Gov. Beshear Vetoes HB5 but Implements Primary Intent of Bill

Press Release

Gov. Steve Beshear today announced an aggressive plan to clear up billing disputes within Medicaid managed care and vetoed well-intentioned legislation that might have interfered with contractual rights between providers and managed care organizations.

"I understand and appreciate what legislators were working to accomplish with House Bill 5, and I fully agree with its intent. It's clear they are driven by a desire to maintain reliable and accessible health care in their communities," Gov. Beshear said. "But as written, HB5 has possible unintended consequences that reach far beyond the so-called "prompt pay' dispute."

HB5 originally was designed to address delays in payments between MCOs and medical providers, such as hospitals and doctor's offices, by directing the Department of Insurance (DOI) to review and investigate payment complaints, a task the Department already performs for the private insurance market.

However, other language in the bill could have interfered with contractual relations between providers and MCOs. That language would have resulted in excessive costs for state government and taxpayers due to the expansion of the review process beyond the current parameters used for private insurance.

Instead, the Governor announced a multi-pronged action plan that will solve lingering implementation problems while preserving the significant improvements in patient care and health care cost savings created by moving the state to a managed care system.

Governor Directs Dispute Resolution, Audits, and Enhanced Education
Gov. Beshear's sharply focused action plan will address legislative concerns about the relationship between medical providers and MCOs, as well as probe the entire managed care system to seek out weaknesses that need immediate attention. The strategy also demands a broad educational effort to assist both medical providers and MCOs in the move to a new culture of health care.

Prompt pay disputes to be reviewed by Ky. Dept. of Insurance: Keeping with the intent of HB5, the first action directed by the Governor is to move all responsibility for governmental review of provider complaints relating to prompt payment of medical claims from DMS to DOI.

DOI has a well established prompt payment dispute resolution process in place for use in the private health insurance market. This mechanism will allow for efficient review and resolution of claims. If improper payment practices are discovered, DOI can impose sanctions.

"We will work with DMS to find and correct systemic problems in order to strengthen the Medicaid managed care program for the Kentuckians who rely on these benefits," said Sharon P. Clark, Commissioner of the Department of Insurance.
MCOs to meet with every hospital in state to reconcile accounts receivable: Each of the three statewide MCOs -- Wellcare, Coventry, and Kentucky Spirit -- has agreed to meet individually with every hospital in Kentucky with which they contract to review and reconcile all outstanding accounts. This effort will begin immediately and continue until every hospital's accounts receivable has been reconciled. All MCOs have also agreed to meet with any other provider upon request.

As these reconciliations are completed, the results will be reported to CHFS and made public, in order to provide transparency and accountability for both providers and MCOs.
Targeted audit of each statewide MCO by Ky. Dept. of Insurance: The Governor is directing DOI to conduct targeted audits of the three statewide MCOs. These reviews, called "Targeted Market Conduct Examinations," will seek out whether systemic changes are needed to address areas such as claim or complaint handling, prior authorization practices, or emergency medical service payments. MCOs will pay for the examinations, and reports are expected to be complete no later than August 15. Failure to comply with policies will result in sanctions.
Education forums on best practices: The Governor is directing enhanced educational efforts to improve the managed care system. The Cabinet for Health and Family Services (CHFS) will sponsor educational forums in each of the eight Medicaid regions to allow medical providers, MCO representatives, and DOI representatives to meet face-to-face to discuss concerns about proper billing, appeals processes and any specific regional issues related to managed care. In addition, these forums are designed to foster conversations about how to improve the overall system of health care delivery.
Emergency Room improvements: A specific component of the education effort will focus on efficient and effective emergency room management that meets community needs without an ER operating as a de-facto primary care office. A key component of controlling costs and improving health in a healthcare system is to provide the right treatment in the most cost-effective setting.

The faculty physicians and staffs at the University of Louisville and the University of Kentucky hospitals, the state's two Level One trauma centers, will work with other providers to develop a system for emergency care that represents best practices around the country. This process will involve physicians, social workers and other professionals and will lead to more appropriate access to care and better use of limited resources.
"Our collective goal has always been to provide quality medical care for Medicaid patients, and we have already seen real success on that front," said Gov. Beshear. "Now our job is to troubleshoot remaining problems, and our action plan does that -- upholding the intent of HB5 -- without the unintended consequences that could jeopardize the managed care program in Kentucky. I have discussed this plan with Speaker Stumbo and President Stivers and have assured them that I will continue to work with them to iron out any additional problems with the system."

Medicaid Managed Care is Improving Patient Health
Kentucky is one of 47 states that have introduced managed care to their Medicaid clients. Since its implementation in November 2011, CHFS has made tremendous efforts to stabilize and make continued improvements to the Medicaid managed care program, which was implemented to improve health outcomes for many of our poorest and least healthy citizens, while also saving hundreds of millions in taxpayer dollars.

"Many states, including our neighbor Tennessee, adopted managed care back in the early 1990s and have seen their overall health rankings improve since then," said CHFS Secretary Audrey Tayse Haynes. "Although Kentucky has only had statewide managed care for a little over a year, we are already seeing a tremendous increase in the use of preventive services, which improve healthcare outcomes, while also reducing the enormous costs for treating chronic health conditions."

Nationally, 70 percent of all Medicaid patients are enrolled in managed care. Alaska, New Hampshire and Wyoming are the only states that currently do not have Medicaid managed care.

Kentucky Medicaid patients have shown marked improvements in several important metrics over the last 16 months, including significant increases in diagnostic screenings and preventive services; body mass index recordings; blood pressure monitoring; and smoking cessation consultations, which all directly correspond to Kentucky's high rate of obesity, hypertension and tobacco use. Increased screenings and preventive care will help to lower Kentucky's rates of these deadly health threats.

At the same time, there has been a significant decrease in the number of amputations, a devastating consequence of Kentucky's high rate of diabetes; as well as a reduction in the number of unnecessary and costly CT scans.

"Managed care refocuses precious taxpayer dollars to preventive care and wellness," said Gov. Beshear. "Getting our people healthy and keeping them that way is not just good health policy, it's good economics. That's why we will never return to the old fee-for-service system. This is a significant cultural shift in medical care that has already happened across the country in both the private insurance market and in the Medicaid system."

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