Business leaders discuss possibility of expanding Medicaid through private insurance

By Molly Burchett
Kentucky Health News

Some Kentucky business leaders are discussing a possible endorsement of expanding Medicaid through private insurance, in a plan similar to one the federal government approved for Arkansas.

The Health Policy Council of the Kentucky Chamber of Commerce discussed the idea last Friday. A talking paper for the meeting highlighted presumed benefits of the approach, in which people newly eligible for Medicaid could use federal funds to buy private insurance through the insurance exchange that the state is constructing.

The health council has yet to decide the chamber's position on Medicaid expansion, but the council's talking paper said expanding Medicaid privately might be a better option than expansion of traditional Medicaid, considering the state's tight budget and already problematic managed care system.

The paper says a private plan would be beneficial to Kentucky because it would allow market forces to control costs and ultimately result in better health care. Private expansion would also prevent a flood of newly eligible people from entering the managed care system. "If Kentucky accepts the traditional Medicaid expansion, everyone that qualifies would be put into the already struggling managed care system, which until changes are made, cannot support the influx," the paper asserted.

The Obama administration has encouraged states to consider the Arkansas approach, the paper says.  To do so, states need to apply for a waiver, and the administration has provided information on how a state would apply. "Florida, Ohio, Louisiana, Maine and Pennsylvania are all looking into this option," the paper said.

An estimated 181,000 uninsured adults would become eligible for Medicaid in 2014, if Kentucky decides to accept the funds offered by the health law to provide coverage to those earning up to 138 percent of the federal poverty level.

Gov. Steve Beshear has said he will make his decision about Medicaid expansion no later than July 1. His office has declined to say whether the privatized option is under consideration, saying, "The governor is considering multiple issues as he determines whether Kentucky will expand Medicaid eligibility.  Along with affordability for the state, he is also looking at potential economic impact through jobs and investment created by possible expansion, as well anticipated changes in health outcomes for newly-eligible Kentuckians."

Beshear says he will decide in four to five weeks, or July 1 at the latest, whether or not to expand Medicaid

By Al Cross
Kentucky Health News
This story has been updated.

Gov. Steve Beshear said Monday that he will decide within the next four to five weeks, or maybe by July 1, whether to expand the Medicaid program under federal health-care reform.

Beshear, who has said he would expand Medicaid if the state can afford it, told reporters that he is considering other factors, which he did not name. He said his administration has not calculated the cost of expansion, which the state would not pay immediately.

The federal government pays about 71 percent of Medicaid's cost in Kentucky, and would pay the full cost of covering those newly eligible in 2014-16. The state would have to pay 3 percent in 2017, rising to 10 percent by 2020.

About 830,000 Kentuckians are covered by Medicaid, and at least 400,000 more could be added if Beshear expanded it to include households earning up to 138 percent of the federal poverty level, as required by the reform law.

Another possibility is that Beshear would seek approval from the federal government to use federal money to subsidize purchase of private health insurance by the poor, which has been approved in Arkansas but not in Tennessee.

The governor's office, asked if the administration was considering that option and what other factors Beshear is considering, has not responded had this response: "The governor is considering multiple issues as he determines whether Kentucky will expand Medicaid eligibility.  Along with affordability for the state, he is also looking at potential economic impact through jobs and investment created by possible expansion, as well anticipated changes in health outcomes for newly-eligible Kentuckians."

That is also the case with There has still been no response from Humana Inc., which does much of its business through government-financed health plans. The Louisville-based insurance company was asked if it has had discussions with the Beshear administration about the idea of a Medicaid expansion that would use federal money to buy, or subsidize the purchase of, private health insurance.

"Beshear said Monday that he is getting a lot of pressure from the medical field – particularly hospitals – to green-light the expansion," Beth Musgrave of the Lexington Herald-Leader writes. "Hospitals will lose additional money they receive through Medicaid on Jan. 1 as part of the Affordable Care Act. Hospitals in Ohio and other states have also put pressure on state governments to expand Medicaid rolls."

Beshear said, “I think they look at the expansion as a means to at least replace some of that (money) that they are going to lose.”

Many Republicans have opposed expansion, "saying that the state could not afford it," Musgrave writes. "The Republican-led state Senate passed a bill during the legislative session that would have required that the two-term Democratic governor get legislative approval before expanding the health care program. But the measure died in the Democratic-controlled House. Beshear could expand the program via executive order."

Beshear said today, “We have a very large uninsured population and we have a very unhealthy population. Anything that we can do — that we can afford — to make our population more healthy, I”m certainly in favor of doing.” He added, “We are looking long-term as well as short-term from a financial standpoint to see if it makes sense for us.”

While he said he would act within four to five weeks, Beshear gave himself some wiggle room, saying also that he would make the decision by July 1, the beginning of the state's fiscal year. (Read more)

Survey shows most rural doctors in Southern Kentucky aren’t ready for electronic health records; grant will help them switch

A recent survey found that 63 percent of rural health providers in Southern Kentucky have not installed electronic health records software, so more than 280 of the small and rural doctor practices surveyed could face financial penalties from Medicaid and Medicare if they do not install it by 2015. Federal grant money will help them make the switch.

Many rural Kentucky providers are near retirement and are deciding between making the necessary investment of capital and personnel that is required to make the switch to electronic records or to just close their practice, according to a release from Kentucky Highlands Investment Corp., which led the effort to get the grant

Decisions to close practices and to avoid using electronic health records could be problematic to rural areas in Kentucky, since the state already has doctor shortages, especially in rural areas. If the state expands the Medicaid program under federal health reform, the number of insured patients could increase much more than the number of physicians in Southern Kentucky, an area where many people are uninsured.

