Federal officials have granted Kansas permission to overhaul Medicaid, allowing the state to turn the $2.9 billion-a-year program for the needy over to three private insurance companies next year as planned, Gov. Sam Brownback announced Friday.
The state already has awarded contracts to subsidiaries of three multibillion-dollar, out-of-state companies and assigned each Medicaid participant to one of them so that the firms can begin managing the entire program Jan. 1. The state covers medical services for about 395,000 poor, disabled and elderly Kansans, and the companies have three-year contracts.
The conservative Republican governor's administration has argued that moving all of the state's Medicaid participants into a managed care program will give them better coordinated and more comprehensive services, while controlling the state's costs. State officials have projected that the changes will save the state more than $1 billion over the next five years, though critics of the overhaul are skeptical.
Kansas needed the federal Department of Health and Human Services to waive some of its rules for the overhaul to go forward, because the federal government provides the majority of funds for states' Medicaid programs. Brownback and top aides have anticipated for weeks that the health department — led by former Kansas Gov. Kathleen Sebelius, a Democrat — would approve the waiver request before the end of the year.
Brownback called the announcement "extraordinary" and said Kansas would continue to work with federal officials to finalize the terms and conditions of the waiver ahead of the Jan. 1 start date.
"Thanks to their efforts, we will have a Medicaid program that will work for Kansans," the governor said of Cabinet officials and staff who worked on the waiver.
Brownback has said the state was compelled to overhaul Medicaid because the program's rising costs would prevent it from sustaining its share of the funding into the future without hurting education and other government programs. Also, he and legislators have worried that the federal government, facing its own budget problems, will reduce funding.
But critics, including a few Republican legislators, questioned whether Brownback's administration was moving too quickly. Advocates for the developmentally disabled were particularly vocal skeptics, and their concerns prompted Brownback to agree to wait until 2014 to deal with their long-term services while permitting pilot programs.
Most Kansans who receive state medical assistance are covered by managed care through private contractors, but the Medicaid overhaul represents the first time the state has tried to include relatively expensive, long-term care for the disabled and the elderly, including those in nursing homes.
The state awarded contracts in June to subsidiaries of Amerigroup Corp., based in Virginia Beach, Va.; Centene Corp., which has its headquarters in St. Louis, and United Healthcare, based in Minneapolis. They are offering competing plans, so that Medicaid participants have choices. Participants who don't like their assignments have until April to switch plans.
Page 2 of 2 - The state has the option of extending each contract an additional two years and included incentives to encourage the companies to pay claims quickly, improve the coordination of care and create innovative programs. Also, the contracts will allow the state to add coverage for preventative dental care for adults, heart and lung transplants and some weight loss surgeries.