Beshear says Medicaid managed care program saving money, improving health

FRANKFORT — Six months after unveiling a plan to quickly resolve payment disputes between medical providers and Medicaid managed-care companies, Gov. Steve Beshear said the program is working.

"In both health outcomes and financial savings, Medicaid managed care is succeeding in Kentucky," Beshear said Thursday at a Capitol news briefing.

In April, Beshear vetoed a bill designed to help hospitals and doctors receive prompt payment from three Medicaid managed-care companies, saying it could have unintended consequences. The proposed law had the backing of many in the medical community but the legislature did not have time to consider overriding the veto.

Instead, Beshear implemented his own plan to address complaints by health providers. As a result, complaints are down, more payments are processed quickly and health outcomes continue to improve, said the Democratic governor.

Mike Rust, president of the Kentucky Hospital Association, was not immediately available for comment.

Beshear noted that next month marks the two-year anniversary of managed care in most parts of Kentucky, a practice now used in 47 states.

In November 2011, Kentucky moved 560,000 Medicaid patients from a fee-for-service system to managed care to help close a $142.4 million shortfall in the state's two-year Medicaid budget. The only other option, Beshear said, was to make 30 percent cuts across the board to all Medicaid providers.

Three companies were contracted to serve most of the state's Medicaid population outside the Louisville area — Coventry Cares, Kentucky Spirit and Wellcare.

The managed-care program has had its problems.

In addition to complaints of untimely payments by medical providers, Kentucky Spirit stopped offering services to more than 124,000 clients in July. After the company pulled out, the state moved Kentucky Spirit's clients to Coventry and WellCare. A legal battle continues between the state and Kentucky Spirit on whether the managed-care company breached its contract.

Beshear maintained Thursday that the system is working but acknowledged there are still critics.

"There will still be a few — be they hospitals or individual medical providers — who will say the program doesn't work, but it's tough to refute the facts," he said.

Beshear said budget analysts anticipated in November 2011 that the state could expect to save $1.3 billion over two years with managed care.

"To date, Kentucky is still on target to meet that savings amount," he said, noting that $390 million of that amount is state money. The rest is federal Medicaid matching funds.

More importantly, said Beshear, health outcomes have improved, particularly those dealing with preventive care.

Those improvements, Beshear said, include a 93 percent increase in smoking-cessation consultations, a 33 percent increase in flu vaccines for children, a 17 percent decrease in amputations, often due to untreated diabetes, and a nearly 11 percent decrease in CT scans used to provide images of specific areas of the body. The numbers of electrocardiograms and mammograms have also increased.

To reduce complaints from health providers and speed-up payments, Beshear moved oversight of complaints against managed care organizations from the Department for Medicaid Services to the Department of Insurance. The insurance department has expedited the process by providing online forms for managed care organizations, Beshear said.

Other steps taken by Beshear included mandating that every managed-care company meet with every network hospital to review each provider's records of bills and payments.

Hospitals participating in those discussions collectively claimed bills of $346.6 million, Beshear said. But after the meetings, they agreed that $59 million of that figure already had been paid and $26.5 million had never been submitted for payment.

Kentucky now has about 700,000 people in Medicaid managed care. Beshear said he is confident the program can take on additional recipients expected under the new federal health care law.