Appalachian hospital chain, facing loss of 25,000 Medicaid patients, sues managed-care firms and state

"Appalachian Regional Healthcare, the largest health care system in Eastern Kentucky, has filed lawsuits against two of the state's Medicaid managed care companies, alleging that the managed care companies had not paid claims promptly," report Valarie Honeycutt Spears and Beth Musgrave of the Lexington Herald-Leader. ARH said it treats about 25,000 Medicaid patients at its eight Kentucky hospitals.

The moves came after Coventry Cares, one of three managed-care organizations hired by the state, said it would cancel its contract with ARH as of May 4. ARH sued Coventry in federal court on Monday; the previous Thursday, April 12, it sued "in Franklin Circuit Court against Kentucky Spirit Health Plan Inc. and the Cabinet for Health and Family Services." On March 29, "Coventry Coventry told ARH that it was terminating its contract with ARH effective May 4."

Coventry spokesman Matthew Eyles told the Herald-Leader, "We were effectively forced to break our ties with ARH until the Commonwealth takes steps to treat all MCOs equally and makes some key decisions to guarantee greater stability in the program, such as paying MCOs fairly based on whether they have healthier or sicker members." Cabinet spokeswoman Jill Midkiff said the issues don't indicate a problem with the managed-care system the state adopted Nov. 1. (Read more)

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Beshear vetoes parts of budget, but health spending is intact

Though Gov. Steve Beshear vetoed 45 parts of the state budget yesterday evening, health-related spending was safe from the cut.

The budget will help reduce caseloads for social workers who investigate child abuse and neglect, funds colon cancer screenings for 4,000 uninsured Kentuckians, substance-abuse treatment for Medicaid recipients and includes funding for an elder abuse registry to protect senior citizens from unscrupulous caretakers.

"This is the most difficult budget I have ever drafted, and it will also be a challenge to implement and manage over the next two years," the governor said in a statement.

In the two-year, $19 billion budget, Beshear voted more than three dozen line-item appropriations, including "portions of the General Fund budget that limited his ability to manage the state's budget or spent money that doesn't exist," reports Beth Musgrave of the Lexington Herald-Leader.

He also cut some earmarks, including $100,000 for Actors Theatre of Louisville and $150,000 for the International Mystery Writers' Festival in Owensboro. "I am vetoing these parts because they identify new spending earmarks yet the General Assembly failed to appropriate additional funds to finance them," Beshear said. (Read more)

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Chiropractic clinic to pay $650K for Medicaid and Medicare fraud

A chiropractic clinic in Williamsburg will pay $650,000 to settle claims it improperly billed Medicare and Medicaid, reports Trent Knuckles for The News Journal of Corbin. (News Journal graphic)

Ho Medical Clinic, Kenneth Ho and Ana Moreno allegedly filed false claims when they billed for physician services, though they were performed by a chiropractor (chiropractors are not medical doctors); billed for unnecessary and unreasonable MRI and X-ray services; billed for work performed by unqualified personnel; and received funds for being a rural health clinic when it did not meet Medicare requirements.

Of the $650,000, $525,000 will go to the Medicare and Medicaid trust fund. The remaining sum will go to Danette Freeman, who sued the company under the False Claims Act. The investigation was conducted by the Kentucky attorney general's office, the Department of Health and Human Services' Office of Inspector General and the U.S. attorney's office. (Read more)

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Knox County Hospital bounces employees' checks; blames old, bad debt and late Medicaid payments

Debt inherited from previous management and late Medicaid payments caused some Knox County Hospital checks to bounce. Most of the facility's employees could not cash their checks last Friday afternoon.

"It was more of an accounting issue than anything and had we known that this was going to happen, we would have put personal money into it and this wouldn't have happened," said Dr. Satya Chatterjee, a management owner. Hospital CEO Craig Morgan said, "That money is starting to come; it's just not coming fast enough, so hopefully we're past the worst of it." Morgan said he "takes the blame for the billing issue and actually had all people in administration hold their checks so other employees were paid as soon as possible," Jerrika Insco reports for WYMT-TV.

It is not the first time the hospital has bounced checks, . "Ever since Medicaid was implemented, the CEO says the hospital has struggled financially," Insco reports.

