Program Review and Investigations Committee


2015 Interim


<MeetMDY1> August 13, 2015


Call to Order and Roll Call

The<MeetNo2> Program Review and Investigations Committee met on<Day> Thursday,<MeetMDY2> August 13, 2015, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Senator Danny Carroll, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Danny Carroll, Co-Chair; Representative Martha Jane King, Co-Chair; Senators Tom Buford, Perry B. Clark, Christian McDaniel, and Dan "Malano" Seum; Representatives Leslie Combs, Tim Couch, David Meade, Terry Mills, Ruth Ann Palumbo, Rick Rand, and Arnold Simpson.


Legislative Guest: Representative Jim Gooch Jr.


Guests: Lisa Lee, Commissioner, Neville Wise, Deputy Commissioner, Department for Medicaid Services, and Tina Heavrin, General Counsel, Cabinet for Health and Family Services.


LRC Staff: Greg Hager, Committee Staff Administrator; Chris Hall; Chris Riley; Colleen Kennedy; Van Knowles, Jean Ann Myatt, William Spears; Shane Stevens; Joel Thomas; Ashleigh Hayes and Laura Tapp, Graduate Fellows; and Kate Talley, Committee Assistant.


Minutes for July 9, 2015

Upon motion by Senator McDaniel and second by Senator Seum, the minutes for the July 9, 2015, meeting were approved by voice vote, without objection.



Presentation on Kentucky Medicaid Managed Care

Ms. Lee said that the Kentucky Medicaid Managed Care program was implemented on November 1, 2011. According to the contracts, each managed care organization (MCO) has to provide the same medically necessary services outlined in the Medicaid regulations. The MCOs do have flexibility regarding prior authorizations and payment to providers. MCOs can create value added services, such as a second dental cleaning, that will not be used as a factor in calculating their capitation payment in the future. MCOs do not serve members in long-term care facilities or in 1915(c) waivers.


After a competitive bidding process, in July 2015 contracts were signed between the Department for Medicaid Services (DMS) and five MCOs. These are the same five MCOs that were serving Medicaid members prior to the rebid; all five operate statewide.


Several contract changes were made based on feedback from providers. All MCOs now have identical contracts and a medical loss ratio requirement was imposed. All MCOs receive a per member, per month capitation payment from DMS for members assigned to them. The MCOs have to spend at least 85 percent of the capitation payments on services that directly benefit the member. If the MCOs do not meet the medical loss ratio requirement, the MCO must return a portion of the capitation payment to DMS. A risk corridor for the expansion population was mandated by the Centers for Medicare & Medicaid Services (CMS). This means that if the MCOs do not spend a certain percentage of the money they receive for the expansion population, they have to return that money to CMS. If they spend more money than they received, they will receive additional funds from CMS.


The new contracts also included new HEDIS [Healthcare Effectiveness Data and Information Set] incentive measures improve quality measures in the delivery of services. All MCOs must now use the same medically necessary criteria to determine if services meet “medical necessity” such as prior authorizations. DMS is working to provide by January 1, 2016 one form for members and providers to file an appeal with the MCOs. DMS is also working to provide one form by January 1, 2016 requesting prior authorization by the MCOs. All MCOs must now follow the National Committee for Quality Assurance standards when credentialing providers.


The new MCO contracts have increased access standards for behavioral health services. All MCOs must have at least half of their providers serving behavioral health needs in their networks in each region and a minimum number of such providers. In order for an MCO network to be counted as meeting access standards, their providers must accept Medicaid patients. MCOs must update their online provider networks within 10 days of adding or removing a provider. MCOs must be more aggressive in finding outpatient services for any individual discharged from a mental health hospital.


Additional contract changes include a strengthened penalty section and improved fraud recovery requirements. Oversight of services has been increased for denied claims due to medical necessity.


More than 1.1 million Medicaid members are enrolled in an MCO, 118,000 members are enrolled in the fee-for-service program. There are nearly 866,000 traditional Medicaid members, nearly 398,000 are expansion members who joined in January 2014. WellCare has the most members enrolled at nearly 400,000; Anthem has the least amount of members enrolled.


In 2011, there was one Medicaid MCO, and 80 percent of Medicaid members were enrolled in the fee-for-service program. In 2015, 90 percent of the Medicaid population was enrolled in a MCO. The 10 percent in the fee-for-service program account for 31 percent of the Medicaid budget.


In response to questions from Senator Carroll, Ms. Lee said that one way the cabinet has standardized the method for prior authorizations is to mandate that all MCOs must use the same software when determining whether to grant a prior authorization. The number of times a request for a prior authorization must be made for the same medical necessity differs depending on the situation. MCOs have different requirements for prior authorization decisions.


In response to questions from Senator McDaniel about the risk corridor, Ms. Lee said it will no longer be a factor when a 90/10 ratio is achieved. Mr. Wise noted that the risk corridor will no longer be a factor after January 2017. At that time, when an MCO spends over 100 percent, they will not be reimbursed.


In response to questions from Senator Buford, Mr. Wise said that DMS will learn in December 2015 whether a clawback amount will be received. If clawback funds are available, they will be returned to the federal government.


In response to a question from Senator Carroll, Ms. Lee said DMS does not intervene in individual cases in which an authorization based on medical necessity has been denied.


Senator Carroll described a case in which a MCO does not cover Quillivant, a drug used to treat ADHD. Ms. Lee said DMS is aware of this, has communicated with the MCO, and is monitoring the situation. She noted that she could talk with the provider.


Senator Carroll commented that the provider maintains that an alternative medication the MCO covers is less effective and that it may be that more claims are being denied in an effort to save money.


In response to questions from Senator Seum, Ms. Lee said forums are being set up at which providers and MCOs can communicate about problems such as late payments to providers. Penalties are now in place for improperly handled claims. Specific examples of problems are needed from individual providers.


In response to a follow-up question from Senator Seum, Ms. Lee said that the percentage of Kentucky’s population enrolled in Medicaid is about the same as that of other states.


In response to a description by Senator Clark of a problem a provider is having with an MCO, Ms. Lee said DMS staff will talk with the provider concerning his questions.


In response to a question from Representative Palumbo, Ms. Lee said $2 billion has been spent since Medicaid managed care has been implemented, which creates jobs. Kentucky has one of the lowest unemployment rates.


Representative Mills and Senator Carroll complimented DMS on its prompt assistance with problems that arise with the MCOs.


Senator Carroll commented that decision-making is being taken away from local physicians and that dealing with the MCOs is still difficult. He would like to see DMS exercise more oversight for individual claims instead of leaving it to the MCOs.


In response to a question from Representative Couch, Ms. Lee said the Medicaid program continues to change and adapt even though private insurance for citizens not enrolled in Medicaid may be prohibitively expensive.


Representative Couch commented that government mandates may be one reason private insurance is as expensive as it is.


In response to a question from Representative Combs, Ms. Lee said $1.3 billion has been saved in the Medicaid budget by implementing managed care. MCOs allow for direct service between case workers and members that DMS does not have the staff to provide.


In response to a question from Senator McDaniel, Ms. Lee said substance abuse treatment has been a covered benefit since January 2014. The provider network for treatment has been expanded and all plans now cover behavioral health services.


In response to a question from Senator Buford, Ms. Lee said Medicaid now covers Nalaxone for those who have overdosed. Policies have been changed to ensure such patients also receive therapies.


Senator Clark said that these should be an examination of why legislation has not resulted as expected in the provision of CBD Oil for children with epilepsy and autism.


The meeting adjourned at 11:00 AM.