The issue came to a head last April after Appalachian Regional Healthcare, Lexington, sued the Cabinet for Health and Family Serves for illegally setting Medicaid reimbursement rates that only covered 75% of its costs. It also sued two managed-care organizations for failing to make timely payments, leaving it on the hook for millions of dollars in claims.
Kentucky expanded its managed-care program in November 2011 to cover all 120 of its counties, estimating it could save $1.3 billion over three years.
The Kentucky Hospital Association said in a news release that it was “disappointed” by the veto of House Bill 5, but “encouraged” by Beshear's plan to resolve billing disputes, noting that the issue has “overwhelming bipartisan support” in both houses of the Kentucky General Assembly.
Beshear vetoed the bill citing its “possible unintended consequences,” including its ability to interfere with “contractual relations between providers and MCOs.”
However, in his alternative plan, he preserved some of the bill's original intent by moving the responsibility for reviewing payment complaints from the Department of Medicaid Services to the Department of Insurance.
The plan would also require insurance regulators to conduct targeted audits of the state's MCOs—currently WellCare, CoventryCares and Kentucky Spirit—and sets up forums for providers, government representatives and payers to discuss payment concerns and suggest improvements to the program.
The final component of the plan would focus not on reforming the managed-care program but about preventing the state's emergency rooms from serving as a “de-facto primary-care office.”
It directs the physicians and staff at the University of Louisville and the University of Kentucky—the only Level One trauma centers in the state—to work with other providers to design a system that will lead more patients to be treated in the most cost-effective setting.