Presumably, she means managed care for Medicaid, which has prompted many complaints from health-care providers. Since the legislative session began, lawmakers have heard gripes about the state's three new managed-care companies, who took over Kentucky's Medicaid program outside the Louisville region Nov. 1. The companies have been too slow to reimburse providers and require burdensome pre-authorizations before treatment can be provided, critics say. State Auditor Adam Edelen said the companies are sitting on "north of a quarter billion dollars of taxpayer dollars. That's something that requires an explanation to the people of Kentucky." (Read more)

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Kentucky hospitals say they gave back $1.67 billion to their communities in 2010, mostly by absorbing losses and bad debts

By Tara Kaprowy
Kentucky Health News

With the downturn in the economy part of the reason, Kentucky's hospitals say they gave back a whopping $1.67 billion to their communities in 2010, mainly by providing care for which they were never paid.

That's 13 percent more than the hospitals reported last year, and just one of many figures in the latest annual report from the Kentucky Hospital Association, which runs a little over a year behind because it takes a long time to compile the data from more than 100 hospitals.

KHA's 2010 Community Benefits Report shows hospitals absorbed $435.5 million in bad debt in 2010, which accrued when patients came to the hospital and were treated but did not pay their bills.

Shortfalls in Medicare and Medicaid payments cost even more — $456.2 million — because the federal government reimburses Kentucky hospitals for about 85 percent of the cost of Medicaid patients and 95 percent for those on Medicare. That's big, because 71 percent of patient days in Kentucky are covered by one of these programs, said Pam Mullaney, KHA's director of membership services. Hospitals also gave $274 million to charity-care programs that are set up to include free or discounted care to people who are unable to pay. Those three categories of losses increased by more than $158 million over 2009. KHAcalls them community benefits because "you're not getting any type of margin," Mullaney said.

A 2009 Thomson Reuters study showed the average U.S hospital reported an operating profit margin of 3.7 percent. The average operating margin at Kentucky hospitals was 2.44 percent in 2009. Forty percent of hospitals lost revenue from patient services that year, Mullaney said. Still, reported community benefits increased by 13 percent, a total of $190 million.

This is the third year of the report, which was based on a voluntary survey to which 104 of 123 hospitals responded (Eight hospitals were not surveyed because they treat limited types of patients, such as veterans, children or psychiatric cases.) Mullaney said the number of hospitals turning in figures "has grown a little bit each year, but it’s not consequential."

Hospitals are asked to describe and put a value on the programs and activities they provide at or below cost that help their community. Though community benefits are "the greatest single affirmation of not-for-profit hospitals' tax-exempt status," Mullaney said data show Kentucky's 26 for-profit hospitals "do every bit as much as the not-for profits."

In the past two years, Pikeville Medical Center has absorbed $70 million in charitable care and bad debt. The Murray-Calloway County Hospital is in the ninth healthiest county in Kentucky, but has felt the crunch too. From 2010 to 2011, bad debt increased from $7 million to $7.8 million and charity care increased from $5.1 million to $6.2 million.

T.J. Samson Community Hospital in Glasgow has also seen bad debt increase and business decrease when the economy crashed and then stagnated. "Our elective procedure volumes have come down. Patients often wait until they're sicker before they come in," said Laura Belcher, director of planning, marketing and development. The hospital has responded by cutting costs, adopting the "lean philosophy" of eliminating waste and streamlining processes.

Interestingly, the hospital is also pushing for more preventive care since the economy went south. "People ask us, 'Aren't you putting yourself out of business?' But we really want people to be proactive about their health. We've done a lot more health fairs, more screenings," Belcher said.

Indeed, the report shows Kentucky hospitals spent $500 million in 2010 to actively help their communities, through such activities as health screenings, support groups, research, training of nurses and doctors, addiction recovery and neonatal intensive care, or simply donating money to community functions. Many of these programs "are provided at no cost or at a financial loss and would not be provided if the decision was based on monetary decisions," Mullaney said.

Realizing there was a need in the area for children with special needs, the Glasgow hospital set up C.A.M.P. T.J. Kids, a weeklong day camp in the summer for children with special needs. "These children often receive services through school and during school," Belcher said. "But we found many of the families could not afford or handle the transportation to get here during the summer. This is almost like a summer booster."

The camp falls under the umbrella of the Discovery Academy, funded by the hospital and money raised by volunteers. The academy also hosts an annual overnight camp for children with autism. While the children swim in the hotel pool or interact with each other, parents are "in a conference setting to learn about ways they can learn to be better parents" to kids with autism, Belcher said. "In the evening, while children are being supervised, the parents get to go for a quiet, romantic dinner."

