Audrey Tayse Haynes was appointed secretary of the Kentucky Cabinet for Health and Family Services in 2012. Prior to her appointment, Haynes served as senior vice president/chief government affairs officer for the YMCA of the USA. She has also held appointments in the administrations of three previous Kentucky governors, including executive director of the Kentucky Literacy Commission, a member of the Kentucky Board for Elementary and Secondary Education, and deputy secretary for the Cabinet of Health Services.
Haynes began working in Washington, D.C. in 1993 as the national executive director of Business and Professional Women/USA and the Business and Professional Women’s Foundation. In 1997, she was named deputy assistant to President Clinton and director of the Office for Women’s Initiatives and Outreach at the White House.
Mark Green: The Cabinet has a diverse portfolio of responsibilities. Please give us an overview of its major public service duties.
Audrey Tayse Haynes: We are the primary state agency for protecting and promoting the well-being of Kentuckians. We do that through the delivery of health services and human services. The Department for Medicaid Services, the Department for Public Health, the Department for Community-Based Services and the Department for Behavioral Health are the four largest. We have about 7,500 employees, and we have over 150 offices, at least one in every county in the state. Based on our current year budget, we will go over the $9 billion mark, and that is a combination of General Funds, tobacco funds, restricted-agency funds and federal funds.
MG: Describe those revenue sources. What part is state General Fund and what part is federal and other sources?
ATH: About 23.5 percent in the current year is General Fund, and almost 65.5 percent is federal. The next largest would be restricted-agency funds; these come from various fees, taxes and penalties that are restricted per statute for certain programs. Only 0.3 percent comes from tobacco funds; it’s very, very small. Mostly our revenue comes from federal funds, and those other funds are used to match the federal funds. Different programs have different levels of match.
MG: You mention that the Cabinet has 7,500 employees now. How has that number changed in recent years as a result of the evolution of responsibilities and as state government has implemented austerity measures to put operations in line with revenues?
ATH: Historically, we’ve had as many as 8,000 employees at times. The number is down from what it used to be. Through the economic downturn, we lost some through attrition when folks retired or left and their positions were not filled. One agency, Community-Based Services, received more money in the last biennium to hire more social workers, and so they have been hiring. In the nearly two years that I’ve been here, the number has fluctuated between 7,500 and 7,700.
MG: The cabinet has thousands of employees and dozens of programs. What management systems, processes or tools do you use to keep abreast of such a large and diverse operation?
ATH: First, as a cabinet secretary you have a responsibility to both lead and manage. You don’t have the pleasure of being able to just lead and have others manage; you have to do both. The first line of management that I have is an executive staff. That’s comprised of the commissioners and executives of the various offices and departments that report directly to me. We meet every Monday morning for one hour, and we go through the entire Cabinet – high points, low points, expected problems – in one hour. On a regular basis, I have one-on-one meetings, especially with the larger departments and their leadership. And then, just like any other workplace, we have special projects, we have work groups.
The other factor is that, as a public agency, the Cabinet has many appointed advisory groups and boards from which we receive a lot of input. And when we’re doing some large transformation like the launch of the health benefits exchange or the expansion of Medicaid, those projects involve more than one department or agency, we see those as a collaborative effort of most of the departments within the Cabinet.
MG: Kentucky has gotten a lot of positive attention for the public launch of its health insurance exchange, Kynect. What has Kentucky done right that others did not do?
ATH: Usually when something that large is that successful, you know you have all the right people in the right seats to manage that project. In management, people always talk about making sure that you’re all in the same bus heading in the same direction, and another part of that is making sure you have people in the right seats. We have an extraordinary IT department at this Cabinet. They really are stellar. I’ve worked at national organizations, in the federal government, and of course at the state level, and we have as good an IT department, if not better, than any I’ve seen. That gives us in-house expertise and also, obviously, they can contract for further expertise.
Next is, Carrie Banahan came in as executive director (of the Kentucky Health Benefit Exchange), and she has a long history of experience with insurance, with Medicaid and with management. That’s critical. And we made it not just Carrie’s project but a Cabinet project. Then we were able to get a great company that was very committed to the success of this in Deloitte.
Finally, we kept it simple. We knew we could make improvements as the months and years went on. We didn’t try to be too fancy right out of the gate. We knew that it needed to work well when it was launched – that was more important than making it the fanciest online system right away. And it has worked well.
MG: Was there any unusual, distinctive process Deloitte used for the website design, and how much did it cost?
