Kansas looks to managed care for Medicaid overhaul

Kansas is turning to managed care organizations to provide Medicaid enrollees more integrated, higher-quality care and to limit Medicaid spending growth.

The state on Nov. 9 released a request for proposals for KanCare, both a consolidation of existing agencies that serve the state's 378,000 Medicaid enrollees and an attempt to recruit managed care organizations to provide comprehensive, coordinated, quality care. Bids are due by Jan. 13, and the state expects to sign statewide contracts with three MCOs.

"Serving the needs of the whole person as well as ensuring long-term fiscal sustainability are the principles this plan is built upon," said Kansas Lt. Gov. Jeff Colyer, MD, who led the initiative. The reform will require federal approval from the Centers for Medicare & Medicaid Services, but the state hopes to receive it and begin KanCare by January 2013.

Historically, the state's Medicaid program hasn't focused sufficiently on quality outcomes, according to a KanCare summary released Nov. 9 by Kansas Gov. Sam Brownback. KanCare will integrate the state's Medicaid fee-for-service, managed care, home- and community-based services, and long-term and institutional care systems in an attempt to deliver care seamlessly.

The state also will require MCOs to provide medical homes to people with complex health needs, beginning with a focus on individuals with mental illness, diabetes or both.

"We are asking these companies to invest in systems of care that don't really exist," said Andy Allison, PhD, director of the division of health and finance for the state's Medicaid agency. Medicaid enrollees also will be offered health savings accounts that can be used to pay for private health insurance as a way to help them transition to private coverage, if they desire to do so.

The state will hold MCOs financially responsible for patient outcomes. Between 3% and 5% of plans' fees will be held back to ensure that they meet state quality goals. The state will measure MCO performance with population-specific and statewide outcomes measures.

"There will be an intense focus on data as we hold ourselves accountable through the performance of our care organizations," said Robert Moser, MD, Kansas secretary for health and environment.

Kansas officials are betting that quality improvement and cost control are compatible in Medicaid. State Medicaid spending grew by an average of 7.4% a year during the last decade. The state would save more than $850 million over five years if Medicaid spending growth were limited to 2% less than projected, Allison said.

Representatives of the state's major physician and hospital organizations said KanCare is a sincere, laudable effort to improve the state's Medicaid program. KanCare is not an attempt to balance the Medicaid budget on the backs of doctors or hospitals, they said.

The request for proposals protects fees for physicians, hospitals and others caring for Medicaid patients, said Jerry Slaughter, executive director of the Kansas Medical Society. Existing state Medicaid fees are about 80% of Medicare rates, he said. Nearly 90% of Kansas physicians participate in Medicaid.

The Kansas Hospital Assn. is examining the details of the request, but the program seems like a positive step, said association spokeswoman Cindy Samuelson.

Medicaid officials will be advised on KanCare implementation by a panel of seniors, patient advocates, people with disabilities, health professionals and other Kansans.

KanCare also:

• Encourages managed care organizations to partner with existing health professionals and facilities.
• Requires MCOs to attempt to improve Medicaid enrollees' health literacy so patients can share responsibility for their health.
• Limits enrollees' health plan changes to one period each year, just as most employee-sponsored health insurance plans do.