When tornadoes struck Kentucky March 2, Pikeville Medical Center kicked into high gear and co-hosted a radio-a-thon that raised $200,000. "We allowed our employees to donate their vacation time, which we converted to actual dollars based on their rate of pay, and we offered employees the ability to do payroll deductions to contribute to the cause," said Cindy Johnson, director of public relations and the Medical Leader, the hospital's community newspaper.

The Murray hospital has increased its community outreach efforts and adopted a mission to provide the local school system with athletic trainers, whose salaries are paid entirely by the hospital, as well as school nurses, which are partly hospital funded. The goal is to promote health and wellness, said marketing director Melony Bray.

The KHA's Mullaney said the annual report reminds people what their hospital does. "A lot of times people think of their hospital as a place to go when they need emergency help," she said. "They don't think of the hospital as one of the big providers in the community for health fairs, health professional education, types of efforts in the community to help improvements like playgrounds and common spaces. Those are things that hospitals often get overlooked for but they do that because they are part of the community."

Kentucky Health News is a service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

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Medicaid recipients displaced by tornadoes can get emergency 30-day refills of prescriptions

Kentuckians on Medicaid who were displaced by last week's storms can get a 30-day supply of needed medicine from their pharmacy, the Department of Medicaid Services announced yesterday.

The right to receive an emergency refill applies to residents living in Ballard, Bath, Carroll, Campbell, Grant, Grayson, Hardin, Johnson, Kenton, Laurel, Lawrence, McCracken, Magoffin, Martin, Menifee, Montgomery, Morgan, Muhlenberg, Ohio, Owsley, Pendleton, Rowan, Russell and Trimble counties. Those counties have declared a state of emergency.

The state's four managed-care organizations are informing pharmacies of the policy, which was part of an executive order signed by Gov. Steve Beshear last weekend. Medicaid recipients who are not enrolled with an MCO can also receive replacement medications at their pharmacy. Co-payments will be waived.

"Many Kentuckians depend on regular maintenance medications, like blood pressure pills, and skipping a few days could cause unnecessary hardship or possible poor health outcomes for some citizens," Beshear said. "This order will allow people to contact a pharmacist to restore their regular medications." (Read more)

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State and companies were unprepared for quick move to managed care, state auditor concludes

Kentucky officials and the companies in charge were unprepared for the switch to Medicaid managed care, State Auditor Adam Edelen said Wednesday.He sent the Cabinet for Health and Family Services 10 recommendations to improve the system, which provides health care for 560,000 Kentuckians who are poor, disabled or elderly.

Since the legislative session began, providers and patients have bitterly complained that the three new managed-care companies are "too slow to reimburse providers" and have "cumbersome pre-authorization processes to allow treatment," reports Beth Musgrave for the Lexington Herald-Leader. The state moved to managed care Nov. 1, a move meant to save the state $1.3 billion in three years.

In addition to the recommendations, Edelen said he will form a Medicaid auditing unit designed to improve the system. He recommended: hiring more managed-care staff to fix backed up claims payments and treatment authorizations, developing a system to measure whether providers are receiving payments in a timely way, and considering removing mental health services from the contracts. Kelly Gunning of the National Alliance on Mental Illness told lawmakers last week that she had asked mental health to be removed from the contracts in January, saying it had not worked in other states either. The companies are reportedly asking psychiatric patients to switch medications, even if the ones they are already on are working. The move has "meant that more people with serious mental illness have had to return to state psychiatric treatment centers," Musgrave reports.

Edelen said Kentucky officials "did not learn from the 1997 launch of Kentucky's first managed care contract — Passport in the Louisville area — and seemed ill-prepared to monitor and enforce the three new managed care contracts," Musgrave reports.Under managed care, the companies are paid a predetermined per-patient, per-month amount regardless of what care is needed. Because they won't be paid using a fee-for-service model — believed to be more costly — and will try to streamline care, managed care is meant to save money. (Read more)

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Managed-care executives acknowledge problems, say they're trying to fix them

Executives of three managed-care companies who run most of the state's Medicaid program told a legislative committee yesterday that they are aware of "significant problems" with their management since they took over in November, and they are "committed to fixing them," reports Deborah Yetter of The Courier-Journal. Health-care providers have complained to lawmakers for months about late payments, claims processing and battles over new rules requiring "pre-authorization" to guarantee payment. The executives said they're meeting with providers to solve the problems.