“Large hospitals in the region such as ARH, Baptist Regional and others have successfully installed this software, and they are using the system with quality results,” Richard Murch, an IT consultant who specializes in electronic health records and is working on the project, said in teh release. But he said the process is complicated and requires extra staff and resources that are sometimes difficult to find in the area.

The U.S. Department of Agriculture has funded a project called Stronger Economies Together to improve the biomedical and life-science practices in the region. SET plans to provide resources and training to help providers and health systems make a successful switch to electronic health records, which the release said could create about 100 jobs over the next few years.

The survey showed 73 percent of doctors’ practices have asked for help transferring to and using electronic records. “SET reviewed industry sector research to determine health care and health related businesses as the fastest growing business segment of our rural economy,” said Jerry Rickett, president and CEO of Kentucky Highlands. For more information about SET and its partner programs, click here.

Beshear vetoes prompt-pay bill but takes several steps to address problems in Medicaid; he and Haynes say it's working

Gov. Steve Beshear has vetoed the bill designed to make Medicaid managed-care firms pay health-care providers more quickly, but is taking administrative steps to address the issue.

Beshear said he agreed with the intent of House Bill 5 but it might have interfered with the contractual relationship between the state and the four managed-care companies. The bill would have subjected that relationship to the state Department of Insurance's review and investigation process for private-insurance payment complaints. 

"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," Beshear's office said in a press release.

Instead, Beshear ordered the department to take over responsibility for review of prompt-payment complaints from the Department for Medicaid Services. "If improper payment practices are discovered, DOI can impose sanctions," the release said. He also ordered the department to audit each of the managed-care firms operating statewide – Wellcare, Coventry Cares, and Kentucky Spirit – at their cost.

Meanwhile, the firms have agreed to meet with every hospital they have under contract to reconcile outstanding accounts.  "This effort will begin immediately and continue until every hospital’s accounts receivable has been reconciled," the release said.  "The results will . . . be made public, in order to provide transparency and accountability." The firms have  agreed to meet with any other provider who wants a meeting.

Also, the Cabinet for Health and Family Services will hold eight regional forums for providers, managed-care firms, and Insurance Department representatives to discuss concerns and how to improve the system. Part of this effort will focus on "emergency room management that meets community needs without an ER operating as a de facto primary-care office," the release said. "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."

CHFS Secretary Audrey Tayse Haynes said the switch to managed care, made in November 2011, is working. “We are already seeing a tremendous increase in the use of preventive services, which improve health-care outcomes, while also reducing the enormous costs for treating chronic health conditions” such as diabetes-related amputations, she said.

Beshear said his plan would solve "lingering implementation problems" with managed care "while preserving the significant improvements in patient care and health care cost savings."

"Getting our people healthy and keeping them that way is not just good health policy, it’s good economics," Beshear said. "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."

Death rates for heart and pneumonia patients at critical-access hospitals are rising nationally, study finds

Death rates are rising at rural critical-access hospitals for Medicare patients who have heart attacks, heart failure and pneumonia, according to a study published in the Journal of the American Medical Association.

Hospitals designated as critical-access get slightly higher Medicsare and Medicaid reimbursements in exchange for limiting their size, procedures and patient stays. In 2002, they had a death rate of 12.8 percent for such ailments, under the 13 percent rate at other hospitals. But from 2002 to 2010, mortality rates at critical-access hospitals increased 0.1 percent each year, to 13.3 percent, while the rates at other hospitals fell 0.2 percent each year, to 11.4 percent.

There are 1,331 hospitals in the critical access program, Jordan Rau reports for USA Today. "Congress started the critical access program in 1997 to stave off hospital closures in places where patients had no good alternative because the next hospital was at least 35 miles away by regular roads or 15 miles by secondary roads. To qualify hospitals need 25 or fewer beds."
 
The authors of the study "suggested that the hospitals' care may suffer because they don't have the latest sophisticated technology or specialists to treat the increasingly elderly and frail rural populations," Rau reports. "Since hospitals are not required to submit performance evaluations to Medicare, the government may not realize that facilities could need additional assistance in caring for sicker patients."

Brock Slabach of the National Rural Health Association told Rau that the statistics don't always tell the complete story and that "The association's own research has found that rural hospitals do better in patient satisfaction surveys than do urban hospitals," Rau writes.

Will Kentucky expand Medicaid, and if so, how?

By Molly Burchett
Kentucky Health News

Kentucky is one of the last states to decide whether to expand Medicaid under federal health reform, and now that the General Assembly has gone home, Democratic Gov. Steve Beshear can turn his attention to the many questions that linger. Some Republican legislators think he will expand the program, but they worry about the cost when the state would have to start helping cover the new expenses, beginning in 2017.

Republican Gov. Bill Haslam of Tennessee decided Wednesday that he will not pursue Medicaid expansion, saying that it could put hospitals in financial jeopardy by giving them more patients on which they lose money, reports Michelle Kaske of Bloomberg. If he is right and the same logic applies to Kentucky, Medicaid expansion in the state could harm the rural hospitals and providers -- some of whom are already squeezed by the issues with the new managed-care system.

Along with Kentucky, 10 other states are undecided about Medicaid expansion: Alaska, Indiana, Kansas, Nebraska, New York, Oregon, Utah, Virginia, West Virginia and Wyoming. The map by The Advisory Board Company shows the lay of the land; for an interactive picture that outlines the research behind the map, click here.

