Blue Cross of Kansas won’t bid to be Medicaid managed-care contractor

02/01/2012 5:00 AM

02/01/2012 7:22 PM

The state’s largest insurance company has decided it doesn’t want to participate in Gov. Sam Brownback’s plan to move Medicaid patients into privatized managed-care programs.

In a letter addressed “Dear provider,” Angie Strecker, director of institutional relations for Blue Cross Blue Shield of Kansas, said the insurer “has decided not to submit a proposal to the state to be a Medicaid contractor.”

Rep. Jim Ward, D-Wichita, said it brings into question the financial feasibility of the governor’s plan to shift the care of poor and disabled Kansans to private health maintenance organizations.

On Wednesday, Ward introduced a bill that would require annual audits to ensure that privatization doesn’t lead to reductions in benefits for Medicaid recipients.

Blue Cross, a mutual insurance company owned by its customers, covers 880,000 Kansans and operates in all Kansas counties except for Wyandotte and Johnson. In 2010, the company processed more than 16 million claims worth more than $2 billion.

The letter said Blue Cross had devoted significant staff and resources to analyzing the state’s request for proposals.

“In the end, although we believe the RFP may present a sizeable opportunity it would have required us to dramatically change our business model to serve new populations in different settings in less than a year,” Strecker wrote. “We decided that we could not responsibly commit to so great a change at this time.”

Brownback has made Medicaid privatization a centerpiece of his plans for reforming state government.

The administration last week applied to the federal government for a waiver to change the state’s Medicaid system. Under the governor’s plan, everyone who receives health care through the system would be moved into a private managed-care program in an effort to reduce costs while avoiding reductions in services.

The change would affect about 350,000 Kansans and $2.8 billion of state spending.

The strongest opposition to the plan so far has come from people with disabilities and their families and advocates. They question whether managed care can effectively meet the individual needs of people with physical and mental disabilities, and whether the switch would disrupt ongoing care plans. Under the proposal, the state would pay a set fee per patient, regardless of how much medical care the person needed. It would also require someone, usually the family physician, to act as a “gatekeeper” and manage services the patient receives.

Miranda Steele, spokeswoman for the Kansas Department of Health and Environment, said the state cannot comment on Blue Cross’ decision because the bidding process is still open.

Technical bids were due Tuesday, and Feb. 22 is the deadline for filing the financial component of the bids, she said.

Ward’s bill, House Bill 2573, would require the state to contract with the Kansas Health Institute for an annual audit and evaluation of services provided by contractors in the Medicaid program.

Ward said he picked the health institute because it is a nonpartisan third party and has on staff two former officials with deep knowledge of the state’s health care system: Duane Goossen, a former state budget director and secretary of administration, and Scott Brunner, the former chief financial officer for KDHE’s Division of Health Care Finance.

Both served under Republican and Democratic governors, Ward said.

The audit would include:

•  whether changes were made to the quality or quantity of service
•  whether the number of people receiving services has changed
•  whether rates paid to health care providers have changed
•  an opinion survey of contractors and service recipients to gauge their satisfaction with the program.

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