Federal officials reject extension for KanCare, citing concerns

Federal officials have rejected Kansas’ request to extend its privatized Medicaid program, KanCare, saying it has failed to meet federal standards and risked the health and safety of enrollees.

Kansas is “substantively out of compliance with Federal statutes and regulations, as well as its Medicaid State Plan” based on a review by federal investigators in October, according to a letter sent to the state Jan. 13 from the Centers for Medicare and Medicaid Services.

The state’s failure to ensure effective oversight of the program put the lives of enrollees at risk and made it difficult for them to navigate their benefits, the investigators found. They cited concerns about the transparency and effectiveness.

Federal authorization for Kansas’ privatized Medicaid system ends at the end of this year. CMS on Tuesday rejected the state’s request to extend it through December 2018. The state must submit a plan to address federal officials’ concerns by Feb. 17.

The Brownback administration dismissed the federal conclusions as being politically motivated. But lawmakers said they felt blindsided and that more state oversight is needed.

Kansas privatized its $3.4 billion Medicaid program in 2012 at Gov. Sam Brownback’s urging, shifting the bulk of responsibilities for providing services to three managed care organizations.

Federal investigators identified a series of shortcomings with the program’s administration, including diminished oversight by the state and a failure to provide beneficiaries with clear and consistent information.

“Public feedback consistently describes a lack of engagement and adversarial communication from the State,” the letter stated.

CMS received complaints from beneficiaries, health care providers and advocates throughout 2016 and conducted a series of interviews with state officials and the three companies providing coverage, the letter said.

Lt. Gov. Jeff Colyer, a doctor and the primary architect of KanCare, dismissed the federal moves as “an ugly parting shot from the Obama administration at Governor Brownback on their way out the door. It is politically motivated pure and simple, and we expect this situation to be resolved quickly once the new administration in Washington comes into office.”

Health care advocates say the CMS findings confirm issues they have raised for years.

“We’re in a political space and anyone can question motivations, but there are significant and real problems with KanCare and these are not new issues that are being brought to light. They deserve serious reconciliation,” said Rachelle Colombo, director of government affairs for the Kansas Medical Society.

Tim Wood, executive director of Interhab, a group that represents service providers who work with disabled Kansans, said Medicaid worked better before privatization.

He noted that Colyer swore an oath as a doctor promising to do no harm. “Well, we had a system that worked and we’ve wrecked it,” he said.

‘Lack of oversight’

Among the problems identified by CMS investigators: The state lacks a comprehensive system for reporting and tracking critical incidents for beneficiaries on the disability waiver, and no data exists to show unexpected deaths were investigated within required time frames.

“The lack of oversight of critical incidents increases the risk that waiver recipients’ rights, health, and safety could be in jeopardy,” the letter stated.

The letter also faults the state for allowing the managed care organizations to develop their own appeals processes. Under federal rules, the state should have developed or approved that process.

CMS “uncovered significant compliance deficiencies” in crafting plans for beneficiaries. The managed care organizations asked beneficiaries to sign incomplete agreements without the number of hours or types of services they would receive and revised plans without the beneficiaries’ input, the letter said.

Aldona Carney, a retired teacher from Wichita, said her 22-year-old son Neil has severe autism and relies on the KanCare program for medical services and daily needs.

When the program started, she said, people were promised better outcomes. But Carney said her family hasn’t seen what was promised.

“I think the federal government is right,” Carney said. “This is the most vulnerable population in Kansas. A lot of them can’t speak and can’t stand up for themselves. I really believe they do need to fix it. They need to make it better. If we’re going to keep it, then we need to fix it and make it better because there’s a lot of people suffering.”

A ‘different standard’

Susan Mosier, the state’s secretary of health and environment, said the state received an initial audit report in November and had already begun work to address the concerns. She said the January letters included no new revelations.

“It appears Kansas was treated differently and held to a different standard than the 11 other states that applied for an extension of their Medicaid waivers and were granted their extensions,” Mosier said.

Judith Solomon, vice president for health policy at the Center of Budget and Policy Priorities, a left-leaning think tank in Washington, D.C., said a denial like this one is rare. She said federal officials usually try to resolve these issues with states before denying requests for an extension but that the transition to a new administration “kind of forced their (the Obama administration’s) hand.”

Solomon said it’s possible that if the state shows progress this year, the Trump administration could approve an extension.

Sean Gatewood, co-administrator of the KanCare Advocates Network, acknowledged the new administration could be more lenient on Kansas. But he said the letter “puts the Legislature on notice that the system is fundamentally flawed and they need to take some pretty serious corrective actions.”

Lawmakers ‘blindsided’

The CMS letter was first reported by the Topeka Capital-Journal late Wednesday. Rep. Dan Hawkins, R-Wichita, who chairs the Legislature’s KanCare Oversight Committee, called the news devastating and criticized the Brownback administration for not informing lawmakers immediately.

“Everybody was blindsided in the Legislature,” Hawkins said.

“Why do I got to find out by reading the newspaper?” he said. “Why didn’t I get a call yesterday or Tuesday? How come nobody has said anything to us about that? That’s ridiculous. … I’ve got members coming to me, saying, what are we going to do? I don’t have any information yet.”

Hawkins said the federal report highlighted the need for an inspector general of the KanCare program.

The state has been without an inspector general since 2014, and the Kansas Department of Health and Environment has made no progress in filling the position. Hawkins has a bill that would shift the inspector general position to the attorney general’s office, which he said would give the program more oversight than the part-time Legislature can provide.

The federal government spends $1.28 for every dollar the state spends on Medicaid. If Kansas fails to meet federal standards, it will put that money at risk.

“Obviously, we’ve got to find a way to resolve that because the federal dollars involved are substantial,” said House Majority Leader Don Hineman, R-Dighton.

House Minority Leader Jim Ward, D-Wichita, who has served on the KanCare Oversight Committee, said serious questions need to be asked by lawmakers about the privatized program.

He said the findings make him angry. “These are disabled people, old people and kids.”

Sen. Barbara Bollier, R-Mission Hills, a retired physician, said the federal finding of noncompliance “was a long time coming.”

Bollier said a bill to reform the program was introduced in the Senate on Thursday by coincidence. A group of lawmakers had already been working on the legislation. “We’ve had these same problems for multiple years and now we need to be sure and fix them,” she said.

Contributing: Kelsey Ryan of The Eagle and Lindsay Wise of the McClatchy Washington Bureau

This story was originally published January 19, 2017 at 9:45 AM with the headline "Federal officials reject extension for KanCare, citing concerns."