KHI News Service

KanCare bidders heavily courting Medicaid providers

A flurry of activity from several ardent suitors

By Dave Ranney | March 19, 2012

Gov. Sam Brownback’s Medicaid reform plan, KanCare, has spawned one of the biggest, busiest and -some say- most confusing courtships in state history.

“I feel like I’m the pretty girl in high school and it’s two weeks before prom,” said Krista Postai, who runs the Community Health Center of Southeast Kansas, a multisite safety-net clinic headquartered in Pittsburg. “I have lots of offers.”

Postai and other Medicaid providers – a group that includes doctors, hospitals, pharmacies, home health agencies, nursing homes, mental health centers and community-based programs for the developmentally disabled – are being wooed by the five companies that have submitted bids to manage the state’s $2.8 billion Medicaid program.

“They all want to do something different and they’re all saying it’s going to be great,” Postai said. “The sales pitches are phenomenal, but I’m thinking they’re like the cute guys with the blue eyes who sell computer software. You want to believe them, but it never works the way they said it would.”

State officials have said they plan to award contracts to three of the companies this summer. An exact date has not been announced.

Meanwhile, each of the five bidders - Centene, Coventry, Amerigroup, WellCare, and United Healthcare - has until March 30 to show that it has assembled at least half of the statewide provider network needed in order to secure a contract award.

“We’re being barraged” by solicitations from the companies, said Deborah Zehr, executive director at LeadingAge Kansas, an association that represents the state’s nonprofit nursing homes. “It’s been pretty confusing because nobody knows who’s going to win the contracts, and yet we’re being encouraged to go ahead and commit to a company that may or may not be selected."

Zehr said that struck her as odd since providers also are being told that any willing provider can sign with any or all managed care networks after the contracts have been awarded.

Administration officials have said they want to launch KanCare on Jan. 1, 2013. But that would come after each of the three selected companies sometime this fall has been “auto-assigned” a third of the state’s Medicaid beneficiaries of which currently there are about 383,000.

The initial contracts are to be for three years.

Holding off

Some providers said they plan to wait until the companies have state contracts before signing with any of them.

Janet Splitter is executive director at ElderCare, a nonprofit meals and home-health program based in Great Bend.

“We’ve heard from all five companies,” she said. “But we’re taking a wait-and-see approach because it doesn’t make a lot of sense to fill out the forms for a company that’s not going to get the contract.”

Some of the forms, Splitter said, were 40 pages long and would require several hours to complete.

Initially, most of the managed care companies asked providers to sign letters of interest or intent, expressing a willingness to work with them if they were awarded one of the contracts.

But in recent weeks, some of the companies have begun pressing providers to enter contractual agreements. And many program directors told KHI News Service they were uncomfortable with that more aggressive push.

“I don’t have teams of lawyers and accountants who know all the ins and outs of a managed care contract, but these companies do,” said Lori Feldkamp, executive director at Big Lakes Developmental Center in Manhattan. “I find that disconcerting.”

Big Lakes serves about 200 developmentally disabled adults in Riley, Geary, Clay and Pottawatomie counties.

Felkamp said Big Lakes has yet to align itself with any of the contractors.

“We’re waiting,” she said. “I have a lot of questions. I don’t have very many answers and, frankly, I don’t know that the answers are there to be had.”

Still time for contracts

Kari Bruffett, an assistant secretary at the Kansas Department of Health and Environment, said the KanCare bidders recently were told that simple letters of intent from providers would be sufficient to for determining each company's potential network capacity.

"The most common question we have heard from providers is whether the bidders need to secure contracts or letters of intent to demonstrate the extent of their network development on March 30," Bruffett wrote in an email to KHI News Service. "We have clarified that letters of intent are acceptable at this time."

KDHE, she wrote, would review standard provider contract and subcontract provisions before they can be executed with providers. She added that all providers who sign with a network would be assured payment for services at least equal to what they currently are paid after incentives are counted.

"Per the RFP (request for proposal), all in-network providers will receive 100 percent of the (current) fee for service as the floor, inclusive of incentives for quality and outcomes," she said.<a name="continued"></a>

In recent weeks, administration officials have offered repeated assurances that KanCare is designed to improve healthcare outcomes and “bend the cost curve of Medicaid” without cutting provider rates, reducing eligibility or restricting access to services.

A single "front door" for billing

Brownback last week asked legislators to approve spending an additional $3.4 million on a “robust communication and education program about changes taking place with KanCare” and to updates the state's Medicaid billing system so that it would give providers “a single billing front door.”

That proposed bill streamlining was in response to concerns raised by some providers that KanCare would add administrative complexity to the Medicaid program.

Without the “billing front door,” providers could face separate billing procedures from each of the three managed care companies.

Several Medicaid-funded program directors said they welcomed the governor’s latest initiative to centralize billing.

“Hospitals cannot be expected to deal with three different sets of rules,” said Kevin Miller, chief executive at Promise Regional Medical Center in Hutchinson. “There has to be uniformity and standardization.”

Miller said he and other hospital administrators were concerned that the managed care companies have not shared their policies for prior-authorization of drugs used by Medicaid clients.

Ohio experience

“I came here after eight and a half years in Ohio,” Miller said. “When we went to managed care for Medicaid-medical, the insurance companies required prior authorization on everything. There was no drug formulary, so when a doctor ordered (prescriptions) it meant that somebody in the office was going to spend anywhere from 30 minutes to two hours on the phone, waiting to talk to a live human being.”

Inevitably, he said, the doctors ended up writing prescriptions without waiting for authorization. Patients, too, sometimes became frustrated and left the premises without their medications.

He said that policy allowed the managed care company to avoid covering many drug costs.

“That’s how (insurance companies) made money,” Miller said. “It was like they were given a bucket of money and anything that was left over they got to keep.”

The policy also caused an increase in emergency room admissions, he said, because patients who went without their medications became sicker and had to go to the hospital for treatment.

Miller said he was looking for assurances that similar policies would not be allowed under KanCare.

“My message is not that KanCare won’t work,” he said. “My message is that the devil is in the details. This can work, but it has to be done correctly. We have to pay close attention to the details.”

Miller said he supported a resolution in the Kansas Senate urging the administration to delay KanCare's planned Jan. 1, 2013, startup until July 1, 2013.

“I would rather we do this right than do it fast,” he said. “This is not simple stuff.”

Various worries

Providers interviewed by KHI News Service said they had a range of other concerns or questions about KanCare.

For example, officials have said reimbursement rates won't be cut. But what about increases to account for inflation?

“We’ve been told that our (Medicaid) reimbursement won’t be cut and that the initial contracts will be for three years,” said Splitter of Elder Care. “What we haven’t been told is whether there will be an increase in provider rates in those three years. What happens if gasoline goes to $5 a gallon? Where is that money going to come from? Are we going to be forcing people who live out in the country to move to the cities to get services?”

Van Coble, who owns the Medicap Pharmacy in Winfield said he worried he would have trouble getting someone from a managed care company on the phone when necessary. He said he currently has no trouble getting someone from the state to talk to when he has a question.

“I can’t say that about my dealings with the large pharmacy benefit management companies," he currently works with, he said. "It’s virtually impossible to get through to someone.”

Others said they were concerned about maintaining long-established relationships with clients under the proposed new system.

“Our main concern is what’s going to happen when someone who’s lived here for several years becomes eligible for Medicaid,” said David Beck, chief executive at Brewster Place, a nonprofit retirement community in Topeka. “Is that person going to be able to stay with us? Are they going to have to move to the lowest bidder?”