Politics & Government

Lawmakers question state's readiness for Medicaid managed care

FRANKFORT — State lawmakers Thursday questioned whether the state has the resources and expertise to oversee moving the $6 billion Medicaid program to private, for-profit managed care companies.

Sen. Jimmy Higdon, the chairman of the Interim Committee on Program Review and Investigations, told Cabinet for Health and Family Services officials a recent report by the committee's staff shows ongoing problems with Medicaid's oversight. The Medicaid program provides health care for 820,000 low-income Kentuckians.

Higdon, R-Lebanon, said the reports "quite frankly, have us concerned that the cabinet is not fully prepared" to monitor or implement managed care by July 1. The state has said it will sign contracts with managed care companies by July 1, which is fewer than 30 days away.

Committee staff reviewed three different committee reports from 2004 to 2007 to determine whether any of the recommendations had been followed. They found the state Medicaid staff did not perform enough analysis to determine whether there were savings in the current program and the staff has not been rigorous in monitoring waste, fraud and abuse.

But cabinet officials, in a response to the report and in testimony Thursday, told state lawmakers they believe they have the expertise to negotiate managed care contracts. They will step up monitoring once those contracts are in place, officials said.

Neville Wise, acting Medicaid commissioner, said the cabinet will hire an independent contractor to do part of the monitoring of managed care contracts. Some current Medicaid staff members will be moved to positions to oversee and monitor as the state moves to managed care.

It is not clear whether there will be one managed care company that will oversee the entire state or if multiple companies will handle specific geographic areas. That will be announced after July 1.

The cabinet is negotiating those contracts. Currently, the state pays providers a set fee for a service. The state is moving to managed care, which could include paying a health care organization a set price per patient. Democratic Gov. Steve Beshear has pushed for managed care, saying it could generate millions of dollars in savings.

But other legislators questioned whether the cabinet will be ready to launch managed care by July 1, the beginning of the fiscal year. That was a key issue in the battle over the state budget earlier this year in the legislature.

Beshear proposed moving $166 million from next year's Medicaid budget to this year's budget to make up for a hole in Medicaid. Beshear said he could make up the $166 million through savings, including savings generated from managed care.

Senate President David Williams, R-Burkesville, who is also running against Beshear in the November election for governor, questioned whether Beshear could generate $166 million in savings.

Wise said that because of the ongoing negotiations, it is difficult to say whether the managed care programs would be ready to go on July 1. Part of the criteria for determining what companies will get the contract will be how quickly they can get a managed care program in place, Wise said.

The cabinet told the legislature earlier this year it planned on having the contracts signed on July 1, but did not say the switch would be complete by July 1.

Sen. Vernie McGaha, R-Russell Springs, also questioned how the cabinet could determine whether there will be savings using managed care programs. There have been questions on whether the state's only managed care program — Passport Health Plan in Louisville — has actually generated savings.

Passport was the subject of a scathing audit by state Auditor Crit Luallen in November. One of the findings was that the cabinet could not determine whether Passport actually saved money.