Red=Not participating; Pink=Leaning toward not participating;
Gray=Undecided; Blue=Participating; Light Blue=Leaning toward participating

Only three states with Democratic governors are undecided; 18 Republican governors have rejected expansion. Kentucky is shown as leaning for it because Beshear has repeatedly said that he will expand Medicaid if the state can afford it. He has also mentioned that the state can reserve the right to pull out of the deal in 2017, when it must paying 3 percent of the cost of covering the newly insured, reaching 10 percent in 2020. Still, the questions about cost and affordability remain, and Beshear could be considering another option.

Tennessee has joined Ohio and Arkansas in negotiating with the Obama administration over plans to use federal Medicaid money to purchase private insurance for those who can't afford it but don't qualify for Medicaid now. However, Haslam's plan has been held up because the administration placed too many conditions on the money, writes Kaske. Republicans in other states, including Florida, Louisiana, Pennsylvania and Texas, have expressed interest in this option since Gov. Mike Beebe of Arkansas, a Democrat, ignited the wildfire of creating a hybrid of the two alternatives, reports Robert Pear of The New York Times.

The idea of privatizing Medicaid expansion appeals to many doctors and hospitals because they typically receive higher payments from commercial insurance than from Medicaid. However, many Kentucky hospitals and providers are concerned about the managed-care program that is run by three private organizations, and are calling for immediate action. Beshear has not said whether he will sign or veto a bill that would subject the managed-care firms to the prompt-payments and dispute-resolution rules of the state Department of Insurance.

"Action is needed to address the problems that patients and hospitals are experiencing with Medicaid managed care and to make the system work properly," wrote Harold "Bud" Warman, chair of the Kentucky Hospital Association, and Charles Lovell, chair-elect of the association, in a recent Herald-Leader article that laid out the various problems with the system. "And with the possibility that Medicaid will be expanded in Kentucky to include an additional 350,000 people, it is critical that these issues be addressed right away to avoid even greater problems in the future."

Either using federal dollars to buy private insurance in order to cover newly qualified individuals (the hybrid plan) under the health law's expansion  or expanding in the "traditional" way will not change the current managed care structure of Medicaid in Kentucky. Yet, it would mean that 350,000 more Kentuckians would be covered under managed care; Medicaid would cover those earning up to 138 percent of the federal poverty level, currently up to $15,856 a year for an individual.

The money that the federal government offers for expansion is very tempting. The question then may be, how will it be used?

Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Senate sends bill for prompt payment by managed-care firms to Beshear, who won't say whether he will sign or veto it

A bill aimed at resolving payment disputes between medical providers and Medicaid managed-care companies passed unanimously Monday in the Senate, and has been sent to Gov. Steve Beshear for his consideration.

House Bill 5, sponsored by House Speaker Greg Stumbo, D-Prestonsburg, would apply existing prompt-payment laws to managed-care firms and would set up an appeal process in the Department of Insurance to handle disputes between them and medical providers. Those claims are now handled by the Cabinet for Health and Family Services, which administers Medicaid and has had some problems with the bill.

Hospitals, doctors and other health-care providers have complained that the cabinet is not resolving their payment disputes with managed-care firms, putting many rural hospitals, clinics and health departments in serious financial binds.  Mental health centers have also reported cutting back services.

Asked last night what he would do with the bill, Beshear said the cabinet "has worked with the managed-care organizations and health-care providers to reduce problems during the change, and many concerns have been addressed.  However, I recognize that some issues persist.  I will review this bill carefully.”

Beshear has 10 days, excluding Sundays, to decide whether to veto the bill, sign it into law or allow it to become law without his signature. Stumbo said that if bill is vetoed it would likely be House Bill 1 in the 2014 session, reports Jessie Halladay of The Courier-Journal. The bill is a top priority for many health-care providers.

State Auditor Edelen says state must fix managed-care issues that have put rural hospitals and providers on brink of survival

State Auditor Adam Edelen said last week that shoring up the financial base for rural hospitals in Kentucky is the number one challenge to the state's Medicaid managed-care system.

The managed-care system has left rural hospitals at a tipping point that determines whether or not they will survive, which is deeply disconcerting when considering access to quality health care for Kentuckians in rural areas, Edelen said in a cn|2 "Pure Politics" interview. The state has a significant rural population, and "you can't overstate the importance of these rural hospitals," he said.

Hiring private companies to manage Medicaid has helped Kentucky slow cost increases in the $6 billion program, but the system has serious structural issues, and hospitals, doctors, dentists and other providers say the managed-care organizations (MCOs) are not paying them for treating Medicaid patients, Jacqueline Pitts of cn|2 reported.

There are many stories "about providers who have submitted claims and all of sudden, these MCOs change the rules, and so these claims are deemed unclear or improper and they are sent back," House Speaker Greg Stumbo said.

Edelen said the problem is that there is no consistent oversight in the claims process from the cabinet, and there is no opportunity for the provider to respond. "Right now we have our providers up against such a wall that the choice is to do one of two things," he said. "It's either to opt out of Medicaid, which is not something we want to do considering we have one of the largest percentage of population on Medicaid anywhere in the country, or go to the courts," which is inefficient and expensive.

“You have good people in the cabinet trying to manage it, you’ve got providers that are just trying to provide services to people, but we’ve got to have a better system of oversight and accountability because if that happen and we begin to lose hospitals in rural Kentucky then we have significantly reduced the level of quality of life for the people of Kentucky,” Edelen said.

Fixing the system for those hospitals and doctors is what is so important to the state as a whole, he said. He said the state and MCOs have had enough time to work out glitches with doctors and hospitals, and they must make some substantial changes before medical care for Kentucky’s neediest suffers any more.