Health care providers implied last week during testimony that the companies were withholding payments to "maximize their profits," Yetter notes. All three executives denied the claim, saying they have to pay interest on payments delayed more than 30 days. They said some late payments "weren't getting past billing clearinghouses" that many health-care providers use to process Medicaid claims. Claims have been delayed in those facilities for a number of reasons, the executives said, including new billing requirements under managed care. They said they are working to identify and pay those claims. (Read more)

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Legislators hear from new managed-care firms; lawmaker rates their performance with a show of hands from pharmacists

Kentucky Health News

The three companies recently hired to manage Kentucky's Medicaid program outside the Louisville region defended themselves yesterday against complaints that they are squeezing independent pharmacies to the breaking point. One of the three firms, Kentucky Spirit, fared better in a hearing held by a House-Senate committee before a crowd that included many pharmacists.

When Sen. Vernie McGaha, R-Russell Springs, "asked for a show of hands from pharmacists in the audience to learn which of the three pharmacy-benefits companies they think underpay on generic drugs, nearly everyone raised their hands for Medco Health Solutions, which is Coventry [Cares]'s partner, and Catalyst Rx, which is WellCare [of Kentucky]'s. No one seemed to object to US Script, which is Kentucky Spirit's partner," reports John Cheves of the Lexington Herald-Leader.

Kentucky Spirit is the only firm that continues to pay pharmacists a dispensing fee of $4.50 to $5 per prescription, the rate that had been paid by the state. WellCare pays $3, and CoventryCares $1 to $1.50, the pharmacists told Deborah Yetter of The Courier-Journal. "Pharmacists have told lawmakers at previous hearings that pharmacy-benefits companies sometimes pay less for generic drugs than it costs pharmacies to acquire them," Cheves notes.

Read more here: http://www.kentucky.com/2012/02/13/2067444/medicaid-managed-care-companies.html#storylink=cpy

Rep. John Will Stacy, D-West Liberty, left, whose business interests include co-ownership of at least two pharmacies, got into it with G. William Strein, Medco's vice president for provider relations. "Stacy cut off Strein several times while he was attempting to answer," Cheves reports.

“Why is it fair that you can reimburse us below costs?” Stacy asked Strein, who "disputed Stacy’s assertion and said managed care attempts to strike a balance between its estimated cost of the drug and the costs of the pharmacy to buy and dispense it," Yetter reports. "But that claim was disputed by some of the roughly 30 pharmacists at the hearing who operate independent drugstores. Though the hearing ended before they got a chance to testify, several said afterward that they intended to keep making their case before lawmakers."

Jason Wallace, owner of Grant County Drugs, told Yetter, “It’s a real burden for Kentucky pharmacists. That’s why I’m here.” All the companies told members of the Joint Program Review and Investigations Subcommittee that they are committed to resolving the problems.

"Much of Monday’s testimony was devoted to the complex pricing formula known as the maximum allowable cost, or MAC, that managed care companies consider proprietary," Yetter writes. "Under the Medicaid plan before managed care, the formula was provided to pharmacists, who said they knew what they would be paid. Now, they said, they don’t find out what a company will pay for a specific drug until they file claims.And too often, they say, it’s less than they paid to buy the drug.

“How would you like to go to a gas station and fill your car up with gas and then be told what the charge is?” Breckinridge County pharmacist Jonathan Van Lahr asked after the hearing. (Read more)

Kentucky Health News is a service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

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Legislators hear about serious problems in managed-care system

The switch to the new Medicaid managed-care system is proving to be a nightmare, health officials told lawmakers Wednesday, with long delays in payment to providers and treatment for patients.

"It appears to me the only place the savings can come from is the delay and denying of care," said Dr. Shawn Jones, president of the Kentucky Medical Association and physician in Paducah. "Patient care is being delayed and, in some cases, simply prevented." (Video from cn|2)

Jones was one of several officials who testified at a meeting of the Senate Health and Welfare Committee. The new system requires pre-authorization for procedures that were once routinely covered, so patients spend hours in waiting rooms or are told to go home and return after their procedures have been given the go-ahead. In one instance, a woman in labor came to the hospital to deliver "and the managed-care company insisted that her care be pre-authorized," reports Deborah Yetter of The Courier-Journal.

"Fourteen days later, mom and baby are home and we still have no pre-authorization," said Joe Grossman, chief financial officer of Appalachian Regional HealthCare.

Problems started Nov. 1 when the state turned its Medicaid program outside the Louisville region to three managed care companies. (Louisville-area recipients have long been managed by Passport Health Plan.) The move is intended to save the state money and fill a hole in the Medicaid budget. But officials said the three companies — CoventryCares of Kentucky, Kentucky Spirit Health Plan and WellCare of Kentucky — seem to be purposefully delaying claims payments, though the state has already paid them $135 million since Nov. 1.

