Lawmakers Vote Against Kentucky Medicaid Contracts

Dec 9, 2019

Credit Ryland Barton

A panel of state lawmakers has unanimously disapproved and voted against $8 billion worth of Medicaid contracts issued by Gov. Matt Bevin’s administration.

In the last hours of Bevin’s term as governor, the outgoing Finance Cabinet Secretary could override that disapproval, but any override may be moot as Gov.-elect Andy Beshear’s incoming Finance Secretary could also nullify the contracts.

Bevin’s Finance Cabinet awarded contracts to five insurance companies to administer Medicaid benefits for Kentucky enrollees two weeks ago. Two of the contracts to companies that had previously provided the service in Kentucky — Anthem of Kentucky and Passport Health — were not renewed.

New Finance Secretary Holly McCoy-Johnson, coming in under incoming Gov. Andy Beshear, could nullify the contracts within 30 days of their issue. A spokeswoman for incoming Gov. Beshear didn’t answer questions about whether McCoy-Johnson will do that, and instead provided a statement from transition chairman J. Michael Brown.

“Awarding $8 billion in contracts with just 11 days left in this administration is concerning. As we move through the transition and ultimately the change of the administration, we will be taking a close look at this action,” Brown wrote.

A request for comment about whether the current Finance Cabinet Secretary William M. Landrum III would override the vote was not returned.

On the same day as one legislative committee nullified the contracts, the Bevin Administration faced questions from another committee about why the contracts were awarded without legislative review. Legislators were perturbed that the administration didn’t cut down on the number of companies in the market, which lawmakers have pushed to cut down on administrative costs.

Senator Stephen Meredith, co-chair of the Medicaid Oversight Committee, said lawmakers are supposed to be able to review contracts before they’re issued, but that didn’t happen. Meredith also serves on the Government Contract Review Committee, which is the body that ultimately voted against approving the Medicaid contracts. Other Medicaid Committee members also expressed alarm.

“These are some of the biggest contracts that state government gives out, and they require legislative oversight,” said Senator Morgan McGarvey at the Medicaid Oversight and Advisory Committee, adding that lawmakers had expected the administration would only give contracts to three Medicaid companies, and not maintain the status quo of five.

McGarvey and other lawmakers have pressed the administration to reduce that number to three to reduce overhead administrative costs charged by insurers to the state. If lawmakers had been able to review the proposals and scoring guidelines that were used to choose the five companies, Meredith said at least lawmakers wouldn’t have been left in the dark.

“I’d feel a lot better about having five; People have to understand there’s an administrative burden that goes with this, that has a disproportionate negative impact on rural health care providers,” Meredith said.

Every time a health provider wants to accept Medicaid patients, they have to go through a lengthy process of approval with each individual Medicaid insurer. Outgoing Cabinet for Health and Family Services Secretary Adam Meier addressed that concern, saying that the state is working on a provider enrollment system.

“So when a provider wants to start taking Medicaid, they can enroll in the provider portal and they can have that information automatically go through our credentialing vendor, so they’re not doing that for every MCO,” Meier said. “[That] will help the soften some of the provider impact that’s occurring currently.”

Meier also answered questions about why the administration released the contracts 11 days prior to Gov. Bevin leaving office. He said the contracts were supposed to be released in October, but the federal government requested changes to the contracts that held up the release.

“The reason we had to get these out is because there’s a tremendous amount of work … for new awardees that are going to have to demonstrate network adequacy, sufficient staffing, and there’s a substantial amount of lead time that goes into that for them to demonstrate operational readiness, which they have to do by sometime in the spring,” Meier said. “If we delayed this a month or two it would be nearly impossible for compliance.”

Meredith said the timing is really tight for the new companies that will be offering Medicaid in Kentucky, Molina and United Healthcare, and he anticipates a potential court challenge.

“I think we’re in a time constraint now that we may have no choice but to move forward, short of a court order,” Meredith said. “That’s a possibility and I wouldn’t rule that out at all. Passport says the process of selection is flawed, so we’re going to ask for a restraining order to stop and desist and revisit this.”

Meier defended the contracts in the hearing, and said five employees within the Cabinet scored thousands of pages of applications from seven Medicaid insurance companies. Four were merit employees who keep working no matter what party is in office, and one was a non-merit employee.

“If the new administration wants to come in and make a different decision, that is certainly fine,” Meier said.

Whether Gov. Beshear’s incoming Finance Secretary nullifies the contracts or the legislature’s disapproval is allowed to stand, the request for proposals will likely be re-issued to not include parts of Bevin’s signature health policy that was never implemented, including work requirements and premium payments.