Managed care, pension payments causing problems for community mental health centers; Edelen, C-J call for changes

"Kentucky mental health centers are cutting back services and struggling to assist patients the first time they’re admitted because of ongoing struggles with Medicaid managed care," Don Weber reports for cn|2. "At the same time, they’re losing out on federal grants because of red flags caused by their administration costs being inflated by increasing contributions to the public pension system."

NorthKey Community Care Mental Health Center in Northern Kentucky, which serves eight counties, had to close its adult day-treatment programs for the seriously mentally ill. Dr. Owen Nichols, the president and CEO, told Weber, “I get calls periodically from elderly parents in the community wanting help with their adult child that suffers from schizophrenia because they’re now wandering the streets, having some difficulties with local authorities.”

A recent editorial in The Courier-Journal addresses Kentucky's need for better mental health treatment, saying that Kentucky has "an underfunded, fragmented and now —thanks mostly to Medicaid managed care —hopelessly complicated system of mental health care."

The editorial notes last week's C-J articles in which reporters Laura Ungar and Chris Kenning uncovered the problems families face when navigating a fragmented mental-health system while trying to provide appropriate treatment for a loved one suffering form a severe mental illness, in addition to the "F" grade Kentucky received for its poor mental-health funding.

The editorial also describes how structural issues with managed care, which began in November 2011, have complicated the state's mental-health system. It notes the community mental-health centers asked to be left out of managed care, "pointing out they already operate efficiently and amount to only about 3 percent of the state’s $6 billion a year Medicaid program."

In addition, the editorial notes, "State Auditor Adam Edelen recommended the Cabinet for Health and Family Services take mental health out of managed care and let the state resume running it." Against his advice and the requests of community mental-health centers, the state expanded managed care of mental health. Now some haven’t been paid for Medicaid services since January, when managed care took effect, the editorial says.

"The nightmare needs to end for the many Kentuckians who need basic mental health services," says the editorial. "It’s time for the state to fully explore this system and, if folks are serious about improving it, fix the problems and find the money to fund it." (Read more)

Legislature eases physician assistant rules; nurse practitioners' prescription power, Medicaid prompt-payment bills, others linger

By Molly Burchett and Al Cross
Kentucky Health News

The Kentucky General Assembly has joined other states in easing the restrictions on physician assistants’ medical practice, but has held up a similar move for advanced registered nurse practitioners. Both issues relate to the shortage of medical practitioners in many Kentucky counties, and the quality of medical care.

The Senate added the physician assistant language of Senate Bill 43 to House Bill 104, an art-therapy bill, in order to preserve an agreement between the Kentucky Medical Association and the Kentucky Academy of Physician Assistants. It will repeal the law that bans PAs from practicing for their first 18 months unless a physician is on site; one will still have to be available by telephone. The amended bill has been sent to Gov. Steve Beshear for his signature or veto.

The amendment was used because the House had tacked onto SB 43 an amendment from advance practice registered nurses that would have repealed the need for them to have a collaborative agreement with a physicians to prescribe non-narcotic drugs. The KMA opposes that idea.

"It's looking like the doctors win," said Sen. Julie Denton, R-Louisville, who favors the repeal. "I'm not hopeful" it can pass, she said, but added that some physicians also favor it: "With Obamacare coming in, we're going to need all the front-line physicians we can get." Leading opponents of the measure, Republicans Katie Stine of Fort Thomas and Carroll Gibson of Leitchfield, didn't return a call seeking comment.

Nurse practitioners say that SB 43 is necessary to allow them to fill health-care gaps in rural Kentucky and address the state's shortage of primary-care providers. The Kentucky Coalition of Nurse Practitioners and Nurse Midwives says in an article prepared for Kentucky newspapers that NPs have never been required to practice under physician supervision and 17 states allow full prescribing authority for non-scheduled medications.

The Medicaid prompt-payment bill, HB 5, went to a conference committee after the House refused to go along with Senate changes, and may be considered when the legislature returns later this month, ostensibly to consider any bills Beshear vetoes. The bill would apply prompt-payment laws to managed-care organizations and would move Medicaid late-payment complaints to the insurance department; those are now handled by the Cabinet for Health and Family Services, which administers Medicaid.

In the final crunch to pass legislation before the veto recess, lawmakers attached seven health care-related bills to HB 366, which had focused on identifying congenital heart disease in newborns. It had 10 additional measures "hung on it like a Christmas tree before the free conference committee of House and Senate members," reports Ryan Alessi of cn|2's "Pure Politics."

The bills still hanging on the measure, dubbed the "healthy Christmas tree," are:

• HB 187, addressing a free prescription-drug program for under-insured Kentuckians.
• HB 79, which would exempt licensed health care providers from being disciplined for prescribing naloxone in the event of an overdose.
• HB 387, which aims to provide nutritional supplements for low-birth-weight newborns.
• SB 201, which addresses licensed diabetes educators.
• SB 38, to require Medicaid to accept provider credentialing by a Medicaid managed-care organization.
• SB 108, relating to managed-care contracts with the IMPACT Plus program, a behavioral health program for children.

Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Kentucky families struggle to care for violent, mentally ill children, and say their plight has been made worse by managed-care firms

Kentucky families struggle to care for violent, mentally ill children, and say their plight has been made worse by managed-care companies that fragment mental-health care and make it harder to find appropriate, stable treatment, which ultimately places the larger public at risk, Laura Ungar reports for The Courier-Journal.

Ungar writes that the lives of these Kentucky families resemble in part the one that lead to a devastating outcome in Newtown, Conn., where 20-year-old Adam Lanza, who had poor mental health and was under his mother’s care, went on a shooting rampage in an elementary school and killed 20 students and six staff members.