"I feel like I've become a bank to these out-of-state insurance companies," said Grossman, whose eight-hospital chain is owed $8 million. "I've lent them money."

The managed care companies did not testify Wednesday, but issued statements saying they intend to address the issues at hand. Neville Wise, the state's acting Medicaid commissioner, " said he believes the issues are just temporary bumps that can be ironed out," Ryan Alessi of cn|2's "Pure Politics" reports. The requirement that childbirth be pre-authorized, for example, has since been rectified, Yetter notes. State Sen. Julie Denton, R-Louisville, asked Wise, "How many more ludicrous scenarios can there be?" (Read more)

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More children are victims of abuse than of SIDS, study finds

As the state's major newspapers and the Cabinet for Health and Family Services battle over how public records pertaining to child abuse and neglect should be handled, children continue to be victims across the country. A study published Monday in the journal Pediatrics has found child abuse affects more babies in the U.S. than SIDS. (Photo by Getty Images)

The rate of hospital admissions for SIDS, or sudden infant death syndrome, is 50 per 100,000 for children under the age of 1. In the same age bracket, 58.2 per 100,000 babies are getting hurt as a result of abuse, reports Bonnie Rochman for Time's Healthland.

"These kids are physically vulnerable because they're small," said Dr. John M. Levanthal, leader author of the study and professor of pediatrics at Yale Medical School. "They are challenging for some parents to take care of because they cry, it's hard to understand what they want and parents can get frustrated, exhausted and angry."

Indeed, abuse most often stems from parents. Previous research shows men, including fathers, stepfathers and boyfriends, are the "largest single group of perpetrators," Rochman reports.

Research conducted at Yale found that in 2006 4,569 children under the age of 18 were brought to the hospital as a result of abuse, 300 of whom died. The resulting death rate of 6 percent was "substantially higher than for children who were admitted for other kinds of injuries or medical or surgical problems," Rochman reports.

The most common injuries included abusive head trauma, fractures, burns, abdominal injuries and bruises. Those hospitalizations cost about $73.8 million and lasted twice as long as children who suffered other kinds of injuries.

Children living in poverty were the victims of abuse much more often, getting hit at six times the rate of children not on Medicaid.

A report showed 18 Kentucky children died from child abuse or neglect last year, down from 33 in 2009, but those numbers have since come into question. A survey in Kentucky and three other states showed child abuse rates have risen significantly since the economy went into recession — from 8.9 per 100,000 children from 2004 to December 2007 to 14.7 per 100,000 during 2008 and 2009. (Read more)

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Funding substance-abuse treatment for Medicaid recipients could help 6,000 people, official says

If the budget proposed by Gov. Steve Beshear is passed, 6,000 Kentuckians on Medicaid could be treated for substance abuse, ultimately saving the tax system hundreds of thousands of dollars.

That was the message Monday during a House budget subcommittee on health and human services hearing. "All of the research shows that this is a smart thing to do," said Stephen Hall, commissioner of the Department for Behavioral Health, Developmental and Intellectual Disabilities.

Treating a person with intensive drug addiction services costs $2,500. But an adult who is not treated costs taxpayers more than $23,000 in prison and other costs, Hall said.

Kentucky is "one of only seven states that does not offer substance-abuse treatment in its Medicaid program," reports Beth Musgrave for the Lexington Herald-Leader.

Beshear has proposed an expansion of drug addiction services in his two-year budget, one of few new spending projects. He is requested $11.6 million in the first year of the budget, which would help about 4,500 people. He wants another $14.9 million in the second year of the budget to help about 1,300 people. Kentuckians who are eligible for Medicaid and who have a mental illness and substance-abuse problems will have priority in the program, as will those with substance-abuse issues and custody of a minor child.

Though "many on the House budget committee applauded the move," Musgrave reports, at a time when state agencies are facing 8.4 percent cuts, the spending project is a hard sell. "It's difficult to start any new programs," said Sen. Robert Leeper, an Independent of Paducah and chairman of the Senate Appropriations and Revenue Committee. (Read more)

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Responding to complaints about new managed-care companies, state auditor asks for claims data; lawmakers threaten subpoena

With complaints piling up about the three Medicaid managed-care companies that coordinate care for 560,000 poor and disabled Kentuckians, lawmakers and officials are taking action to get to the bottom of the situation.

