Back in May, I warned that Gov. Steve Beshear's move to managed care would have a substantial negative impact on Medicaid. My concern was that it will take existing dollars away from services to pay for a layer of bureaucracy between the Medicaid department and the Medicaid providers and that the bureaucracy would sop up about 20 percent of the Medicaid budget for fees and profits. I worried that any savings would come from cutting services.
Now that the program has been implemented, things look much worse. Many Kentuckians are going to be seriously hurt.
Beshear has contracted with three out-of-state for-profit managed care organizations — Coventry Health and Life Insurance Co., WellCare Health Insurance Co. and Centene Corp. Each has formed a Kentucky corporation and each is required to have offices in Kentucky. They are contracting with service providers.
In addition, Passport of Louisville, had its contract renewed for one year. It is owned by Louisville hospitals and covers Jefferson and 15 nearby counties.
WellCare and Passport had management problems and upper levels of management were terminated. WellCare had to pay a fine of $170 million for misdeeds in Florida. All of this managed-care contracting was done unilaterally by the administration; the legislature had nothing to do with it.
Usually, a contracting process takes a year to 18 months. However, Beshear gave the MCOs 90 days to sign up providers and organize their lists of people getting services. That period was extended to Nov. 1.
Under the program, providers of Medicaid services (hospitals, primary care physicians, behavioral health care centers and others) were required to contract with each of the three MCOs. This means each provider will have three service payers to contend with instead of just one as before.
Adding to the complexity will be the need to keep track of the people who move in and out of Medicaid and between each of the companies. This will cause poor continuity of care. People will be treated later in their illnesses resulting in more expensive types of treatment.
Beshear said Medicaid managed care would create about 550 new jobs. That will create a huge surge of hiring by the companies, the service providers and the Medicaid department. MCOs need staff to keep up with all of the payment, authorization procedures and their lists of clients. Providers need staff to keep up with the three MCOs, each with their own billing, client lists and authorization methods. And, Kentucky's Department of Medicaid Services staff will go up so it can review the work done by the MCOs.
The money going to Medicaid services will be reduced because of the MCO-related bureaucracies. Worst of all, the MCOs have instituted plans to deliberately reduce the number of people allowed to access Medicaid services.
The MCOs have said they plan to eliminate computerization for a time and require paperwork instead. The theory is paperwork will slow down the authorization process from days to weeks, which will discourage some people from applying for Medicaid. Hence, a "savings."
They plan to make the authorization process more stringent, thereby denying more people access to services. More savings.
They plan to tangle up the payment processes by denying coverage for people who have dropped out of Medicaid before payments are made, causing headaches for the providers of those services, and by refusing services to people who need to get back into the Medicaid program later. That will discourage people from applying. More savings.
Previously providers and the people they served only had to deal with Medicaid. Now, people are initially assigned to a MCO which contracted with the provider treating them.
But, providers may contract with all the MCOs. When people drop out of Medicaid, they have an option to go to a different MCO. People have until next January to switch. The cost of keeping track of all this will be staggering and deducted from services.
In sum, there will now be four bureaucracies, with each sopping up Medicaid money to pay for the bureaucrats needed to keep track of everything. Where will the money for the bureaucrats come from? From services, of course. On top of that, Beshear cut the Medicaid budget by 4.5 percent in May and has set a target of saving $40 million a month under managed care.
How can he do that? By reducing services again. Nice job, Governor.