To represent the Kentucky families fighting, this battle, Ungar tells the story of the Davies family, who battle to keep themselves safe from the violent rage of their 14-year-old daughter, Lucy, while struggling to find the help she needs. Lucy has threatened to kill her 16-year-old sister, Katie, and herself, she’s tried to throw Katie and her father Dan down the basement stairs, and she’s been abusive to her mother.

Lucy suffers from a long list of disorders: neurological problems from fetal alcohol spectrum disorder, a mood disorder, post-traumatic stress disorder, and cognitive difficulties, Ungar reports. "Since Lucy was adopted at age 9, she’s received fragmented treatment in more than six facilities and doctors’ offices, none of which have been able to stop her violent outbursts," Ungar writes. Now, her Medicaid managed-care insurer, Coventry Cares, won’t cover her treatment in an Illinois facility called NeuroRestorative, which Ungar says offers her the best chance at improvement.

"The care tracking is just so fragmented, and we have managed-care companies that determine from afar what care people can get. They go from provider to provider. It’s a tragedy," said Louise Howell, president of Buckhorn Children and Family Services, where Lucy was treated briefly before becoming too violent for the staff. “This child is a perfect example of someone in need of a strong therapeutic community," Howell said. "And there’s so many of them."

Before going to Buckhorn, Lucy was at Rivendell Behavioral Health Services in Bowling Green, where she received brief treatment after threatening to kill her sister. From Buckhorn she got an emergency transfer to Our Lady of Peace in Louisville, which could handle her high level of violence. She was released when she moved from the Medicaid plan Kentucky Spirit, which plans to break its contract with the state, to Coventry Cares, with which Our Lady of Peace had severed ties.

Lucy's mother told Ungar that every switch of caregiver and facility increases the trauma to her daughter, who desperately needs stable care. Lucy’s parents say she would have such stability at NeuroRestorative, where her fetal alcohol syndrome could be addressed on a long-term basis. But two doctors working for Coventry, who have never examined Lucy, told her parents that Conventry "won’t cover the placement because there’s no evidence that inpatient care for brain trauma is medically necessary," Ungar reports.

Her eyes full of tears, Cynthia Davies told Ungar, “You cannot look into my daughter’s eyes and tell me she doesn’t deserve care. She’s a human being.” (Read more)

Kentucky receives an F grade for its low funding of mental-health services; supply falls short of demand

Kentucky's supply of mental-health services is much lower than demand for those services, in terms of state funding, and the state spends only 45 percent of the national average in mental-health funding per person.

In 2010, Kentucky dedicated about $232 million to mental-health services, according to the Kaiser Family Foundation, which is $54 per person, compared with a U.S. average of $121 that year. That ranks Kentucky among the bottom 10 states without including individual mental health reimbursements for Medicaid, reports Chris Kenning of The Courier-Journal.

The state's Medicaid rates for mental-health services haven't been raised substantially in years, and only a fraction of mental-health facilities offer residential treatments, reports Kenning. He also reports the most recent “Grading the States” report of the National Alliance on Mental Illness gave Kentucky an F in 2009. The group considered measures such as the number of programs using evidence-based practices and the number of psychiatric beds.

Kentucky officials cite new efforts to improve care, such as partnering with the University of Kentucky at a new Eastern State Hospital that will open soon, and pursuing a change to allow Medicaid funding of community outpatient teams, reports Kenning. Kentucky also funds 14 regional community mental-health centers, which served 160,000 people last year, and there are 179 mental-health facilities, which include 40 offering residential care, reports Kenning.

Yet, these efforts fall short of providing mental health services for those Kentuckians in need.  In 2011, a surprisingly high 42 percent of Kentucky adult females and 31 percent of Kentucky males reported having poor mental health. Experts estimate that one in four people will suffer from some form of mental illness in a given year, which is nearly 1.1 million people in Kentucky, Kenning reports. 

It is critical for Kentucky officials to examine this issue in light of the Department of Health and Human Services rule that included mental-health benefits and treatment of substance-abuse disorders as part of the 10 "essential health benefits" insurance plans must provide when federal health reform takes full effect next year. HHS estimates it will expand mental-health and substance-abuse treatment benefits to 62 million Americans, and there is already a shortage of such services in Kentucky.

Kentucky hospitals gave $1.96 billion to communities in 2011, including $576.7 million cover of Medicare, Medicaid shortfalls

In 2011, despite economic and financial obstacles, Kentucky hospitals' estimated value of benefits to their communities up 17 percent from the year before, to $1.96 billion. So says the Kentucky Hospital Associated 2011 Community Benefits Report, compiled by the Kentucky Hospital Association with data submitted by hospitals. (Chart gives a breakdown of hospitals' total community benefits and services expenditures in 2011.)

Kentucky hospitals say they absorbed $576.7 million in 2011 shortfalls from Medicaid and Medicare, which cover 19 and 55 percent of Kentucky hospital patients; those losses were 26 percent larger than 2010, and may nearly double under federal health reform, to an estimated $852 million by 2019.

Bridging gaps created by Medicaid and Medicare underpayment is only one example of how the 131 Kentucky hospitals demonstrate their commitment to local communities by investing in community needs, the report says. In addition to covering government shortfalls, community benefits include providing charity care, forgiving bad debt and supporting medical research.

In 2011, the reports says, Kentucky hospitals financed $451 million in charity care, which means they cared for the sick and injured even if those patients could not afford care.

