Medicaid Oversight and Advisory Committee




September 16, 2015


Call to Order and Roll Call

The<MeetNo2> Medicaid Oversight and Advisory Committee meeting was held on<Day> Wednesday,<MeetMDY2> September 16, 2015, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Representative David Watkins, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Ralph Alvarado, Co-Chair; Representative David Watkins, Co-Chair; Senator Dan "Malano" Seum; Representatives Robert Benvenuti III and Joni L. Jenkins.


Guests: David Brewer, American College of Emergency Physicians; Creasa Reed Rigsby, citizen; Garett Gillam, citizen; and Sarah Nicholson, Kentucky Hospital Association.


LRC Staff: Jonathan Scott, Cindy Smith, and Miranda Deaton.


Medicaid Managed Care Contract Update

            Lisa Lee, Deputy Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, and Tina Heavrin, General Counsel, Cabinet for Health and Family Services, testified about the Medicaid Managed Care contracts.


The managed care implementation was November 1, 2011. All managed care organizations must provide the same medically necessary services outlined in the Medicaid regulations. They must have flexibility regarding prior authorizations and payments and flexibility to create value-added services. Managed Care Organizations (MCOs) do not serve Medicaid members in long-term care facilities or 1915(c) waivers. Currently, 90 percent of the population is served by MCOs, and 10 percent of the population is enrolled in fee-for-service programs. As it relates to the budget, the individuals who are enrolled in managed care organizations account for about 69 percent of the Medicaid budget. Those being served through fee-for-service account for 31 percent of the Medicaid budget. Early in 2015, the MCO contracts were up for renewal or rebid. The department decided to rebid through a competitive bidding process in 2015, and the new contracts were signed in July, 2015. There are five managed care organizations currently serving the managed care population: Anthem, Coventry/Aetna, Humana, Passport, and Wellcare. There are many contract changes. These include: same capitation payments; one contract rather than negotiating individual requests for each MCO; state-wide coverage for all MCOs; imposing a medical loss ratio requirement; CMS mandated “risk corridor” for the ACA expanded Medicaid; HEDIS Measures Incentive Program; using specifically named national standards to determine “medical necessity”; Department for Medicaid Services will provide one form for a Member or a Provider to file an appeal with the MCO; Department for Medicaid Services will provide one form for request for Prior Authorization by the MCO; MCO credentialing of providers must follow National Committee for Quality Assurance standards (NCQA); increased access standards for behavioral health services; in order to be counted when determining whether an MCO’s network meets access standards, the provider must accept Medicaid patients; MCOs must update their on-line provider networks within 10 days of a change; mandates more aggressive involvement of MCOs when persons with severe mental illness are being discharged from mental health hospitals; penalties section was tightened up; fraud recovery requirements were improved; retro eligibility and prior authorizations were included; and there was increased oversight of services denied for medical necessity.


            In regard to the Medicaid population, Commissioner Lee said that the total current Medicaid members are 1,264,275. Traditional Medicaid members total 866,491, while expansion members total 397,784.


            In response to a question by Senator Alvarado, Commissioner Lee said the cabinet has met with the MCOs. When the contracts go into place, the contract with Coventry will cover Aetna and the same provisions will be in place. The merger will not affect the contract.


            In response to a question by Senator Alvarado, Commissioner Lee said, regarding the HEDIS measures, there are some measures like the Children’s Health Insurance Reauthorization Act that have certain quality measures. The way the HEDIS measures will work is that the department and the MCO will work together to identify specific measures that they want to improve over the course of the year. Once the MCOs improve those measures, they can earn funds one of two ways: by improving their own measurements, or by improving measurements set at a national level.


            In response to a question by Senator Alvarado, Commissioner Lee said each region must have at least half of the behavioral health providers who are enrolled with the department in that region in network.


            In response to a question by Senator Alvarado, Commissioner Lee said changes in the Medicaid program are very difficult. The department is always open to changes that are going to improve the program. When looking at a change in the program, there are usually five questions that have to be asked: how will it impact the member; how will it impact the provider; how does it fit in the managed care organization contract; how does it impact the system; and how will it impact the budget. Any changes that would improve the program must be sure the needs of the population are met while being fiscally responsible should be looked at.


            In response to a question by Representative Jenkins, Commissioner Lee said the Department for Medicaid Services collaborates with the Department for Behavioral Health to make sure that the members are being served as we address the needs of the population suffering from substance abuse in this state. Expanding Medicaid allows the department to cover entire families who may have substance use issues or need treatment. The Department for Behavioral Health continually meets with the department to be sure they are analyzing services and addressing where needs and gaps are. The Department for Behavioral Health also meets with the MCOs on a routine basis to look at their delivery systems, the provider networks, and how services are delivered.


            In response to a question by Senator Seum, Commissioner Lee said the Department for Medicaid Services requires the Managed Care Organizations to submit on a monthly basis all of the providers in the network, and that information is reviewed to be sure the members assigned to the MCO’s have adequate access to providers. There is adequate network access, but there are gaps throughout the state that need to be worked on.