ATH: Deloitte is an international business consulting firm with various divisions, one being their technology division. There was a basic framework in the RFP. We also received a lot of requirements from the federal government as to what the system would have to do, because it interacts with their systems almost every second of every day. So there were a lot of federal requirements put in right up front as well. I believe the cost was $252.7 million.
In terms of the system, people often think of something like Amazon: going online and making a purchase. This system has to do so much more than that. It has to interface with many different databases, such as the IRS database. It confirms your identity, your tax history, your income. So it’s a pretty complex system. It’s more than going online and buying a book or buying a pair of shoes.
MG: How is the information people submit protected and maintained in privacy?
ATH: This Cabinet has a long history of maintaining people’s private information because of Medicaid and food stamps and many other programs that we run here. Last year millions of dollars were collected for Kentucky’s kids through court-ordered child support that runs through this Cabinet. We have very strict requirements, both at the federal and state levels, and we take privacy very seriously. Our IT department and others plan for it, and we’re alert to it all the time.
MG: How many Kentuckians have now signed up for health insurance through the exchange?
ATH: We’re over 186,000 this morning (Jan. 28). Some of these people could have had insurance already, and they’re getting a cheaper or a better plan through us. But as of this morning, in all, about 186,000 folks have signed up for a plan, some individually and some as part of a family or group.
MG: Individuals and businesses are concerned about how to comply with some of the health reform requirements. Is the IRS going to be the entity monitoring whether individuals and businesses have gotten coverage and complied?
ATH: Yes, that’s an IRS function. In terms of small businesses in particular as well as small nonprofits obtaining complying coverage, we have worked quite well with the Kentucky Chamber, and we have a great relationship with insurance agents, which has been key for us, especially with the business community. Business owners are likely to prefer to sit down with their agent, whom they are accustomed to working with. Now that agent can be certified to utilize the health insurance exchange and also will make a commission, just as they would if they do not use the exchange, on the private plans.
We suggest small businesses sit down not only with their insurance agent but probably with an accountant or whoever helps to prepare their taxes, because they need to make this a business decision. Even though everyone would love to provide their employees with as many benefits as possible, sometimes it might be a better business decision to pay your employee more money and let them go onto the exchange – and then you just pay the penalty. Each particular business and situation will be different. When we make presentations to the business community, we always say be sure to have both someone who can help you navigate the different plans and someone who can help you make the best financial decision for your business.
Not all agents have been certified, but we have over 2,000 health insurance agents who have gone through the training and certification. They are represented on the advisory council. We keep track of how many folks they are signing up. And it isn’t only businesses that benefit; agents who sell to individuals can also benefit from this training and certification.
MG: How does an individual or a business verify or determine if they offer a qualified plan?
ATH: That’s a function of the Department of Insurance. On the Kynect exchange, of course, all the plans are qualified plans. There are some issues with existing policies being grandfathered in, that sort of thing, and the Department of Insurance is a good resource for that.
MG: What is the status of the healthcare sector’s adoption of electronic health records systems, and how is state government supporting this effort?
ATH: We have over 2,000 healthcare providers participating in the Kentucky Health Information Exchange, and we have given out more than $144 million to providers in incentive payments. The Kentucky Health Information Exchange is another program of this Cabinet that is nationally recognized as being in the forefront for the exchange of health information records. We are one of the most progressive in the nation. KASPER (Kentucky All Schedule Prescription Electronic Reporting) is another digital health information program that is run through this Cabinet. Doctors and medical professionals check KASPER before prescribing controlled substances to prevent incidences of drug abuse. We have over 24,700 users. KASPER is a very complex system to maintain, but it is keeping Kentucky at the forefront nationally as far as helping to curb the prescription drug problem in our state.
MG: Let’s shift to Medicaid. Describe the size of Medicaid in Kentucky. What portion of the population does it cover, and what are the dollar amounts involved?
ATH: Last year, before the expansion, we had about 725,000 people on Medicaid, and about 600,000 were individuals who were very, very poor – incomes at around 38 percent of the poverty level. You had to be poor, blind, disabled or very low income and pregnant to qualify for Medicaid before we went to Medicaid expansion on Jan. 1. Those 600,000 are part of the managed care system, and that covers about $3 billion or more of the Medicaid budget. The other $3 billion-plus of that budget covers about 125,000 people; a third of that is for people in long-term care facilities, usually the elderly. The others are people who have special needs such as brain injuries or developmental disabilities, who have very high-intensity needs beyond what Medicaid would generally provide. Medicaid is about 77 percent of the Cabinet’s budget, and we expect the Medicaid budget for 2014 to be just over $7 billion – and that’s all funds, federal and state.
MG: Why did the administration take the Medicaid expansion offered through the Accountable Care Act? Please explain the funding mechanism attached to that.
