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KanCare companies lost money in first year

State submits draft of first annual report on Brownback Medicaid makeover

By Mike Shields | April 28, 2014

The state’s three prime KanCare contractors each lost money in their first year managing health care for the 380,000 Kansas Medicaid enrollees, but received cash infusions from their parent companies that allowed them to meet their contract obligations and stay solvent.

That’s according to information included in the draft of the first annual report on KanCare submitted by state officials to the federal Centers for Medicare and Medicaid Services. The draft report was made public Friday afternoon as Gov. Sam Brownback was in Lenexa for a press conference describing his plan to reduce the waiting list for in-home Medicaid services using money from “KanCare dividends” the state has reaped.

It wasn’t explicit in the report how much each company lost, but references to reports filed with the National Association of Insurance Commissioners showed their collective “net operating losses” totaled more than $110 million.

“Although each health plan experienced net operating losses…each plan’s parent entity contributed adequate capital to ensure each health plan met or exceeded capital requirements as outlined in state of Kansas solvency statutes and requirements,” the report stated.

Brownback officials have put government “savings” from KanCare's first year in the range of $55 million to $250 million, depending on how they are calculated.

KanCare is the initiative launched by Brownback on Jan. 1, 2013. It moved virtually all the state’s Medicaid enrollees into health plans run by Amerigroup, UnitedHealthcare and Sunflower State Health Plan, a subsidiary of Centene.

Budget neutrality

State officials said the report showed that Kansas exceeded the first-year requirements of CMS for the KanCare initiative, including the achievement of “budget neutrality,” which means the program didn’t cost the federal government any more than it did before the Brownback administration’s Medicaid makeover.

The federal government pays almost 60 percent of the cost of Medicaid. The state pays the rest.

When the program was launched, Brownback officials predicted that it would save the state and federal governments $1.2 billion over five years, though most of those savings were expected to come closer to the end of the five years.

Administration officials said Medicaid historically was going up at the rate of about 6.5 percent a year and their goal was to reduce the growth in cost while improving health outcomes for enrollees.

“KanCare has outperformed in its first year the estimates for savings that were made when the original KanCare proposal went in,” said Kari Bruffett, director of the Division of Health Care Finance at Kansas Department of Health and Environment, the state’s lead Medicaid agency.


KanCare Annual Report

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Kari Bruffett, director of the Health Care Finance Division at the Kansas Department of Health and Environment.

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The KanCare initiative has been controversial on various fronts and continues to leave many Medicaid providers, large and small, frustrated by delayed or partial payments for their services.

The report acknowledged those problems for 2013 and listed the number of appeals and grievances filed by providers with each of the managed care companies. There were more than 30,000 with Amerigroup chalking up the most.

“Amerigroup remains focused on working with all of our Kansas providers and hospital partners, and our priority is to maintain strong relationships with primary care and specialty practices, hospitals and every KanCare provider,” said Amerigroup Kansas President Laura Hopkins through a company spokesperson. “Amerigroup has a commitment to managing the KanCare program appropriately and in a sound manner on behalf of our customer, the State of Kansas.”

Persistent problems for providers

Bruffett said the administration has been working with the KanCare contractors and providers to improve the system.

“We have seen improvement, great improvement in the MCO (contractors’) interactions with providers,” she said since the program was launched, noting that the agency has been focusing in recent months on “overall improvement of the provider experience in Kancare and together with MCOs we have been focusing on that” in response to the continued concerns.

But others say the results of that effort have been mixed at best.

“Wesley has seen no marked change in recent months,” said Matt Leary, chief financial officer for Wesley Medical Center in Wichita, one of the state’s largest hospitals. “There remains ongoing communications and efforts made by all parties, but it continues to be a struggle to get timely and accurate payments.”

Other hospitals report similar problems, according to Cindy Samuelson of the Kansas Hospital Association.

“It’s hard to really answer whether it’s better overall,” she said, “because some things have improved but others have gotten worse.”

Other provider groups also described ongoing problems or inconsistent results.

