The Medicaid managed care revolution – discredited in other states – promises to cause more chaos in Kentucky

By TERRY BOYD | Published: JUNE 5, 2012

 Kentucky is moving as quickly as possible in the opposite direction of the successful, progressive states.

At the time Beshear Administration officials are trying to figure out how to expandMedicaid managed care madness into Jefferson County and the surrounding 14 counties – currently are under Passport Health Plan – Connecticut (the No.1 state by per capita income not counting Washington D.C.) is getting rid of managed care organizations.

During the past decade, many states stopped trying to manage their own Medicaid fee-for-service plans, handing over manged care contracts to private insurers. The theory was, the private sector knows how to cut costs while upping care. Magic.

Not in Kentucky.

Last year, Kentucky officials dealt out about $700 million in Medicaid managed care contracts to three publicly traded insurers: Centene Corp. of St. Louis, Tampa, Fla. based WellCare Health Plan and Coventry Health, based in Bethesda, Md. Since then, there’s been hell to pay, with law suits, denied care, insurer-vs-provider showdowns and more law suits.

We rarely if ever agree with the Courier-Journal editorial board about anything. But we agree with the take of this editorial from yesterday:

 … it appears that Passport — which by all accounts provides very good care to more than 170,000 low-income and disabled people — come Jan. 1, 2013, will be forced to compete with private, for-profit Medicaid companies such as those operating elsewhere in Kentucky.

 State and federal officials say this is about competition and choice.

We say the Passport region needs to be afraid. Very afraid.

Three private, for-profit companies won state contracts last November as a Medicaid cost-savings initiative by the administration of Gov. Steve Beshear. Not only was the start-up a disaster of bureaucratic confusion and delay, horror stories continue to pour forth on a daily basis of battles people face to get basic health care they took for granted under Medicaid services previously run by the state.

Essentially, Passport will have to compete on a low-price bid basis with the aforementioned companies, as well as against huge potential competitors such as Louisville-based Humana and United HealthCare, based in Minneapolis.

This is a plan so flawed that at the exactly same time Kentucky was implementing its transition to Medicaid managed care last year,  Connecticut, “insurance capital of the world,” was dropping private MCOs.

Kentucky officials say that there are just initial growing pains.

But in in this December article by USA Today reporter Phil Galewitz is something closer to the truth:

State officials say the companies, including Hartford-based Aetna, did not fulfill their promise of lower costs and better care. ”Connecticut has a 15-year history with managed-care organizations, and there has been a diminishing confidence in the value of what they are providing,” says Mark Schaefer, the state’s Medicaid director.

Connecticut officials went back to square one, canceling $800 million in contracts while retaining the non-profit fee-for-services provider, according to media reports.

The funny thing is, this whole Kentucky switch has been incredibly painful for the insurers, who you would think would be making out like bandits.

An insider sent us analysts’ reports from Citi Personal Wealth Management, which contains a lot of read-it-and-weep for Coventry investors:

Managed Care Weekend Update: Week Ending June 2, 2012

Highlights — The focus this week is on first quarter Medicaid results in Kentucky, and not surprisingly, things weren’t good. We estimate the four plans in the market lost a combined $130 million in the first quarter, with Coventry bearing the brunt of the hit, absorbing an estimated $70 million loss.

Worst case scenario for state officials: Coventry flees Kentucky with its tail between its legs, leaving officials at Kentucky’s Cabinet for Health and  Family Services wondering what hit them.

Worst case scenario for Medicaid members in Jefferson County: Passport gets pushed out, with the chaos out in the state interrupting dependable patient services and provider reimbursement here.

Most likely scenario in Kentucky, as usual: No one wins!