Modernize Medicaid

Kentucky’s Medicaid program now covers more than 1.3 million people with a total annual budget of more than $10 billion in FY 2016 (includes state and federal funds). Though the escalating trend in spending has decreased since the implementation of Medicaid managed care, the rising cost of Medicaid is pulling funds away from education, further compounding the problem because, as research shows, better education is linked to better health. The key challenge is finding a way to slow unsustainable Medicaid spending increases without inflicting harm on Medicaid recipients and health care providers.

The Kentucky Chamber supported the statewide expansion of Medicaid managed care. Although the implementation has not been seamless, studies suggest that Medicaid managed care contracts are saving the state money over the traditional fee-for-service model, and the program has saved $1.3 billion in total funds since its implementation. In addition to continuing to monitor the implementation and oversight of the managed care approach, we recommend some additional concepts to make the Medicaid program more closely resemble a private insurance model:

Wellness Activities

A best practice identified by the National Governor’s Association Center for Best Practices is for states to incorporate more wellness activities into Medicaid programs. The Kentucky Chamber supports offering financial incentives to Medicaid recipients who maintain healthy behaviors.

Program Review

The Chamber encourages a top-to-bottom, data-driven review of the Medicaid program conducted by a nationally recognized consulting firm with expertise in Medicaid. The review should focus on an evaluation of the scope of services covered by Medicaid compared with other states as well as outcomes for Medicaid patients.

Program Administration

The Chamber believes additional areas that should be explored for possible savings include:

  1. Improving the “error rate” – reducing overpayments to providers and ensuring the correct determination of recipient eligibility.
  2. Ensuring that child support orders require non-custodial parents with access to health insurance to provide coverage for their children (as permitted by Kentucky law).
  3. Increasing the use of generic drugs by Medicaid recipients.
  4. Revisiting the use of significant co-pays for recipients at higher income levels.
  5. Ensuring the managed care contract companies honor the timely payment rules and pay providers for the correct services in a timely manner.
  6. Encouraging and promoting personal responsibility and quality and cost-conscious decision making to ensure Medicaid recipients choose the correct level of care.

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