“It’s just such a rabbit hole right now,” said Cindy Luxem, chief executive of the Kansas Health Care Association, a nursing home trade group.

Tammy O’Donnell, co-proprietor of a small nursing home in Easton in northeast Kansas, said it still is time consuming and often difficult to get claims correctly paid by the managed care companies, but “it has gotten a little better. It’s definitely better than it was last year. That’s for sure.”

'Mixed bag'

Pharmacists and their associations also reported ongoing problems, though some praised efforts by KDHE pharmacy program director Kelley Melton to keep lines of communication open.

“From the durable medical equipment side of things, it’s not any better than it was from the beginning,” said Mike Conlin, who owns of Jayhawk Pharmacy and Patient Supply in Topeka. “All of the MCOs are telling people things are covered when they’re not, and then we end up in an adversarial circumstance with beneficiaries.

“It’s been my experience that their people don’t read what I call the ‘benefits grid,’” he said. ”They’ll tell a beneficiary, ‘Oh, yeah, your CPAP (continuous positive airway pressure machine) is covered,’ but they don’t tell them it’s only if they’re under 21. There have been a lot of incidents like that. It just goes on and on.”

“I would characterize it as a mixed bag,” said Mike Larkin, executive director of the Kansas Pharmacists Association said. “But I have to say that KanCare is just one of five or six fires that pharmacists are trying to put out at both the state and, primarily, the federal level with Medicare going to preferred provider networks and TRICARE making its beneficiaries get their generic maintenance medications through the mail.”

Larkin said one of his members had told him: ‘KanCare isn’t even on my radar screen anymore. I’m trying to get a drink out of one of the other fire hoses.’”

DD providers getting paid

Service providers for the developmentally disabled were some of the most vocal critics of KanCare before it was implemented and their programs were the last to be included in it. The so-called carve-in of DD long-term supports into KanCare began Feb. 1.

Tom Laing, executive director of Interhab, which represents most of the state’s Community Developmental Disability Organizations, said payments haven’t been a problem, so far, but that providers have been saddled with more administrative burden in dealing with the managed care companies.

“Folks will need to understand that we’re still in the first quarter of this changeover,” he said. “I think the state and the MCOs have done a good job in working to make sure that bills that are submitted are paid . And the administrative complexities are what we said they would be. It is more complex than it has been in the past. Our members invest more in time and energy and staffing in chasing down the bills. But bills are being paid.”

Laing said that might change once the state allows use of the billing “edits” that would otherwise have automatically applied when bills were submitted.

“We have a little bit of an artificial honeymoon right now while the new system is being made to work, Laing said. “When those edits begin to be used we’ll see some bumps certainly. I think the state is committed to doing that gradually and I think that’s pruduent. If all the edits are turned back on eventually we may find we have more problems than we currently have.”

The Legislature’s KanCare oversight committee is scheduled to meet Tuesday and is expected to hear many of the details included in the state’s draft report to CMS.

Among the report's details:

  • The KanCare external evaluator recommended that the state require more detailed reporting from the KanCare contractors and consistent wording in provider surveys. Also according to the evaluator, “complete annual data for several performance measures were not available for review” due to the lag in claims processing and the “standard reporting tools.”
  • Native Americans were among the few Medicaid beneficiaries allowed to opt out of KanCare and remain in the old “fee-for-service” Medicaid system. In 2013, only 15 chose to opt out.
  • The number of Medicaid beneficiaries receiving home- and community-based services declined the first year of KanCare. There were 14,913 people on HCBS in 2012 versus 14,517 in 2013.
  • There were 570 new additions to the waiting list for HCBS developmental disability services in 2013 bringing the total to 3,141 people. Brownback last week announced he would ask the Legislature to fund services for 77 people using KanCare savings.
  • The number of children enrolled in the Children’s Health Insurance Program, which is included in KanCare, increased nearly 4 percent from 51,450 in 2012 to 56,194 in 2013.
  • UnitedHealthCare had the greatest number of providers in its network: 18,010. Amerigroup had 17,352 and Sunflower had 15,404.

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