After health providers complained reimbursements have been wrongly rejected, delayed or ignored, state Auditor Adam Edelen asked to see the companies' claims-processing data, reports Deborah Yetter of The Courier-Journal. Legislators are threatening to subpoena the companies "after the state's 550 small pharmacists complained that they're being pushed out of business by the companies' low Medicaid reimbursements," Yetter and Mike Wynn report for the C-J. (C-J photo: Pharmacist Mac Bray at Capital Pharmacy in Frankfort)

Some providers said they are having to borrow money to offset the shortage until the claims are reimbursed. Others are worried they will go out of business because they can't afford to wait for claims to be paid.

Audit: Edelen told CoventryCares of Kentucky, Kentucky Spirit Health Plan and WellCare of Kentucky he wants the claims data by Feb. 17. He also asked for information from Passport Health Plan, which has long coordinated care for 170,000 Kentuckians in the Louisville area. No complaints have been voiced about Passport, but an Edelen spokeswoman said they want to get information to paint "a complete picture."

The move to managed care was the Beshear administration's answer to fill a hole in the Medicaid budget, but lawmakers have complained the transition has been bumpy. "They never know when they are going to get paid," said Sen. Joey Pendleton, D-Hopkinsville. "I can see why it saves money — if you don't pay your bills, you have more money." (Read more)

Pharmacies: The House-Senate Program Review Committee has asked officials from the three companies to appear Feb. 13 to answer questions. If the committee doesn't get the information it seeks, it will issue subpoenas. "This is a drastic measure, but they are putting our independent pharmacists out of business," said Sen. Jimmy Higdon, a Lebanon Republican who co-chairs the committee. "You can't see things for less than they cost and stay in business."

With traditional Medicaid, "pharmacists were paid a dispensing fee of $4.50 to $5, plus the cost of medication, based on an industry formula called the maximum allowable cost," Yetter and Wynn report. "But two of the three companies under contract with the state have cut the dispensing fee to $1 to $3. And pharmacists say that under managed care, the maximum allowable payments don't cover their costs of buying the drugs from the wholesaler."

The committee has not used its power to issue subpoenas in more than 10 years, Higdon said. (Read more)

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More complaints lodged about Medicaid managed care; lawmakers demand answers

Complaints continue to pile up about the state's new Medicaid managed care plans, which cover about 560,000 Kentuckians. Lawmakers are hearing gripes from providers who say they are not getting paid, and from patients and clinics who say the three managed-care companies take too long to give permission for certain care.

"It's a drastic change to the system," Neville Wise, the state's acting Medicaid commissioner, told the Senate Health and Welfare Committee yesterday. "We didn't expect the level of issues that we had."

Sen. Julie Denton, a Louisville Republican who chairs the committee, "expressed outrage about a case in which she recently called the president of one company trying to get care authorized for a battered domestic violence victim who sought treatment at a Lexington clinic on a Friday afternoon," reports Deborah Yetter of The Courier-Journal.

Despite Denton's call to Coventry Health Care, the woman was not able to get a scan for a shoulder injury until the following Monday. "This woman had to go in pain all weekend because she couldn't get the services she needed," Denton said. "This is not acceptable, and this is only one instance that I know of."

Denton also asked about late payments to providers. "The payment issues have gone on way too long, and it should have been better," Wise responded.

Kentucky moved to three managed care companies Nov. 1, in an effort to save the state money and balance the Medicaid budget. (Read more)

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Home-health industry is the latest to complain about late payments since state switched to managed-care Medicaid

Kentucky's new Medicaid managed-care system is three months late in making payments to home-health agencies, officials told the House Health and Welfare Committee Thursday.

Nurses Registry and Home Health has outstanding claims of $300,000 to $400,000, Jeannie Lemaster, chief compliance officer, told lawmakers. "Kip Bowmar, executive director of the Kentucky Home Health Association, said only 8 percent of the claims from the approximately 150 home-health agencies have been paid since the switch to managed care Nov. 1," reports Beth Musgrave of the Lexington Herald-Leader.

"If these problems don't get corrected, there is a likelihood that some agencies could go out of business," Bowmar said.

Therapists who work with abused, neglected and at-risk children have likewise told lawmakers of back payments. Independent pharmacists have said "reimbursement rates are much lower than they were under traditional Medicaid, which means they are having to lay off employees," Musgrave reports.

In November, Kentucky made the switch to managed care for its 500,000 Medicaid recipients outside the Louisville region. The move is expected to save the state more than $1 billion in the next three years. Three companies, Coventry Cares, Wellcare of Kentucky and Kentucky Spirit, broker the care and are paid on a per-patient, per-month rate.

