were not immediately returned Tuesday.
Hospitals are not the only providers that have voiced concerns about the switch to managed care. A group of health care providers who advise the Medicaid program had asked the cabinet to delay the implementation, saying there were lots of questions from providers about how the new system would work.
Legislators at a recent meeting also asked the cabinet to consider delaying the switch to Nov. 1, arguing that too many snafus as the program started could spell doom for managed care down the road.
The cabinet and Gov. Steve Beshear's administration are under the gun to generate savings in the Medicaid program this fiscal year, which began in July.
Beshear moved money within the two-year budget to cover a shortfall in the Medicaid program last fiscal year. To make up the difference this year, Beshear has said he will generate enough savings through managed care and other initiatives to cover the $166 million transfer.
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 that patient needs.
The one-month delay could cost about $9.2 million in projected savings. Still, cabinet officials said the delay should not have a major effect on the program's overall budget.
"The Medicaid program is made up of many moving parts, so handling a one-month deferral in savings is very manageable," said Neville Wise, the acting Medicaid commissioner.
The state's contracts with the three managed care companies — Coventry Cares of Kentucky, Kentucky Spirit Health Plan and WellCare of Kentucky — allow the cabinet to delay the implementation to Nov. 1, Wise said.
The Medicaid budget ballooned to more than $6 billion in recent years as the economy tanked. The federal government pays for about 70 percent of the program.