Home » Managing Medicaid: 2020 has been a year full of changes for Kentucky Medicaid providers

Managing Medicaid: 2020 has been a year full of changes for Kentucky Medicaid providers

By Shannon Clinton

In late May this year, Kentucky Gov. Andy Beshear announced five organizations would receive $8 billion in Medicaid Managed Care Organization (MCO) contracts to manage patient care for the state’s Department of Medicaid Services (DMS), the goal being efficient use of and access to health care to obtain the best outcomes with the available resources.

The five companies awarded contracts were Aetna Better Health of Kentucky; Humana Health Plan; Molina Healthcare; United Healthcare; and WellCare Health Insurance of Kentucky.

Overall, Medicaid provides a reliable $12 billion revenue stream to every corner of Kentucky and most elements of the state’s crucial health services economy.

For Medicaid enrollees, MCOs process claims, provide disease management, issue prior authorizations and other functions, according to the DMS website. The contracts comprise a growing segment of the health care system, with 1.6 million Kentuckians now receiving Medicaid, including those newly added due to financial woes stemming from the COVID-19 pandemic.

During one week in mid-October alone, 7,926 new Medicaid enrollees were added, about 60% of whom were fast-tracked for temporary benefits enrollment, likely as a result of the pandemic’s impact, according to Susan Dunlap, executive director of the Office of Public Affairs in Kentucky’s Cabinet for Health and Family Services (CHFS).

CHFS Secretary Eric Friedlander said most states have adopted the MCO format. Kentucky’s system began in 2011 not only as a means of cost savings but also because providers have more administrative capacity for case and care management, which should lead to better health outcomes for members.

Tyler Glick, who with his Louisville public relations/public affairs firm Glick Strategies represents the Kentucky Association of Health Plans trade organization, said Kentucky MCOs have a 90% medical loss ratio (MLR) guarantee, the highest in the country. This means 90% of Medicaid revenue is spent on medical care and other quality-improvement activities. 

He added that Kentucky’s MCOs have some of the highest scores in the Centers for Medicare and Medicaid Services’ (CMS) Southeast region—which includes Tennessee, Florida, Alabama, Mississippi, Georgia, North Carolina and South Carolina—for behavior health measures, treatment measures and health plan ratings, and rank in the top two states within the CMS region in health plan ratings for the past three years.

And, he noted, MCOs invest in research and development, telehealth and data analytics at a high level to ensure positive health outcomes for members, and integrate benefits including behavior and physical health and pharmacy results for greater efficiency and care coordination.

Starting in January, the new contract term for the state’s MCOs is five years. According to the CHFS website, all MCOs must provide identical benefits and cost sharing, though some may offer special programs above normal benefits.

Friedlander said the state provides quality oversight for MCOs, evaluating and grading them for effectiveness. And inasmuch as Medicaid serves to support individuals who need care, it also supports Kentucky’s health care system, which he said “would absolutely collapse without Medicaid.”

“The Medicaid program is around a $12 billion program in the state of Kentucky,” Friedlander said. “It is giant. And the Medicaid programs, through the MCOs or directly, pay hospitals, nursing homes, doctors, all sorts of therapists. Medicaid pays for a lot of services across the commonwealth.”

A changing landscape

Anthem didn’t receive a contract renewal in May, and filed a lawsuit citing flaws in bid evaluations and other issues. A Franklin Circuit Court judge in late October ordered the state to include Anthem as a sixth contract provider, and CHFS said on Oct. 28 it will comply. Anthem representatives declined further comment.

Passport Health Plan, whose majority owner is Virginia-based Evolent Health Inc., also didn’t receive a seat at Kentucky’s MCO table this time after serving as a MCO for Kentucky for more than 20 years. When the decision was released in late 2019, Passport was in the midst of constructing a new $100 million headquarters facility in West Louisville at the intersection of 18th and Broadway.

In July 2020, it was announced Passport’s Medicaid and dual-eligible (both Medicare and Medicaid) businesses would be purchased by Long Beach, Calif.-based Molina Healthcare for about $20 million in a deal that closed September 1. Molina acquired the Passport name and agreed to keep about 500 Kentucky-based Passport and Evolent Health employees.

“Acquiring the operations as well as transferring over employees of Passport Health Plan provides us with a well-known brand in Kentucky and positions us well to compete even more effectively in the market,” Molina CEO and President Joe Zubretsky said in a news release. “We look forward to being able to achieve a major objective of this transaction, which is the continuity of care for Passport’s members.”

A company representative didn’t respond to additional requests for comments, but a Bloomberg report in late May said Molina’s plans included bringing more than 1,100 jobs to Kentucky, establishing its state headquarters and regional operations center in West Louisville, and creating a Molina Community Innovation Fund to provide more than $2.5 million over four years toward improving the health care experience for low-income populations.

