TOPEKA, Kan. (AP) — 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 three-year contracts to Kansas 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.
The conservative Republican governor's administration believes moving all of the state's Medicaid participants into a managed care program will give them better coordinated and more comprehensive services, while controlling costs. State officials have projected that Kansas will save more than $1 billion over the next five years, though critics are skeptical.
"This is the way forward, and you're going to see a lot of states doing this sort of model," Brownback said during a Statehouse news conference.
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.
State officials said the waiver itself isn't quite finished, as the final language is being drafted. But HHS told Kansas it could move ahead as planned, state officials said.
The waiver conditions would ease the transition for Medicaid participants, for example, by allowing them to keep their current physicians for 90 days, even if the doctors are not in provider networks. Also, the state will have an ombudsman to handle problems.
State Sen. Laura Kelly of Topeka, the ranking Democrat on the Senate Ways and Means Committee, said the conditions address the concerns of critics like her. But she said issues remain, such as ensuring the independence of the new ombudsman.
"I still think that it will be a very bumpy road," Kelly said.
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.
State Rep. Peggy Mast, an Emporia Republican, said the overhauled Medicaid program will allow the state to provide comprehensive care, including mental health care and even employment services for the disabled. The revised program will be called KanCare.
"I'm so relieved," she said. "It looks very positive, and I'm very optimistic about it."
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.
Tom Laing, executive director of InterHab, which represents groups providing services to the developmentally disabled, said there are still questions about the extent of the companies' provider networks and how disagreements over services will be resolved.
"It'll be a little bit like a computer system that's activated before it's debugged," Laing said.
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., headquartered in St. Louis, and United Healthcare, based in Minneapolis. Since then, WellPoint Inc., based in Indianapolis, has moved to acquire most of Amerigroup.
The contractors are offering competing plans, so that Medicaid participants have choices. Participants have until April to switch plans.
The state's contracts include incentives for the companies to pay claims quickly and will result in new coverage, including preventive dental care for adults.
"This is a really big deal," Brownback said. "Instead of cutting services, cutting providers, we're adding."
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