Lemaster said most of her agency's problems are with Coventry, which has denied 82 percent of their claims. "Lemaster said that because there are differences in the managed care companies and what is being approved for payments, there are inequities in the Medicaid system," Musgrave reports. "Some people are receiving services and others aren't."

Jill Midkiff, spokeswoman for the Cabinet for Health and Family Services, said problems related to the changeover are being ironed out. "The primary focus of the Medicaid program staff is and continues to be the prompt resolution of any issues that arise as we ease the transition of providers to managed care," she said. (Read more)

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Spend $1 on smoking cessation, save $3 in health costs, Massachusetts study finds

Every $1 spent on smoking cessation in Massachusetts, saved $3 in health costs, a study of low-income Bay State residents found. That could bode well for the impact of a new smoking-cessation benefit in Kentucky's Medicaid program.

Massachusetts added a smoking-cessation benefit to its Medicaid program in 2006 and "let members choose from any FDA-approved options," reports Martha Bebinger for National Public Radio.

Researchers at George Washington University "found that members who quit saved three times the cost of the program in fewer heart-related hospitalizations after just over one year," Bebinger reports. "The study does not take into account the benefits of avoiding cancer or other long term smoking related illnesses."

Kentucky ranked 36th in the nation for tobacco prevention spending. Though it received $389 million in tobacco-settlment funds in fiscal year 2012, and ranks first or second in tobacco use, Kentucky spent just $2.2 million of that on prevention of tobacco use. It recently added a smoking-cessation benefit to Medicaid, a program that is funded mainly by the federal government but administered by individual states.

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Electronic health records are helping nurses provide better care, big study finds

Electronic health records are helping nurses get better health outcomes and are improving nursing care, the first big study on the subject has found.

The study conducted by the University of Pennsylvania School of Nursing involved 16,000 nurses at 316 hospitals in California, Florida, Pennsylvania and New Jersey. It found that "implementation of an EHR may result in improved and more efficient nursing care, better care coordination, and patient safety," wrote lead author Ann Kutney-Lee, a health-outcomes researcher at Penn Nursing.

The study, which was published in the Journal of Nursing Administration, also found, "having a basic EHR was associated with better outcomes independently of nurse staffing, indicating that they both play an important role in quality of care."

Nurses in hospitals that had comprehensive EHR systems were "significantly less likely to report unfavorable patient safety issues, frequent medication errors, and low quality of care," research-reporting service Newswise reports.

The most current estimates show just 12 percent of U.S. hospitals have an EHR system in place, but that will change with the Health Information Technology for Economic and Clinical Health Act. Starting in 2011, hospitals and physicians received incentive payments from Medicare and Medicaid to switch over to EHRs. The study did not measure outcomes in rural vs. urban settings "although we do know from other studies that hospitals that used electronic health records during this time period were less likely to be in rural areas," Kutney-Lee said. (Read more)

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Several pieces of federal health reform law taking effect in 2012

At the beginning of the new year, family doctors started facing a 1 percent cut in Medicare reimbursement if they hadn't nixed their paper-based prescription pads in favor of an electronic version. The change is part of another piece of the federal health-care reform law taking effect, USA Today reports.

"There will be a significant number of folks that will incur the penalty," said Robert Tennant, senior policy adviser with the Medical Group Management Association.

E-prescribing, which allows physicians to generate, transmit and file patient prescriptions, is part of the federal government's effort to get doctors to use electronic health records. Last year, doctors received bonuses from Medicare and Medicaid to set up EHRs, but this year they will start being penalized if they haven't already done so — 1 percent this year, 1.5 percent in 2013 and 2 percent in 2014.

Another piece of the federal health care reform law that will begin falling into place in 2012 involves Medicare's Shared Savings Program, "under which groups that qualify as accountable care organizations will be eligible for shared savings in 2013," USA Today reports. "Under the program, savings from participants in an ACO — including hospitals and doctors working together to improve patient care and reduce costs — would be shared between Medicare and the providers."

One study showed Kentucky already has three ACOs established, though several Kentucky experts have said no ACOs have been formed in the state yet.

Jan. 1 also marked the beginning of consumers being eligible for rebates if their insurer spent less than it should have on medical care. As per the new law, insurers have to spend 85 percent for large group plans and 80 percent for small groups and individuals on medical care as opposed to administrative and other costs. Kentuckians will not be privy to these rebates this year, however. Kentucky got a one-year break from the rule after applying for an exemption. (Read more)

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Move to managed care involves a steep learning curve, patients and providers tell Noelle Hunter of The Morehead News

Patients and providers are "ascending a steep learning curve as they implement Medicaid managed care," reports Noelle Hunter in a two-part series in The Morehead News. Even for a proactive patient, the changeover has its challenges, and vulnerable populations are at risk of falling through the cracks, providers say. For health administrators, it means getting accustomed to three new systems, all of which require pre-authorization before treatment can begin.