In Glasgow, T.J. Sampson Community Hospital and Dr. Bharat Mody (left), a general surgeon, have teamed up to fulfill the unmet health care needs of low-income, working, uninsured or under-insured adults of Barren County through a charity program called Community Medical Care. The program provides assistance with basic coverage for those who qualify, in addition to helping cover the cost of medications, glasses or hearing aids.

In 2011, Kentucky hospitals absorbed $426.5 million in bad debts, losses due to patient non-payment that often occur in hospital emergency rooms. Dennis Manners, who had a $500,000 medical bill and sometimes visited the ER 25 times a month, is one patient out of the total 22 percent of University of Louisville patients who cannot afford care and often cannot even afford their $15 co-pay. Highlighting its efforts to give back to the community, the reports says U of L developed a new treatment plan for Manners, which included sending him to a treatment center outside of Cincinnati.

Many health-improvement services in Kentucky communities, such as health fairs, screening programs, immunization clinics, health needs assessments and community planning, are financed by Kentucky hospitals. According to the report, $43.7 million was spent by these hospitals on such outreach programs that serve all ages and a number of special needs populations. For example, Northern Kentucky's St. Elizabeth Healthcare is fighting against cardiovascular disease, diabetes and stroke with its Cardiovascular Mobile Health Unit that brings vascular services to the community for easy access, screenings, risk appraisals and education.

Hospitals also spend a lot of money, an estimated $127.5 million in 2011, to ensure health professionals are properly educated -- a great need in Kentucky, where 59 of the 120 counties are designated as health professional shortage areas. One effort, the Rural Physician Leadership Program on the campus of St. Claire Regional Medical Center in Morehead, addresses this shortage by training physicians to serve in rural areas of Kentucky and the nation.

Other community benefits include subsidized health services, estimated at $32.3 million, to support programs like Highlands Regional Medical Center's Highlands Center for Autism in Prestonsburg (left). The center is the first of its type in the state and was created in 2009 to address autism in Kentucky, which is estimated by the Center for Disease Control to be diagnosed in one out of every 88 children, says the report. Each child at the Highlands center has a customized treatments plan involving psychologists, educators, behavior analysts, speech pathologists, pediatricians and neurologists, who collaborate to help children with autism reach their full potential.

The annual KHA report reminds people what hospitals do for the state and provides education about ongoing efforts. A more recognizable contribution is that Kentucky hospitals had a combined spending of $6.4 billion in 2011 on staff salaries, purchases or supplies and services that create a‘ripple effect” in the overall economy to generate state businesses, jobs, and tax revenue. The reports says St. Joseph Mount Sterling, for example, provided 213 jobs and generated about $12 million in annual local payroll in 2011. Kentucky hospitals' compensation comprises 5.8 percent of all wages and salaries in the state.

The reports says hospitals are more important than ever to the overall economic health of Kentucky communities. This is the fourth year for the report, generated by the voluntary KHA survey and other data sources, including the annual survey by the American Hospital Association; Kentucky Hospital Statistics, 2013; and Kentucky Hospitals’ Economic Importance to Their Communities, 2011. The KHA report covers community benefit expenditures made in 2011, which is the most recent year for which statewide data is available.

Feds letting Arkansas privatize Medicaid expansion; idea could spread like wildfire, as in Florida, but cost questions remain

Arkansas has turned heads nationally with its preliminary plan to expand Medicaid using the private insurance market, showing that the Obama administration is willing to give states more flexibility than expected in expanding the program.

Health and Human Services Secretary Kathleen Sebelius has agreed to a proposal by Arkansas Gov. Mike Beebe to reject the Medicaid expansion but use federal money to buy private health insurance for the 200,000 people who would have been covered under ordinary expansion, reports Sandhya Somashekhar of The Washington Post.

States that have come down on either sides of the Medicaid-expansion issue may reconsider their decision in light of the Arkansas proposal, said Sara Rosenbaum, a health law professor at George Washington University. "If Arkansas is allowed to do this, I expect it to spread like wildfire," Rosenbaum told the Post.

The first place could be Florida, where a state Senate committee rejected Republican Gov. Rick Scott's expansion plan and proposed a privatization plan like that in Arkansas. Last week, a House committee voted to reject any expansion of the program. Scott "made it clear he was not going to lobby the Legislature on Medicaid," preferring to emphasize other issues, The New York Times' Lizette Alvarez reports. For coverage from the Tampa Bay Times and The Miami Herald, click here.

Could the wildfire spread all the way up to Kentucky?

Gov. Steve Beshear has said he wants to expand Medicaid in Kentucky if the state can afford it, but many Republican lawmakers oppose the idea, saying it would not be fiscally responsible. On the national level, 26 states and the District of Columbia have expressed a desire to expand Medicaid, 17 have said they reject it and seven are undecided, according to the nonpartisan Kaiser Family Foundation.

A more flexibile arrangement could be a game changer because it makes expansion more appealing, especially for states where expanding Medicaid has been politically unpopular and polarizing. in Arkansas, which has a Democratic governor and a Republicna legislature, officials say that from an ideological standpoint, using private insurance appeals to lawmakers from both parties, reports Somashekhar. She reports that even Democratic-led states might prefer this arrangement because it gets rid of some bureaucratic hurdles.

However, there are questions about cost. The Congressional Budget Office estimates that private insurance plans cost $3,000 more per person than Medicaid, reports Somashekhar. On the other hand, Arkansas officials say the move could ultimately save money in administrative charges along with other cost-control measures.

