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Brownback announces managed care for all in Medicaid

Agency shifts and wider reliance on contractors part of Medicaid makeover plan

By Mike Shields | November 08, 2011

Gov. Sam Brownback and his administration's top social service officials today unveiled their proposal for reforming the state's Medicaid program.

In a nutshell, it would expand managed care to all currently on Medicaid, including nursing home residents, the disabled and the mentally ill. It also would prompt reshuffling of departments at four state agencies. Officials said the plan would save the state $12.5 million in the coming fiscal year and a total of about $367 million over the next five years.

Three Companies

Administration officials said they anticipated at least three companies would get state contracts to provide Medicaid services statewide. An RFP, or a request for proposal, seeking contract bids was posted on the website of the state purchasing office. About 60 percent of Medicaid is funded by the federal government, and federal approval of changes to the state's Medicaid plan on file with the Centers for Medicare and Medicaid Services will be required before the contracts can be issued.

Lt. Gov. Jeff Colyer said administration lawyers were still working on the plan amendment that will be filed with CMS. He said he wasn't sure yet when it would be submitted for federal approval.

He said the state also will request a "global waiver" from federal officials seeking the flexibility the administration wants to fine-tune its plan once it is launched.


The retooled Medicaid program will be called KanCare, officials said. Currently, the state only uses managed care contractors in its HealthWave program, which provides health coverage for low- to moderate-income pregnant women and children eligible for either Medicaid or the Children's Health Insurance Program.

Dr. Robert Moser, secretary of the Kansas Department of Health and Environment, said the state's current contracts with the two HealthWave managed care companies were soon due to expire. Once they do, HealthWave will become part of KanCare.

As previously reported by KHI News Service, the plan calls for shifting the Division of Disabilities and Behavioral Health Services out of the Kansas Department of Social and Rehabilitation Services into the Kansas Department on Aging. KDoA will then be called the Kansas Department for Aging and Disability Services.

Agencies Shuffled

As part of the move, KDoA, which is headed by Secretary Shawn Sullivan, will take charge of the state's mental health services, including the five state hospitals for the mentally ill and developmentally disabled.

That means KDoA will gain about 115 state workers in Topeka and about 2,300 stationed at the state hospitals.

SRS will take over nine programs currently managed at the Kansas Department of Health and Environment and some prevention services from the Juvenile Justice Authority and will be renamed the Kansas Department for Children and Family Services.

KDHE will continue to be the state's Medicaid fiscal agent and oversee the Medicaid contractors.

Officials said they will include provisions in the managed care contracts that will prevent the contractors from cutting the rates paid to Medicaid doctors and other providers. They also said they expected services and outcomes for patients to improve. They said the contracts would be "ironclad."

Health Homes

The plan will emphasize care coordination using "health homes" and intensive case management for Medicaid patients with "complex needs," officials said, and that will help produce the anticipated cost savings. Officials said they also intend to emphasize the use of home and community based services, which historically have been less costly than the institutional care provided in nursing homes and hospitals.

Each Medicaid client would be required to have a "health-risk appraisal" to determine what level of care coordination would be needed.

The state currently has about 350,000 Medicaid beneficiaries. Annual cost of the program this year is expected to be $2.8 billion of which the state's share is about $1 billion. Brownback and others in the administration have said the program's spending arc over the past decade would be unsustainable, if it were to continue unaltered.

Other Features

Among other features and policies included in the plan:

  • The state would reserve the right to set rates for nursing homes, as opposed to the rates being determined by the Medicaid contractor.
  • Expand PACE and PACE-like programs. PACE is a federal program that provides community-based services for the frail elderly who otherwise might be in a nursing home. Most PACE beneficiaries are eligible for both Medicaid and Medicare.
  • Contractors would be required to establish member advisory boards. They also would be required to maintain current services and benefit protections.
  • Contractors would be required to use "established community partners," including hospitals, physicians, community mental health centers, safety net clinics, community developmental disability organizations (CDDOs) and the Area Agencies on Aging.
  • The deadline for responding to the state's RFP would be January 2012. KanCare would then be launched in January 2013.
  • Any administrative savings realized as a result of the agency reorganizations would be used to reduce the waiting lists for home and community based services.

Competing Companies

Colyer said he felt confident at least three managed-care companies would seek and ultimately secure state contracts because administration officials had already held discussions with some interested firms. But he wouldn't say which companies he or others had talked with.

Bob Finuf, chief executive of Children's Mercy Family Health Partners, one of the two managed care companies that currently provide HealthWave services, said the firm planned to respond to the new request for proposals. Coventry, a national health insurance company, recently announced it had inked a deal to buy Children's Mercy Family Health Partners.

Other managed care companies have retained or stationed lobbyists in Topeka and also are expected to seek a contract. Among them are Centene, Amerigroup, and United Healthcare.

"I'm guessing everybody and his brother is going to chase the dollars on this thing," said Mike Hammond, executive director of the Association of Community Mental Health Centers of Kansas.

Mixed Reaction

The plan drew favorable response from Hammond who said the community mental health centers particularly liked the idea of introducing health homes and integrated care for the mentally ill. He said he also was pleased to hear Brownback officials say that they did not intend to implement a preferred drug list for mental health drugs.

"Overall, it's a good plan," Hammond said.

Tom Laing, executive director of Interhab, a group that represents most of the community-based programs that serve the developmentally disabled, offered scathing criticism of for-profit managed care companies in general and predicted that making the group's community providers sign contracts with three different insurance companies would be disruptive to a stable and efficient system that has been in place at least 15 years.

"Their dialogue with us (about this) has been very positive, no slamming of doors," Laing said of Brownback officials. "And we know at the end of the day, if we're carved in (to managed care) we'll need to work with them. We have to believe the goal at the end of the day is that we're all going to try to make the system work. If this turns into an expensive experiment gone bad, like I think it will, I wouldn't derive any pleasure from that. The good news is there's a lot of positive dialogue taking place. But it has to be discussed. Come on, we're talking about a $2.8 billion program."

Audio clip

KPR story: Brownback administration unveils Medicaid reform proposal

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