Kentucky’s embrace of private Medicaid plans leads to complaints

July 13, 2013

Kaden Stone loves playing baseball, riding his bike and watching “Duck Dynasty” on TV at his red-brick ranch-style house in rural, south-central Kentucky.

Despite his energy, the tiny boy of 8 with a crew cut and missing front tooth can’t eat much, the result of congenital bowel problems that have required dozens of surgeries and procedures. He needs PediaSure, says his mother, who was shocked when Kaden’s Medicaid managed-care plan stopped paying last fall for the expensive nutritional drink, saying it was not “medically necessary.”

“We couldn’t believe it, because he had only gained four pounds in a year, and the doctor says he had to have it because he wasn’t flourishing,” Angelina Alcott said. “He’s only 3½ feet tall and 48 pounds.”

Ever since Kentucky rapidly shifted patients from traditional Medicaid to private health plans that manage their care for a set price, problems have been widespread. Patients complain of being denied treatment or forced to travel long distances to find a doctor or hospital in their plan’s network. Advocates for the mentally ill argue that the care system for them has deteriorated. And hospitals and doctors say health plans have denied or delayed payments.

Experts warn that what happened in Kentucky should be a cautionary tale for other states that rush to switch large numbers of people enrolled in Medicaid, the state-federal program for the poor and disabled, to private managed-care plans in hopes of cutting costs and improving quality. Nearly 30 million Americans on Medicaid now belong to a private health plan, as states move away from the traditional program that paid doctors and hospitals for each service they provided.

Beginning in January, millions more people will become eligible for Medicaid under the federal health law, and many will be placed in managed care.

“The Kentucky case is a harbinger of what can happen when states don’t allow enough time and devote sufficient resources to strengthen the Medicaid agency’s oversight capacity and systems — or develop strong contracts and care-monitoring systems from scratch if they haven’t contracted with managed care plans before,” said Debra Lipson, a senior researcher at Mathematica Policy Research.

Medicaid managed care appears to be running more smoothly in states that phased it in gradually. Whether managed care routinely saves taxpayers money is debatable, but it provides states a way to predict how much they’ll need to budget.

Kentucky health officials admit there have been problems because of the speed of the changeover, which started in late 2011. But they insist that claims are now being paid promptly and that the quality of care has improved.

“We’re changing the delivery of health care in Kentucky for the good,” Kentucky Medicaid Commissioner Lawrence Kissner said.

Kissner, a former chief executive of two managed-care companies, says that child immunization and diabetes testing rates have jumped, emergency room use has dropped and prescriptions for controlled substances are down.

In May, Gov. Steve Beshear (D) said the state would expand Medicaid under Obamacare to about 308,000 more Kentuckians, who will be placed in managed care.

But many say that problems persist, especially in rural areas. And mental health advocates say plans have denied prescriptions that patients have taken successfully for years and community mental health centers have limited or canceled programs because the plans won’t authorize enough treatment.

“The whole thing has been a mess,” said Sheila Schuster, executive director of the Kentucky Mental Health Coalition, an advocacy group.

Advocates also are concerned about managed care’s impact on people with developmental disorders.

Darlene VanHoeve, who lives in the hills of southeastern Kentucky, was shocked to learn the health plan WellCare of Kentucky wouldn’t pay for services at an autism center for her son, Reuben, whose doctor thought he had Asperger’s syndrome. The lanky 17-year-old with curly brown hair and thick glasses is depressed, she said, and gets agitated if he has to do multiple tasks.

The doctor recommended he get testing and counseling at the center, an hour away, because no local child psychologists were in his plan’s network. But WellCare denied the request, saying the center wasn’t in its network.

“I’ve got a child who’s almost nonfunctioning,” said VanHoeve, who home-schools her children and whose husband, Frank, is a missionary.

The VanHoeves, who live on about $22,000 a year, are paying $1,650 to have Reuben tested at the autism center, which has given him an Asperger’s diagnosis.

WellCare of Kentucky President Mike Minor couldn’t comment on the case because of privacy laws, but he wrote in an e-mail that the plan thinks that its provider network is capable of covering members’ behavioral health needs.

Kentucky, which is largely rural and has a population with serious health-care needs, has a $6 billion Medicaid program. When the state faced a $100 million shortfall in the program, Beshear announced a plan to move members to managed care in 2011. Officials signed contracts with three national managed-care companies and transferred about 550,000 people within four months. The companies had to scramble to recruit and train employees and contract with a network of doctors and hospitals.

“It was a significant challenge,” said Michael Murphy, chief executive of CoventryCares, part of the Bethesda-based Coventry Health Care chain that recently was purchased by Aetna. “Obviously, we learned a few lessons in Kentucky.”

Kissner says most problems have been resolved, but some legislators say they continue to get complaints from doctors, dentists and hospitals.

For Alcott, managed care has been a nightmare. After CoventryCares denied the PediaSure, Alcott took on extra jobs to pay for it.

Coventry spokeswoman Kristine Grow said that the plan generally covers “medically necessary” nutritional supplements, but she couldn’t discuss the case because of privacy laws.

“It’s been so hard,” Alcott said. “I feel like I’m a strong person, but I’ve cried. You feel powerless.”

— Kaiser Health News

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

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