The move to managed care, which took place Nov. 1, was intended to fill a $166 million shortfall in the Medicaid budget. Gov. Steve Beshear pushed hard for the switch and estimates it will save the state $1.3 billion in the next three years. Managed care will be handled by four organizations — Kentucky Spirit, CoventryCares, WellCare and Passport — across the state. Passport was already handling the Louisville region.

When the switch took place, Medicaid recipient Mary Jo Long discovered "45 percent of Medicaid recipients were automatically enrolled in Kentucky Spirit," Hunter reports. "None of the doctors (in Rowan County) take Kentucky Spirit," Long said. Discovering this, she waited on hold 30 minutes before being switched to CoventryCares and doesn't "anticipate any problems from here," she said.

While Long was able to navigate the challenge, many patients, particularly those with mental or behavioral health issues, might find it difficult, said Kimberly McClanahan, CEO of Pathways, Inc., a drug or alcohol rehabilitation center. "A lot of our patients are seriously mentally ill and they don't or cannot always pay attention to the information they are getting in the mail about the change," she said. "When they got their first letter about the changes, it was seven pages long. A lot of our consumers just threw it in the trash."

Health administrators are likewise dealing with lengthy forms from managed care organizations. "We've essentially gone from a one-page document to a sometimes 25-30 page document that has to be faxed to the MCOs before any care can be given," said G.R. "Sonny" Jones, chief financial officer at St. Claire Regional Medical Center.

The paper overload stems from the fact that Medicaid patients must be pre-authorized before they can receive any treatment, the likely key to savings in such a system. "I was talking to a case manager who said she spent an hour and 45 minutes on the telephone trying to obtain a pre-authorization," said Charlotte Walker, administrative director for clinical operations at St. Claire.

Moreover, the existing network of providers is not extensive enough, in part because the move to managed care happened in just 120 days, as per the state's directive, "when it usually takes a year or two to develop a satisfactory network," Jones said.

Behavioral health organizations and pharmacies are also experiencing challenges, with some patients not able to access their prescriptions "because each MCO has different prescription formularies," Hunter reports.

Whether the move will indeed save money remains to be seen, administrators say. "In the long run, the financial incentives are there to pay hospitals and providers less," Jones said. "It will make it more difficult for us."

An op-ed piece in the Lexington Herald-Leader indicated likewise. "There will now be four bureaucracies, with each sopping up Medicaid money to pay for the bureaucrats needed to keep track of everything," writes Edward L. Smith, a charter member of Northern Kentucky's Mental Health/Substance Abuse Regional Planning Council. "Where will the money for the bureaucrats come from? From services, of course." (Read more)

To read Part 1 of Noelle Hunter's series Mandatory Medicine, click here. For Part 2, click here.

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Independent pharmacists say managed care costs them money

Because two of the three new Medicaid managed-care companies have slashed the dispensing fee they will pay them, independent pharmacists are in danger of going out of business all over the state, pharmacists told the interim joint Health and Welfare Committee yesterday.

But one managed-care firm said that's the cost of saving money for the taxpayers, the reason the state implemented managed care statewide. "We recognize ... there's a big change here for everyone," said Barb Witte, CEO of CoventryCares. "All health care providers are going to have to tighten their belts."

Under the traditional Medicaid system, "pharmacists were paid a 'dispensing fee' per prescription of $4.50 to $5 plus reimbursement for their actual cost of the drug based on an industry formula called the 'maximum allowable cost,'" reports Deborah Yetter of The Courier-Journal.

But the dispensing fee of CoventryCares is only $1 to $1.50. WellCare increased its fee to $3 from $1.50, but cut reimbursement for cost, making the increase only worth about 80 cents. Kentucky Spirit is still paying $4.50 to $5.

Because the maximum allowable cost fluctuates on a monthly basis, pharmacists don't know their return until they file a claim. Often, "pharmacists find they are being paid less than it cost them to buy the drug from a wholesaler," Yetter reports.

"How long will I be able to stay in business losing money?" asked Mayfield pharmacist Sam Willett. "Not very long."

Rep. Tom Burch, D-Louisville, told the MCOs and pharmacists to come to an agreement. "There must be a way to work this out," he said. (Read more)

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