Kentucky to Shift Chronically Ill into Managed Care, May Increase Medicaid Copayments

To save costs by improving access to primary care and eliminating "unnecessary" emergency room visits, Kentucky is requiring 69,000 patients with chronic illnesses who receive Supplemental Security Income benefits and who are in traditional Medicaid to enroll in KenPAC, the state's Medicaid managed care program, the Cincinnati Enquirer reports. The shift to managed care will only affect adults receiving community-based care. Disabled children on SSI, adult SSI beneficiaries in nursing homes, hospices or psychiatric facilities are exempt from the change (Bonfield, Cincinnati Enquirer, 2/16). The decision comes as the state's Medicaid program is expected to "exceed its budget" by $82 million this fiscal year and $281 million in 2002. The state budget director, James Ramsey, testified before the state Senate Health and Welfare Committee that the shortfall was caused by high prescription drug costs and payment increases to Medicaid managed care plans in the Louisville area. With costs rising, Ramsey said other possible budget solutions include "cutting or reducing some services" (Yetter, Louisville, Courier-Journal, 2/16). Shifting chronically ill adults to Medicaid managed care, however, is expected to save the state $10 million to $15 million over two years. But as only 1,500 of the state's 3,640 primary care doctors participate in KenPAC, some beneficiaries may be required to switch physicians under the plan. To avoid inconveniencing the affected SSI beneficiaries, state officials said that they will ask non-KenPAC physicians of those making the switch to join the program, and that doctors who add 20 KenPAC patients to their practice will receive a bonus from the state. In addition, the state has increased its monthly KenPAC management fee from $3 per patient to $4 to entice physicians to participate. Gil Lawson, spokesperson for the Kentucky Cabinet for Health Resources, said, "We think (the need to switch doctors) is a remote possibility. Our records show that 80% of people on SSI saw a KenPAC doctor in the past year." Dr. William Vonderhaar, president of the Kentucky Medical Association, said, "Providing more of a medical home for these patients is a good idea. But Medicaid reimbursement is marginal for primary care doctors and unacceptably low for many specialists" (Cincinnati Enquirer, 2/16).

Reversing the Shortfall
The state Senate is also considering legislation (SB 145) that would charge Medicaid beneficiaries the maximum copayment permitted under federal law, or a $3 copay for services costing the state more than $50. While legislators are attempting the reduce the state's Medicaid shortfall, lawmakers may increase the debt by $3 million this year by approving an increase in pharmacists' fees. Last month, the state reduced the fees, but legislation restoring the payments cleared the Senate Health and Welfare Committee last week. Under the bill, the state would pay $5.75 for nursing home patients' prescriptions and $4.75 for other prescriptions -- up from the current $4.51 per prescription (the reduced rate). Kentucky's total Medicaid budget this year is $3.2 billion (Yetter, Louisville Courier-Journal, 2/16). For more information about Kentucky's Medicaid program, please visit http://chs.state.ky.us/dms/stplan/statplan.pdf.