ATH: The governor decided to take on Medicaid expansion for several reasons. One is that Kentucky is the 44th unhealthiest state in the country; and when you have about 640,000 who are uninsured, that makes the problem worse. Education has been a big priority in Kentucky in terms of jobs, but we need to have not only an educated workforce – we need a healthier workforce in order to recruit and keep business.
The second reason is that the federal government is giving us 100 percent of the cost to implement the Medicaid expansion between now and 2017. That is going to amount to about $15 billion, but it doesn’t go to individuals. Medicaid is like your insurance card; the money goes to medical providers in our state. That will, in turn, generate jobs and tax dollars for Kentucky. So through careful analysis, it was both a good policy decision and a business decision for Kentucky.
MG: The state moved about two years ago to broaden the system of managed care oversight for Medicaid services. How is that proceeding?
ATH: People were having a difficult time at the beginning; the IT and payment systems were not talking to one another. And we went up so quickly. Now it has stabilized. Systems have been adjusted and payment is going much, much more smoothly. We get reports on the payment status every month from MCOs (managed care organizations), so we know how well payment is going. We have workgroups throughout the Cabinet with the MCOs to now begin doing the work that we really want the managed-care organizations to help us do, and that is to improve health outcomes.
MG: How far along is the state towards achieving the efficiencies that managed care organizations are supposed to bring us in the long term?
ATH: First of all, we are on budget for the $1.3 billion in savings put forth as a goal in the last biennium and that precipitated moving to managed care so quickly. That is obviously very important. Secondly, the healthcare delivery system in Kentucky is going through a great transformation. This is happening throughout the country, but Kentucky is having some of the greatest changes. Most states implemented managed care for their Medicaid populations years ago. Tennessee did that in 1994. We were one of the last two or three states to implement managed care.
The MCOs can do things to incent the kind of behavior we want – for example, they can incent Medicaid consumers for their annual dental checkups by offering $25 to them if they go to the dentist. If the Cabinet wanted to do that, we would have to change a regulation and design an entire IT system around that with all kinds of proof required; it would probably take us two years. MCOs, which are businesses, can do this easily to incent preventative care and wellness initiatives. That’s the flexibility of the private sector.
MG: What is the role of the business community in improving the overall health of Kentucky’s citizens?
ATH: Health, just like education, is a responsibility of all of us, and it takes the public, the private and the nonprofit sectors in our state all working closely together. Clearly large businesses in our state, which generally provide health insurance benefits, have a role to play because they, too, want to incent their employees for those preventative screenings. Each year, to bring down their healthcare costs, those businesses have looked at all kinds of incentive and preventative programs to get their employees healthier. With the high uninsured population in our state, this is an opportunity to lay some groundwork for Kentucky to be seen as a progressive state, as a state that companies looking to relocate or to create a new business would consider to be a great option. We can continue to improve the education and the health of Kentuckians. And those are the building blocks for economic success.
MG: Many of the programs and services the Cabinet provides are for Kentuckians at lower socioeconomic levels. Those programs are altruistic, but is there also a return on investment in terms of our workforce?
ATH: Many Kentucky employers have a low-wage workforce, and many of those employers have not been able to provide health benefits to their employees. And often those employees made too much to qualify for Medicaid but not enough to be able to buy insurance. And these are not just people we would think of as low-income; these are people fresh out of college who start out at the lower rung of the income ladder, as we all did when we were starting out. These can be people who went to college and have only part-time jobs because of where the opportunities are when they are starting out. One of the great things about the policy decision that has been made by this governor to provide the state health benefit exchange, as well as the Medicaid expansion, is that it gives employers an opportunity to have healthier employees. The return on investment of having employees that have fewer missed days because of sick time gets right to the bottom line for any small business owner. We are able to provide an opportunity for their employees that they were not able to prior. Talk about a return on investment, not only for employers but for employees and for our state as a whole. I think it will be long seen as a real turning point in Kentucky’s history.
MG: Any closing statement, anything we didn’t touch on already?
ATH: When I came back from Washington, D.C., to take this job, people who know me and know this Cabinet were very surprised, but I’ve never regretted it. I believe in public service as well as in the role of the private sector, and this has been a dream job for me because I’ve had an opportunity to work making good policy. I’ve had some pretty neat dream jobs in my career, but this is certainly going to be the topper. Few of us ever have an opportunity to say that we have done something that can truly have an impact and be part of something that’s going to have an impact for many, many years. I think about that all the time. I wouldn’t want to be anywhere else.
Mark Green is editorial director of The Lane Report. He can be reached at [email protected]