KHI News Service

Budget cuts forcing changes at KHPA

Situation is "untenable," says agency head Andy Allison

By Dave Ranney | June 22, 2010

The Kansas Health Policy Authority can't absorb a 25-percent cut in its operating budget and keep doing what it’s doing, the agency’s executive director told board members Tuesday.

“The situation is untenable,” Andy Allison said during the board’s annual planning meeting.

Allison said that in the coming months, the agency will have to cut back on services it provides that today are taken for granted.

The health policy authority oversees the state Medicaid program and the health benefit plan for state employees.

For example, Allison said, the agency may have to quit mediating payment disputes between providers and the state’s managed care contractors.

“Fiscal integrity is more about looking ahead than it is about looking back,” he said, defending the possibility that contractors and providers will be left to settle differences on their own.

In the past three years, lawmakers coping with steep reductions in state revenues because of the recession have cut the administrative portion of the agency's operating budget by 25 percent – from $22.8 million in fiscal 2008 to $17 million for fiscal 2011, which begins July 1.

In addition to administering the state’s Medicaid, HealthWave and state employee health insurance programs, it also has been charged with crafting health policy recommendations and charting the state’s health-care future.

But the budget cuts, Allison said, are hindering the agency’s ability to plan or craft policy.

“We are simply losing our ability to innovate, to lead and to manage,” he said.

Allison said the state’s clearing house for handling HealthWave applications now has “more than 20,000 cases on hand,” waiting to be processed.

He characterized the backlog as, again, “untenable.”

In April, federal officials asked the health policy authority to explain why 8,100 Medicaid applications and 5,300 renewals had been “pending” for more than 45 days.

States are subject to federal penalties when Medicaid applications and renewals sit for more than 45 days.

Allison said he’ll soon propose changes in how the clearinghouse confirms applicants’ income and citizenship.

“We need to move away from on-paper validation of citizenship and income to, whenever possible, an electronic form of validation,” he said.

Now, applicants are expected to verify citizenship and income with birth certificates and pay stubs or similar paper documents.

In many instances, Allison said, that information is available electronically.

Earlier this year, the health policy authority changed clearinghouse contractors, replacing Maximus with Policy Studies, Inc. (PSI).

Allison said PSI is now close to keeping pace with day-to-day processing demands but is a long way from reducing the 20,000-application backlog.

“That can only be done by a change in rules, mechanics, or additional funding,” he said.

Several board members endorsed Allison’s assessment.

“The word ‘untenable’ is correct,” said Dr. Vernon Mills, a Leavenworth pediatrician.

Mills said the application delays cause parents to postpone needed health care for their children.

“I see it all the time,” he said. “People don’t come or don’t pick up a prescription because they don’t know if they’re eligible.”

Board Chairman Joe Tilghman said the agency faces a troubled future.

“Here we are, we’ve been through tons and tons of cuts and now we’re on the brink of implementing the largest change in social policy in the last 50 years – health reform,” Tilghman said. “This puts us in a very weak position to plan for everything that’s going to come with health reform.

“That makes me nervous,” he said. “I can see a train wreck coming.”