Over the past ten years, Kansas’ Medicaid budget has grown about 7.5 percent year—a rate consistent with the growth in other states, but one that lawmakers say cannot be sustained. To improve outcomes and reduce costs, Gov. Sam Brownback, a Republican, has proposed a method of privatizing the system, which serves about 350,000 Kansans.
Brownback’s administration promises the plan, named “KanCare,” will achieve the savings without reducing coverage for the disabled, the elderly, or poor families, and without cutting payments to doctors, hospitals, clinics, and nursing homes.
Consolidation and Coordination
According to Beverly Gossage, director of HSA Benefits Consulting and one who participated in the planning sessions for the new system, the approach leans heavily on consolidating and coordinating care.
“The primary aim was to cut costs but maintain services that we’re offering without cutting provider reimbursement. That was the challenge,” Gossage said. “There was a consensus that we have to cut back on money. However, when you went around the table, for many people that vague sentiment would be paired with a comment that ‘we need to add dental, we need to add this and this’—instead of cutting back on costs.”
Examples from Other States
Gossage said Kansas looked to Texas, Tennessee, Michigan, and Pennsylvania for examples of how features could be combined to improve the system.
“What KanCare aims to do to meet this challenge is to make Medicaid more patient-centered, through coordinated care,” Gossage said. “What providers told us is that if you are dealing with someone who has multiple disabilities, multiple issues, there was very little coordination of their care, leading to a significant amount of duplication of effort.
“We also found we needed more accountability,” she added. “If you don’t have true coordination of care, we found no one’s truly accountable for not only the costs for these services but for the outcomes. Medicaid was spread over several different agencies in Kansas, with lots of different people hired to do pieces of this—again, that contributed to not having enough accountability.”
Gossage says the consolidation of services, agency streamlining, and a clearer line of authority, paired with a consolidated portal of qualification for services, was undertaken to help KanCare make the system “more person-centered, more efficient, and provide better outcomes at a lower cost.”
Concerns About Unintended Consequences
Some advocates for the developmentally disabled express concerns about the plan. According to Anna Lambertson, executive director of the Kansas Health Consumer Coalition, the long-term care needs of patients with developmental disabilities won’t be sufficiently addressed via a private program to manage health care costs.
“We have lots of concerns going forward. The governor put forth KanCare which will move the Mediciad silos all under one umbrella,” Lambertson said. “The governor is saying he’s going to improve outcomes and lower costs, but is there a Plan II if this one doesn’t work out?”
Lambertson says the governor’s plan doesn’t address the nearly 5,000 people with developmental disabilities who are on a waiting list to receive assistance in their homes. She maintains the speed of the process could lead to unanticipated problems.
“I’m not convinced any of us have taken the time to study the best practices for managed care. This is all happening very fast—they’re signing the contracts this summer and the reforms start at the beginning of 2013. All I’m asking is: Are we ready? Has anyone looked at the numbers yet?” she asks.
Sen. Dick Kelsey (R-Goddard) agrees with some of these concerns. He said the move toward coordinated care is going too fast and has too many unresolved questions.
“The request for proposals from managed care companies has elicited 1,100 questions from the bidders, implying that even the professionals don’t understand what is being suggested, let alone the providers of Medicaid services and those receiving those services,” Kelsey said.
Incentives for Better Outcomes
Shawn Sullivan, secretary of the Kansas Department of Aging and one of the architects of the new system, says the changes are necessary and will not disrupt the lives of the developmentally disabled. Sullivan says everyone currently in the system will be able to keep their case manager.
“By coordinating Medicare’s medical, mental health, and long-term care services,” Sullivan said, “the state will be able to save money by relying less on institutions and nursing homes when providing services to those who need it.”
Beyond the newly streamlined model, Gossage points out the reform will provide incentives for efficiency and cost saving.
“Roughly 3.5 percent of the funding will go toward incentives, using a carrot and stick approach. If you can demonstrate greater outcomes at a lower cost, there’s an incentive in place to give to the private contractor,” Gossage said.
Doctors Approve Change
Jerry Slaughter, executive director of the Kansas Medical Society, says the governor’s plan does three things which have met with approval from the doctors he represents.
“It coordinates agencies across the whole spectrum of health care, which will gradually slash costs; it preserves eligibility without dropping anyone from the program; and it continues to pay providers at current rates,” Slaughter said.
Slaughter said Kansas was on an unsustainable path and that reform was clearly necessary.
“We recognize that some people think this plan is moving too fast, but our state is facing some serious financial problems, and we think the governor’s plan has the best chance of making this program sustainable. We tell the critics: If you have a better alternative, then you’d better present it now,” Slaughter said.
Artz has more than 20 years’ experience in nonprofit organizations, publishing, newspaper reporting, and public policy advocacy.
Benjamin Domenech is the founder and publisher of The Federalist and a senior fellow at The Heartland Institute.
