New Medicaid Managed Care Providers for Kentucky.

But only for new beneficiaries and not in Region 3?

Significance to Norton-UofL dispute over pediatric care.

We have been waiting for these next shoes to drop. The Commonwealth of Kentucky has announced its award of new contracts to three Medicaid Managed Care Organizations (MCOs) to provide services to new Medicaid beneficiaries in the 104 Kentucky counties not in Region 3. The contracts went to: Anthem of Kentucky (a division of Wellpoint that is an entirely different company from WellCare), Humana, and Passport (University Health Care, Inc.). These additions come just ahead of the major expansion of Kentucky Medicaid resulting from the federal Patient Protection and Affordable Care Act, known affectionately to some as Obamacare. Some 300,000 new beneficiaries will be added to the current 715,000 beginning January 2014.

Medicaid Managed Care, 2012 Version.
The new round of contracts preserves the division of Kentucky’s 120 counties into two parts: the former Region 3 (Jefferson and surrounding 15 counties) and the rest of the state. Region 3 was the sole survivor of Kentucky’s initial attempt at Medicaid Managed care in the 1990s. It was serviced by Passport, a new MCO formed and controlled by the University of Louisville. In 2012, the Commonwealth contracted with three other MCOs to provide mandatory managed care elsewhere in the state for most of the state’s Medicaid population. (Some Medicaid beneficiaries such as nursing home patients are not included in managed care.) The initial three MCOs were Coventry Cares of Kentucky, Kentucky Spirit (Centene), and WellCare of Kentucky. Passport was not required to form a statewide network at that time. The expanded new programs got off to a predictably rocky start. Kentucky Spirit withdrew in October of 2012 leaving the other two MCOs to pick up their members.

Region 3 had a life of its own.
Since 1997, Passport was allowed to serve as a sole provider for eligible beneficiaries in Region 3. In October 2012, for a variety of reasons including mismanagement of funds by Passport and the University, the region was opened up to 3 additional MCOs. These were Coventry Cares, Humana, and WellCare. At its start-up some 171,000 beneficiaries were divided equally among the four MCOs, but Passport rapidly regained control of 74% of members. The other three MCOs individually had only 10% or less of market share. Although hospitals and insurers typically support the Republican Party’s policies with respect to their business interests, these entities have been among the strongest supporters of Medicaid expansion under Obamacare. I predicted that it was in anticipation of this new line of business that the three minority players might be willing to suffer some temporary programmatic setbacks or financial losses in Region 3.

Getting more complicated, not less.
I also predicted that the two-part division of the state could not endure, but for a while longer at least, the organization of Medicaid managed care in the state gets even more complicated. We now have 5 different MCOs responsible for the medical care of beneficiaries. Contracts are being given for two geographical parts of the state but also, apparently for two different Medicaid populations– former beneficiaries and new beneficiaries added by expansion. Eventually, all this must settle down into a rational coordinated system of care.

Medicaid Managed Care Organizations in Kentucky: Fall 2013
• Anthem
• Coventry Cares
• Humana
• Passport
• WellCare

I cannot today find an “official” Kentucky press release, or copy of the new contracts. Based on what I could learn from other reports, it is not clear to me how new beneficiaries in Region 3 will be handled. Presumably they will be assigned to the four existing MCOs but I do not know whether assignments will be voluntary.  The contracts are said to cover only the estimated 300,000 new members. I am unaware of the extent to which the current Medicaid beneficiaries will be kept separate in terms of rates and benefits. There may be some justification to keeping the Medicaid populations separate, at least for a while. For example, it is likely that the new Medicaid beneficiaries will be less sick and cost less to take care of. This may be a reason to keep the two populations separate. Some experience may be needed to determine fair reimbursements. Such an approach seems reasonable to me, but for the time being, we are left with a complicated structure of Medicaid managed care. I predict that this will be sorted out as contracts come up for renewal in future years.

[Addendum Sept 17. After I posted this article, a press release from the Medicaid Cabinet became available.  You can view it here. The release did not fully clarify all the questions I  posed.  I requested additional specifics, and when I learn more, I will modify this article accordingly. PH]

Unanswered questions.
I do not know who might have submitted bids for the new Medicaid business. A lot is unclear to me from available reporting, but I will try to find out. For example:

• It appears that Coventry Cares might not get a shot of new beneficiaries out in the state even though it currently serves there. Will it have a chance at serving new patients in Region 3?