            In response to a question by Representative Watkins, Commissioner Lee said sometimes it is hard to quantify savings. When implementing managed care the Cabinet was tasked with saving $1.3 billion in both federal and state funds and that was accomplished. They were also faced with cutting provider reimbursement across the board at about 30 percent. The managed care organizations have been able to do several things that the Department has not. For example, the case management services are quite valuable. They are able to provide case managers to individuals who have complex needs and help them manage their care to be sure they are utilizing services appropriately.


In response to a question by Senator Alvarado, Commissioner Lee said medical necessity reviews are being implemented when services or claims are denied. In the contract there is specific emphasis on ER services. Those are things that are going to be looked at when denials are made.


            In response to a question by Representative Benvenuti, Commissioner Lee said as far as the MCOs charging or not charging co-payments, it may not be to entice members to join their organization. It is more about the providers. The federal government mandates how much can be charged to Medicaid members for co-payments and how much out-of-pocket can be paid. They are limited to five percent of their income per year out-of-pocket. When a co-pay is charged, the amount of co-pay has to be deducted from the claim when it comes in from the providers. If a member does not pay that co-pay, then the provider loses that money. To reduce some of the administrative burdens on the providers, some of the co-payments are not being applied because it does penalize the provider a bit.


            In response to a question by Representative Benvenuti, Commissioner Lee said the Medicaid members do not have tax credits. It is for the qualified health plans on the Exchange.


            In response to a question by Representative Benvenuti, Commissioner Lee said the Medicaid program is vital to the state and the 1.2 million members relying on it. As a group, the state needs to come together and figure out how to make is sustainable going forward and put every option on the table to see what can be done. She noted that everything the department does has to be medically necessary and federal guidelines must be followed. When it is determined that medical necessity is not met in retro reviews, the provider should have an opportunity to submit any supporting document to show why he believed that the service rendered met medical necessity.


            In response to a question by Representative Jenkins, Commissioner Lee said that 138 percent of the poverty level is about $18,000 per year for one person, depending on the family size. Representative Jenkins said the state needs to be careful when talking about co-pays for this vulnerable population that are probably also dealing with mental health or behavioral health issues. Representative Benvenuti said that co-pays should be considered, even a model with a vanishing deductible.


In response to a question by Representative Watkins, Commissioner Lee said that Medicaid does cover smoking cessation products and counseling services, but Medicaid does not reimburse for exercise programs. Some of the managed care organizations work with members to provide education, and they can provide incentives for gym memberships.


Long-Term Care Presentation

            Will Saunders, CEO, AllyAlign Health and Alicia Heazlitt, Director of Corporate Development & Innovation, Signature HealthCare presented information on long-term care. Mr. Saunders said Signature HealthCare owns 26 nursing facilities in Kentucky, and is the largest nursing facility provider in the state. Signature takes its role as the skilled nursing facility for many Kentuckians very seriously, and has basically been discussed as a large provider that wants to invest more in its patient’s care for the most vulnerable folks in the state. Signature has launched a Medicare Advantage Plan, a special needs plan for institutional residents who are institutionalized for more than 90 days in a nursing facility. The plan will go to market October 1, 2015. They are contracted with CMS. Most of the population are dually eligible so Medicaid covers their per diem for the nursing facility. Medicare covers hospitalization, drugs, physicians and the total cost of care that surrounds that patient. The coordination model and the way the company will be successful is very simple. Much of the discussion around managing the care of patients as a provider sponsored plan will be successful if care is coordinated better than it is today, investing in the physicians, nursing facility staff and taking care of the patients in the facility. At this point, they are a Medicare only plan. They are insuring folks for their Medicare benefit and that plan can be leveraged with a patient’s Medicaid benefit as well at the right time. They are launching in the Louisville and Lexington markets on January 1, 2016 and should expand further into Kentucky once the success is proven.


            In response to a question by Senator Alvarado, Mr. Saunders said once admitted and a local level of care assessment has been passed, then Medicaid pays the daily cost of the facility. It covers nursing, meals, and if dually eligible, Medicaid covers everything. There is typically a spend down process. That per diem is viewed as a fixed cost once someone is in the institution.


            In response to a question by Senator Alvarado, Mr. Saunders said under a Medicaid special needs plan, additional benefits are allowed to be offered that Medicare does not cover. There are a specific set of enhanced services for these institutionalized vulnerable patients. Also, when you have the premium for Medicare and Medicaid together, there is also a Dual Eligible Special Needs Plan, a plan endorsed by both the State and Federal Government. There is more availability to invest in the care team and other services, and potentially offer premium reduction over time.


In response to a question by Senator Alvarado, Mr. Saunders said that by contract with CMS they are only allowed to market their program to institutionalized folks in their facility. By definition, they are not marketing themselves, or offering individual insurance or small group insurance.


            Representative Watkins noted that at a future meeting he would like to have representatives from the MCOs to answer questions from the committee.


            The meeting was adjourned at 11:20 a.m.