Gov. Sam Brownback’s administration unveiled a major Medicaid reform package Tuesday that will shift thousands of disabled, elderly and low-income residents into a managed care system that aims to reduce hospital visits and slow the growth of Medicaid spending over five years without reducing benefits.
The “person-centered” integrated care program is called KanCare. It will be managed by three companies that win state-issued three-year contracts. They will be evaluated and paid based on their outcomes, such as reduced emergency room visits. (View the request for proposals documents here.)
“We want results and we are willing to put money on the line to achieve results,” said Lt. Gov. Jeff Colyer, a doctor.
The companies will be asked to provide incentives to consumers for healthy decisions, such as quitting smoking and losing weight. And the companies will not be able to reduce the amount they pay to reimburse health care providers.
The state does not need federal approval to instigate the changes. The system is expected to begin operating at the start of the state’s fiscal year on July 1, 2012.
Medicaid, the state’s health care program for about 350,000 disabled, elderly and low-income residents, is one of the state’s largest expenses. It cost about $2.8 billion in state and federal money last year. Costs have been growing at 7.4 percent per year over the past decade.
Kansas had to borrow $200 million from its transportation program to fund its Medicaid programs this year because of a slump in state revenues.
Brownback, a Republican, assigned Colyer to lead a group of state agencies in the nine-month reform effort, which included multiple meetings with health organizations and town hall-style meetings across the state that the administration says drew a total of about 1,700 people.
Officials project the reform package to save $853 million over five years, which translates to slowing the growth of Medicaid spending by about a third. But state officials provided few details Tuesday about how they calculated the projected savings, saying only that efficiencies, competition and a better coordination of care for those who need the most services will result in savings.
The package also features an option for Medicaid users to transition from Medicaid to private insurance with a “COBRA-like option” and health savings accounts that could be used to pay private-sector insurance premiums.
Cindy Luxem, president and chief executive officer of the Kansas Health Care Association, called the overhaul “scary.” She acknowledged that the association, which represents nonprofit and for-profit nursing homes and assisted living centers, worked with the administration for months to avoid making the process confrontational.
“Providers are scared,” she said. “It’s a big change.”
Tom Laing, executive director of InterHab, which represents community organizations providing services to the developmentally disabled, said he’s worried that the changes will put distance between state government and providers and clients.
“I think it’s moving awfully fast. I think there’s lots of moving parts that may or may not fit together. I am concerned over, sort of, off-loading the responsibility for Medicaid for a multiyear deal into the hands of contractors,” he said. “This locks in a three-year contract which has a goal of cutting a whole lot of money out of the system.”
Jerry Slaughter, executive director of the Kansas Medical Society, said the system has to change because the state can’t sustain the continued growth in Medicaid spending.
“We had to change the mindset,” he said. “I think the idea of bringing what’s been an unmanaged population – the aged, blind and disabled – into a care-coordinated system, is a good plan.”
Senate Minority Leader Anthony Hensley, D-Topeka, said Brownback left more questions unanswered, including specifics on where the savings will come from and how bidders will be selected to manage the programs.
Three state agencies are affected by the changes.
The Department of Aging will add Human Services to its title, gaining oversight of Medicaid waivers for several disabled groups, oversight of mental health and substance abuse and health regulatory services.
Social and Rehabilitation Services becomes the Department for Children and Family Services, adding programs for child and foster care licensing, pregnancy maintenance and prevention programs, as well as juvenile justice grants.
The Department of Health and Environment will handle KanCare finance and oversight. Earlier this year, Brownback moved the Kansas Healthy Policy Authority under KDHE to streamline management of Medicaid finances.
“If we find efficiencies, we’ll put these savings back into programs. We do not expect layoffs,” said Aging Secretary Shawn Sullivan.