Although the Arkansas proposal is not concrete, it provides proof that the Department for Health and Human Services encourages innovative, state-based approaches to promote expansion. Many states may develop a new route best suited to their specific needs, without having to leave federal money on the table. (Read more)

Commission says drastic changes to doctor pay and cuts to wasteful services can fix Medicare problem without tax hikes

A national advisory panel says “drastic changes” in how Medicare reimburses doctors and other providers are needed to shore up Medicare's finances, improve patient outcomes and rein in health care costs, and there is no need to seek more taxpayer money.

Medicare needs $138 billion over the next decade to avoid steep cuts in physician pay, and avoiding those cuts has become an annual scramble in Congress known as "the doc fix."  A panel dominated by internal-medicine specialists, The National Commission on Physician Payment Reform, has concluded that reduction of wasteful medical services can help solve the problem and "our nation cannot control runaway medical spending without fundamentally changing how physicians are paid," it says in its report.

Source: Henry J. Kaiser Family Foundation and Congressional
Budget Office, Budget and Economic Outlook, January 2011

The U.S. spends nearly $3 trillion a year on health care, and that level of spending is unsustainable. The report says that as a proportion of the federal budget, the cost of Medicare has risen from 3.5 percent in 1975 to 15.1 percent in 2010 in 2010). In 2020, it is projected to consume 17 percent, or 4 percent of the U.S. gross domestic product.

Recognizing the way that physicians are paid contributes substantially to the high cost of health care, The Society of General Internal Medicine convened the commission in March 2012 to make recommendations for payment reform. According to the report, some of the factors that drive up health care expenditures are:

• Fee-for-service reimbursement
• Consolidation in the health-care industry
• Reliance on technology and expensive care
• Reliance on a high proportion of specialists
• Paying more for the same service or procedure when done in a hospital setting as opposed to an outpatient setting
• A disproportionate percentage of health care spending directed to a small number of people who are very sick and costly to treat
• High administrative costs
• Fear of malpractice lawsuits
• Fraud and abuse

The commission says increased taxes are not needed to fix the Medicare problem, and the Medicaid shortfall could be entirely found by reducing overuse of services within Medicare. See the chart to the right for a breakdown of those excess medical costs.

The commission developed 12 recommendations to reduce health costs, calling for drastic changes to the current fee-for-service payment system and a five-year transition to a physician payment system that rewards quality and value-based care and not the volume of care.

The 12 recommendations were based on the principles that payment reform should improve care quality and efficiency, encourage care for the medically disadvantaged, reduce marginal and ineffective services, increase transparency to the public and should reward patient-centered comprehensive care. (Click here to see those recommendations)

House sends Senate pill-mill and Medicaid managed-care fixes

The state House yesterday approved without dissent two bills aimed at improving Kentucky's health care.

House Bill 217 addresses some "unintended consequences" of last year's "pill mill bill" by easing some of the bills regualtions. The bill also tightens restricitions on prescription drugs, reports Ryan Alessi of cn|2.

The other measure, House Bill 5, deals with payment problems of the Medicaid managed care system. Itl would apply the prompt-payment laws to managed-care organizations and would move Medicaid late-payment complaints and disputes to the insurance department; those are now handled by the Cabinet for Health and Family Services, which administers Medicaid.

Both bills are expected to see action in the Senate.

Bill to make Medicaid managed-care firms pay up, and more promptly, nears final form in House and will get attention in Senate

By Molly Burchett and Al Cross
Kentucky Health News

The complaints by many health-care providers about Medicare managed-care firms' delay or denial of payment claims appears to be generating a bipartisan solution in the General Assembly. A bill on the House floor that would transfer late-payment complaints to the state Department of Insurance, which enforces Kentucky's prompt-payment laws, appears to have support in the Senate.

House Bill 5 would apply the prompt-payment laws to managed-care organizations and would move Medicaid late-payment complaints to the insurance department; those are now handled by the Cabinet for Health and Family Services, which administers Medicaid.

Hospitals, doctors and other health care providers have complained that the cabinet is not resolving their payment disputes with managed-care firms. The bill cleared the House Health and Welfare Committee Feb. 21 and is awaiting a vote on the House floor. The bill is sponsored by House Speaker Greg Stumbo.

Sen. Julie Denton, chair of the Senate Health and Welfare Committee, told Kenny Colston of Kentucky Public Radio that she plans to give the bill a hearing and supports its intent to make managed care organizations pay providers. "I think anything we can do to have more oversight and more assistance in keeping them in compliance with their contracts is a welcome breath of fresh air," she said.

Senate President Robert Stivers said he has concerns about the bill affecting the MCOs contracts with the state. But he said his chamber will take a look at the bill, Colston reports. The cabinet has had the same concerns, and some other objections that are to be addressed by House floor amendments.

Kentucky providers report being burdened by a lack of or delayed payments from the new managed-care system. Kentuckians have called for immediate action by state government to help fix these issues on behalf of providers and patients, which has prompted this bipartisan legislative response.

Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Medicaid expansion brings primary care access to the forefront

The federal health reform law will usher at least seven million more Americans into Medicaid, and as states like Kentucky debate Medicaid expansion, policymakers are struggling with the question of whether there will even be enough primary care doctors to provide care, reports Michael Ollove of Stateline.

The country is already short of primary-care doctors. Although many primary-care physicians would take on new Medicare or privately-insured patients, only two out of three primary-care physicians surveyed in 2011 were willing to accept new Medicaid patients.

Why? Poor compensation is one reason; on average, Medicaid pays physicians 59 percent of the amount Medicare pays for primary care services, reports Ollove. Many Kentucky primary-care providers are also deterred by existing Medciaid problems. Providers report being burdened by a lack of or delayed payments from the new managed-care system.

