By Ronnie Ellis
CNHI News Service
Two years after implementing a managed care Medicaid delivery system, Gov. Steve Beshear says complaints from medical providers about overdue accounts were overstated or have largely been resolved, and the program is on track to save $1.3 billion.
In November 2011, Kentucky faced a Medicaid shortfall of $142.4 million and Beshear ordered the moving of 560,000 Medicaid patients from a fee-for-service model to a managed-care system where companies bid for the right to serve patients at a per-person annual cost while offering more preventive services to hold down long-term costs.
Critics said the administration tried to make the change too quickly and almost from the beginning, medical providers — hospitals, pharmacies and others — complained the Managed Care Organizations that won the bids to manage the system were slow to pay for medical services.
The Madison County Health Department, which operates a home-care agency and previously ran the Madison County Schools’ school nurse program, in recent years cited late payments by managed care organizations in its financial reports.
On Thursday, Beshear conceded the change was rapid.
“That’s probably true. We did do it quickly,” Beshear said. “Why? Because we had to,” referring to the $142.4 billion shortfall. The only alternative, he said, would have been to cut provider rates by 30 percent and to cut services to patients.
But last April in the face of provider complaints and howls from legislators, Beshear developed an action plan to investigate and respond to the complaints. On Thursday, he said most of those issues have been resolved, and the state is on track to save $1.3 billion.
“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,” Beshear said.
The days when medical providers made more money by performing more services and charging fees for each are over, he added.
“We expect more from our tax dollars, and we expect meaningful health management, not just disconnected treatment,” Beshear said.
Part of Beshear’s plan was to have the Department of Insurance which regulates private insurance companies investigate and review complaints.
He said Thursday that DOI received 1,935 complaints about MCO late payments or denial of payment and 67 percent are either closed or nearly closed, usually after 45 days. Only 41 percent of the complaints were found to be justified, he said. Still, DOI has recovered $233,518 from MCOs in the form of payments to providers of disputed claims.
In total, hospitals claimed $346.6 million of accounts receivable from the MCOs, but after meetings in which both providers and MCOs reviewed all claims, only 2 percent of that amount — $7 million — was actually owed to the hospitals.
“They know full well they won’t get that billed amount — they never have, even before managed care” Beshear said. “So for them to continue to use these figures as money they are owed is disingenuous at best and at worst downright deceptive.”
Of the remaining amount, some bills had been double-submitted, some listed the full amount when it had been partially paid, and many were the total amount billed by the provider rather than the contracted amount it had agreed to accept from the MCOs. (This is similar to private insurance in which a covered patient may receive a bill from the hospital for an amount much larger than it has agreed to accept from the insurance company.)
As an example, Beshear said Murray-Caldwell Hospital in western Kentucky reported overdue bills of more than $2.2 million to its MCO, Wellcare. But under the old, fee-for-service model, the state would have paid only 22 cents on the dollar for those claims. The best the hospital would have been paid under the old system, Beshear said, was $272,000.
But Wellcare paid the hospital $288,886 for the claims while an additional $44,000 in claims was never submitted.
“We didn’t take sides in this,” Beshear said. “We put the MCOs under the microscope, too.”
DOI performed a type of performance audit of the MCOs which identified several common concerns, including billing errors, which the examination found MCOs did not adequately explain to providers. As a result, the state sent two of the MCOs, Wellcare and Coventry, corrective action plans to address those problems.
“These are not unusual concerns,” said DOI Commissioner Sharon Clark. “The findings are not out of the ordinary compared to the private market.”
Beshear said he has been meeting with lawmakers, sharing his findings, and they are “much more comfortable” with how the system is operating.
The managed-care system has reduced the number of emergency room visits by Medicaid patients, the most expensive form of health care and a large problem in Kentucky and has increased the number of preventive services to Medicaid patients.
Flu vaccines for children are up by a third, and there have been dramatic increases in smoking cessation consultations, mammograms, heart screenings and a decrease in amputations and CT scans.
In short, Beshear said, Medicaid patients are healthier, and the state has spent less money for their care under managed care.
Michael Rust, president of the Kentucky Hospital Association, said, “We know managed care is here to stay. But what we’re looking for is to make the system work. There are some remaining issues, particularly with some of the older outstanding claims, that we would like to work out.”
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.