• Anthem now has a chance at serving new beneficiaries out in the state, but not apparently in Region 3 where its greatest strength lies.

• Passport now will work outside its home region. Will it be permitted to try to market itself to existing beneficiaries in the other plans? Will Humana, also a current player in Region 3 but not previously elsewhere?

• What questions do you have to offer?

Medicaid beneficiaries include children too.
Perhaps not entirely coincidental, the announcement of these new contracts comes superimposed on the conflict over control of Norton Kosair Children’s Hospital. Pediatric care lies at the heart of Medicaid. After all, one of the primary initial goals of the program was to protect children. Norton Kosair is the premier children’s hospital in the Commonwealth and provides unique medical services to children. As a Norton facility, and with the partnership of specialty physicians from both from the University and the community of Louisville, there is no source of expertise in the state to match it. I termed it the lynchpin of pediatric care for the state. No Medicaid Managed Care Organization, indeed, no private insurance company can offer services to populations containing children or delivering babies without unencumbered access to that facility. I venture to say it is a community asset, not an entity to be fought over for commercial or programmatic gain. And yet, that is what is happening. There is no reason why any qualified physician, no matter what other institution they are affiliated with, should not be able to provide care at Norton Kosair Children’s Hospital. There is no reason why a child should be discriminated against because of the insurance coverage they might have, or what part of the state they were born in, or what their family’s religion might be.  No patient or insurance company should receive a disproportionally high bill because they are not in the “right” network.  To prevent all these things from happening has taken, and will take unprecedented cooperation from the healthcare community. I am not seeing that happen. It is shameful to contemplate that any individual or entity would compromise this community resource of greater Kentucky.

Is an intervention needed?
And yet, in my opinion, taking programmatic and perhaps physical control of Norton Kosair Hospital appears to lie at the heart of the University’s current aggressive actions. UofL’s historical joined-at-the-hip relationship in pediatrics with Norton Kosair was the one major area of partnership with Norton Healthcare that it could not simply walk away from. Additionally, Norton is also a sponsor of Passport.  Kosair was and is a “problem” for UofL. It cannot offer a statewide network with KentuckyOne Health without a children’s hospital. I do not see such access denied to it, but the several reports of the University wanting to restrict the medical staff of Norton Kosair to its own faculty are troubling. [See the comment to an earlier article.] Troubling to me also were UofL’s promises made to CHI and KentuckyOne Health in earlier merger and partnership documents to try to restrict its faculty practices to KentuckyOne facilities only, not to give gratis faculty appointments to non-KentuckyOne physicians, and not to enter clinical relationships with any entity other than KentuckyOne without permission. These represented to me a few of the many unacceptable compromises of academic and clinical freedom that UofL was willing to make to fund its commercial research enterprise and fund raising goals. These are certainly not indicators of ongoing cooperation with the greater Louisville and Kentucky communities. The University of Louisville cannot deny that it set the stage for this conflict by making obvious contingency plans for severing its relationship with Norton Kosair by promising KentuckyOne Health first option to be its new pediatric partner. (Where did UofL plan to put this new service?)  Whether it is their intention or not, I cannot avoid thinking that UofL is trying to force that outcome.

The University of Louisville has an army of public relations and legal staff or advisors. They are pulling out all the stops with press releases and letters to the media from faculty and supporters. Their claims of being taken advantage of and their aggressive posture in initiating this legal confrontation do not comport. I do not buy it, and neither should the public. In my opinion, I just don’t see how they can spin this one away.

All the above represents my considered opinion based on information available to me. If my numbers or facts are wrong, please help me correct them. If you have better information to share or a link to official documents, please share.

Peter Hasselbacher, MD
President, KHPI
Emeritus Professor of medicine, UofL
September 15, 2013

One thought on “New Medicaid Managed Care Providers for Kentucky.”

  1. I did not get a reply to my request for additional details from the Medicaid Cabinet. If someone else can clarify any of the issues I raise above, please do so for us here.

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