Congress hopes to lure practitioners to primary care with a provision that raises primary-care providers' Medicaid fees to Medicare levels. This is only a temporary fix, which went into effect at the beginning of the year and will remain in effect for two years, reports Ollove.

The impact in Kentucky remains uncertain. Lawrence Kissner, Kentucky's commissioner for health and family services, says the state’s Medicaid pay raise in 2005 resulted in a 36 percent increase in the number of primary care doctors accepting Medicaid patients, reports Ollove. This is precisely what the health-law authors hope will happen now.

Kentucky is addressing the health coverage issue in other ways.  The General Assembly is considering a bill that would repeal a burdensome supervision requirement and encourage more independent physician assistants to remain in Kentucky to serve medically underserved areas.

Although Kentucky already allows nurse practitioners to practice independently, the Medicaid rate increase applies only to physicians who provide primary care services. It does not apply to nurse practitioners, who have been touted as a potential solution to the primary care problem and often provide care in underserved areas of the state. (Read more)

If Republican governors are agreeing to expand Medicaid after lobbying by hospitals, can Beshear be far behind?

By Al Cross
Kentucky Health News

Florida Gov. Rick Scott's surprising announcement that he would use federal health-care reform money to expand the Medicaid program to households earning up to 138 percent of the poverty level "means the dominoes are falling," says Ron Pollack, executive director of Families USA, a consumer group that lobbied for the law. And another domino seems likely to be Democratic Kentucky Gov. Steve Beshear, without involvement by the state legislature.

Beshear has said he will expand Medicaid if Kentucky can afford it, and has mentioned that the state can reserve the right to pull out of the deal in 2017, when it must start paying a small but increasing share of the cost, reaching 10 percent in 2020. Scott used the same qualification.

Pollack told The New York Times that the message sent by seven Republican governors' acceptance of the deal is  “Even though I may not have supported and even strongly opposed the Affordable Care Act, it would be harmful to the citizens of my state if I didn’t opt into taking these very substantial federal dollars to help people who truly need it.” The GOP governors (of states outlined in Times map below) have said they will expand the program partly to protect rural hospitals and the poor.

"The change of heart for some Republican governors has come after vigorous lobbying by health industry players, particularly hospitals," the Times notes. "Hospital associations around the country signed off on Medicaid cuts under the health care law on the assumption that their losses would be more than offset by new paying customers, including many insured by Medicaid. . . . Every few days, state hospital associations and advocates for poor people issue reports asserting that the economic benefits of expanding Medicaid would outweigh the costs." (Read more)

Kentucky Hospital Association President Michael Rust said the trade group is for "universal coverage" by whatever means but is not lobbying Beshear for Medicaid expansion. "We assume he is" going to expand it, Rust said in an interview today. He said the association has not taken a position on bills that would require legislative approval of expansion and the health-insurance exchange being set up under the reform law. The legislation, Senate Bill 39 and SB40, passed the Republican-controlled Senate on party-line votes today, and are expected to die in the Democratic-majority House.

Senate Majority Floor Leader Damon Thayer said the bills were aimed at reining in "big daddy government." Here's a video from cn|2:

Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Herald-Leader says state running out of time to fix Medicaid managed care, with decision on expansion looming

A recent editorial in the Lexington Herald-Leader called for swift legislative action to fix the problems of Medicaid managed care. Timely action is even more necessary since the state is considering expanding the program, some critics have said.

Fifteen months ago the administration of Gov. Steve Beshear made a quick transition to managed care that privatized Medicaid for 550,000 poor, elderly and disabled people and was projected to save Kentucky $375 million in three years.  If the state expands Medicaid, that number of covered individuals could grow to more than 1 million — or roughly a quarter of all Kentuckians.

Although Medicaid is encouraging preventive care, such as more well-child visits and diabetes testing, providers haven't been paid for some of their services. The state recently granted the managed care companies a seven percent rate increase, and the companies have said they're losing money here and one is pulling out in July. But at the end of the first eight months of managed care Medicaid, the state had paid $500 million more to the companies than the companies had paid to providers.

"The delay and denial of payments are creating financial crises for providers and pharmacies and forcing small hospitals to lay off employees, deplete reserves and default on bonds," the editorial said. "This is creating a massive transfer of wealth from Kentucky medical practices and hospitals to for-profit companies based in other states. . . . For patients, the companies are putting up barriers to care that would be illegal in the private sector. The new burdens that have been placed on vulnerable Kentuckians and their medical providers threaten to unravel not just the safety net but, in some places, the whole health care system."

The editorial called on the General Assembly to pass legislation to curb abuses such as "the stiffing of hospitals that provide emergency care as required by federal law. . . . House Bill 299 and Senate Bill 178 would also curb the false economy of severely limiting in-patient mental-health care for children while referring them to nonexistent out-patient care."

The legislation would also require Medicaid managed care companies to:

• Meet the same provider network standards, including distance to hospitals and obstetrical care, as other insurers operating under Kentucky law.
• Decide claims based on nationally recognized clinical standards and provide specific reasons for denials so providers would know what's allowable.
• Participate in an appeals process for denied claims.

Appalachian Regional Healthcare wants to sue the U.S. Department of Health and Human Services and others, alleging that the new system is out of compliance with federal law.

"The feds shouldn't have to be dragged in," the editorial says. "The federal government covers roughly 70 percent of Kentucky’s $6 billion Medicaid program. Expanding Medicaid to include more low-income people is a linchpin of federal health care reform," and Beshear has said that he wants to expand Medicaid if the state can afford it. "Kentucky can't wait much longer to get Medicaid right." (Read more)