Kentucky is just one new horizon for Molina, which has been laying out hefty sums lately and increasing its presence as a Medicaid manager in several states. The company’s website profile says it served 3.6 million members nationwide as of June 30, 2020.

In 2019, Molina announced plans to acquire YourCare Health Plan Inc., which serves 47,000 Medicaid members in New York, in a $40 million transaction.

In April 2020, Molina announced plans to acquire Magellan Complete Care (MCC), a business line of Magellan Health Inc., for $820 million. MCC has a footprint in six states, including Virginia and Arizona, as well as dual-enrollment and managed long-term care plans in Massachusetts and New York, respectively.

Molina is also in the process of purchasing the assets of Affinity Health Plan for about $380 million, with finalization expected in the second quarter of 2021. Affinity has 284,000 Medicaid members in several New York counties.

Meanwhile, Aetna Better Health of Kentucky (ABHK) is launching SKY, a new program geared toward youth under state oversight in conjunction with the state Department for Medicaid Services. ABHK is a subsidiary of Hartford, Conn.,-based Aetna Inc.

An ABHK online newsletter describes SKY as providing “enhanced benefits and wraparound services to children in the foster care system, including former foster care youth, children who have been adopted, as well as children dually committed to the Department of Juvenile Justice (DJJ),” adding that ABHK will oversee and coordinate various services for these youth, including physical and behavioral health, dental care, social services, and more.

“We are honored to have been selected as the sole health plan to manage and coordinate care for the most vulnerable and at-risk youth across the state who are part of the new SKY program,” said Aetna Better Health of Kentucky CEO Jonathan Copley. “This transformative program will introduce innovative interventions and models of care focused on the whole family, on creating comprehensive whole-person care plans, and on increasing community capacity across Kentucky.”

ABHK will continue to work closely with the commonwealth, provider partners and community organizations to support program beneficiaries, Copley said.

”Supporting the improvement of Kentucky’s child welfare and juvenile justice systems by engaging members and their support networks–family, friends, neighbors, communities–will be key to the success of our innovative model,” he said.

This program also will create new jobs for Kentuckians. The SKY program is expected to launch in January 2021, and key staff is being hired, Copley said. About 200 job openings statewide have been posted on Aetna’s website.

Humana is only state-based MCO

Jim Turner, with Humana corporate communications in Louisville, said Humana has been a Medicaid partner with Kentucky for seven full years, and will enter its eighth year Jan. 1, 2021.

“Overall, Humana has more than 12,000 employees in Kentucky, more than in any other state, who support all of our lines of business, including Medicaid,” said Turner. “Approximately 500 of these employees are dedicated to work in our Medicaid business, Humana Healthy Horizons. Humana is the only MCO serving Medicaid beneficiaries in Kentucky that is fully based in the state. Our Kentucky-based team designs, implements and administers our program with the commonwealth.”

Turner said Humana, which with nearly $65 billion in 2019 revenue is the largest publicly traded Kentucky-based company, had annual salaries in the state of about $880 million last year. And from a humanitarian standpoint, employees contributed more than 80,000 volunteer hours in-state last year, he added.

Humana’s main focus, Turner said, is to ensure that individuals served under Medicaid, many of whom are medically at risk, receive high-quality health care. The strategy includes fostering strong health care provider networks statewide, disease management programs, and comprehensively focusing on physical, mental and behavioral health.

The company leverages technology and educational resources and works to remove barriers that could impact members’ health. Humana also offers resources to help members find affordable housing, Turner said. Next year digital diabetes monitoring and management tools will be offered along with 24-hour access to nurses and lactation consultants for pre- and postnatal care.

United Healthcare spokesman Tony Marusic said the Minnesota-based company was in a blackout period related to litigation and was unable to comment about its MCO relationship with Kentucky. Representatives for WellCare didn’t respond to requests for information. St. Louis-based Centene Corp. completed a $17 billion acquisition of WellCare early in 2020.

Of course, the impact of COVID-19 on the vulnerable Medicaid segment isn’t forgotten. At the onset of the pandemic, Humana quickly engaged to help members face emerging challenges, Turner said. It created a risk-stratification model, ultimately expanding access to health care supplies, masks, vaccines, immunizations and medication management. Humana delivered more than 4,000 meals and donated more than 100,000 reusable masks to the Coverings for Kids initiative.

Medicaid members also receive dental and vision coverage, 24/7 access to telehealth services, GED programs, return-to-work programs, and gift cards to reward healthy behaviors, Turner said. 

“The more we can help our members get and stay healthy, the more we can invest in additional programs to continue this cycle,” he said.