Gov. Steve Beshear announced Friday he had vetoed a bill to expedite disputes between Medicaid managed care companies and providers over prompt payment of claims.
However, he will implement a plan to comply with the intent of the bill.
House Bill 5, sponsored by Speaker Greg Stumbo, D-Prestonsburg, would require such disputes to be resolved by the Department of Insurance rather than the Department of Medicaid Services.
Beshear said other language in the bill was “expanding the reviews by DOI beyond the prompt pay disputes” and might conflict with contracts signed by the managed care companies (MCOs) and providers.
But Beshear said he “understands and appreciate the intent behind the bill” and agreed complaints about prompt payment need to be addressed.
“While we must address the prompt-pay issue,” Beshear said, “we must also address the resistance by some providers and patients to the change in culture that is required” by managed care.
So, while he vetoed the bill, the governor said he will implement the main intent of House Bill 5 by giving the Department of Insurance the authority to resolve the prompt payment disputes. DOI already provides such a process for private insurers.
Other parts of Beshear’s five-point plan will convene meetings between the three MCOs and hospitals to go over disputed accounts, the results of which Beshear said will be made public, and DOI will conduct targeted audits of the MCOs by August.
On top of that, the state will conduct education forums for the MCOs and medical providers and physicians from the University of Kentucky and University of Louisville will consult with hospitals to improve emergency room use.
In November 2011, the state moved most of its Medicaid patients to managed care delivered by three MCOs: Kentucky Spirit, Coventry and WellCare (a fourth, Passport, was already serving the Jefferson County region with few complaints).
Prior to that, providers were paid on a fee-for-service basis for each individual medical procedure or test. That drove up costs. Under managed care, the MCOs are paid a per-capita amount to provide care for patient-clients and negotiate contracts with providers to provide medical care to those clients.
Almost immediately providers such as hospitals complained to lawmakers that the MCOs were delaying payments for services for months and threatening providers’ cash flow and in some cases even their solvency.
That produced an outcry from lawmakers and prompted Stumbo’s bill, which passed both chambers of the General Assembly without a dissenting vote.
Stumbo issued a statement after Beshear’s announcement saying the unanimity of lawmakers’ votes “shows that a real problem exists.”
He said he was pleased Beshear had directed DOI and the Cabinet for Health and Family Services, which houses Medicaid, to correct the problems, calling it “a great positive effect.”
But, said Stumbo, “We will continue to monitor the situation and every lawmaker will talk with their local providers to see if the new approach is working.”
Senate President Robert Stivers, R-Manchester, said the Senate is committed to helping Beshear solve the problems.
“It is well known that the state needs to get the kinks out of the implementation of managed care,” said Stivers in a statement released through his press office. “Payment for providers needs to be addressed because they offer the health care we need.”
Michael Rust, President of the Kentucky Hospital Association, said hospitals would have preferred Beshear sign the bill, but he called the alternative plan to move disputes to DOI a “positive step.”
He also said hospitals realize manage care is “here to stay.”
That was part of Beshear’s message. He began his press conference by saying managed care is necessary to provide better and preventive care for patients at a reasonable cost to the state.
“Kentucky is not now and not ever returning to the obsolete, costly and unfettered fee-for-service model,” he said.
Beshear showed reporters several charts showing managed care has reduced costs and provided better care. Since implementation of managed care, costly emergency room visits are down, far more preventive services have been delivered and immunizations and other preventive procedures are up while overall costs are down.
He also displayed charts indicating hospitals were showing millions more in unpaid claims than they ever expected to be paid. Beshear compared it to the amount on a hospital bill versus the amount the hospital had agreed to accept from a private insurer.
In one case, a hospital had billed more than $15 million — the amount it said hadn’t been addressed by the MCOs — but in fact never expected payment of more than just a little over $5 million. And of that, $2.1 million had actually been paid to the hospital and another $1.8 million in claims had never been filed.
Another example Beshear provided: under managed care, emergency rooms are paid a $50 “triage fee” for patients who come to the emergency room but do not require emergency care. But out of 643,839 emergency room claims by hospitals in the past year, only one was for the triage fee.
Rust said he didn’t have any specific data on that but said hospitals are required by federal law to screen such patients for serious medical problems. A patient may say he has a headache but hospitals must do expensive tests to ensure it’s not caused by serious conditions such as an aneurism.
“If (the tests indicate) the patient only has a headache and just needs a couple of Excedrin, the hospital gets $50,” Rust said. “But they are running up several thousand dollars’ worth of charges which we feel we should get paid for.”
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at firstname.lastname@example.org. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.