Medicaid Managed Care Contracts to be rebid

The Commonwealth of Kentucky has issued a Request for Proposals (RFP) seeking competitive proposals from Managed Care Organizations (MCOs) to coordinate the healthcare services provided to more than 1.1 million Kentuckians who have met eligibility requirements and are enrolled in either traditional Medicaid or Medicaid expansion. The current contracts with Anthem, Aetna (Coventry Cares), Humana (CareSource), Passport and Wellcare are set to expire on June 30, 2015. The new contracts will take effect July 1, 2015.

“After four years, the Medicaid Managed Care Program is no longer in its infancy. Statistics confirm that moving to a managed care model has saved Kentucky taxpayers more than $1.3 billion in state and federal funds while simultaneously improving the delivery of health care services to our Medicaid population,” said Cabinet for Health and Family Services Secretary Audrey Tayse Haynes. “However, after several years of experience, we determined it was time to retool, rebid and strengthen the contracts to appropriately address concerns expressed by advocates and healthcare providers.”

The new contracts will put standardized processes in place that will help healthcare providers by improving administrative processes; increase oversight in many areas, including appropriate denial of claims; include incentives for MCOs to work with Medicaid members and providers to decrease the overutilization of emergency rooms; encourage MCOs to assist in the continued expansion of behavioral health services; incentivize the MCOs to continue to improve health outcomes for Medicaid members; and address concerns that penalties assessed on the MCOs are not sufficient or stringent enough to ensure contract compliance.

Some of the changes reflected in the RFP that will be incorporated into the new contracts include:

Establishing a standardized contract for all MCOs;
Requiring statewide coverage from all contracted MCOs;
Mandating that 82-87 percent of member capitation payments to the MCOs must be expended for direct services to Medicaid members;
Adding an incentive pool for the MCOs to improve health outcomes;
Requiring the use of national standards designated by the Cabinet to determine “medical necessity”;
Ensuring the appropriate medical specialists are making “medical necessity” determinations and reviewing cases on behalf of the MCOs;
CHFS will be reviewing “medical necessity” denials and denials of payment for emergency room use for contract compliance;
Expanding performance requirements for Medicaid members’ pharmacy benefits;
Requiring the use of standardized forms for prior-authorization requests, grievances or appeals for members and providers, and claims submittal;
Using nationally accepted uniform standards for credentialing all health professionals;
Strengthening requirements for the provision of behavioral health services;
Developing practical and convenient alternatives to non-emergent emergency room utilization;
Requiring timely updates by the MCOs to their online provider network information within 10 days of changes being made to the network;
Requiring MCOs to serve persons with Severe Mental Illness (SMI) as persons with special needs; and
Increasing penalties for non-conformance with contract requirements.

Under the terms of the new contracts, MCOs will serve more than 1.1 million Kentuckians who are enrolled in the Medicaid program. These individuals are either children or pregnant women; aged, blind or disabled; or have income that falls below 138 percent of the Federal Poverty Level. This equates to an individual making less than $16,000 a year or a family of four with an annual household income below $36,000.

Statewide contracts will be awarded to multiple MCOs for a one-year period with four, one-year renewal options. The RFP is posted on Kentucky’s e-procurement website. The deadline for MCOs to respond to the solicitation is May 5, 2015. The process will be completed in time for new contracts to become effective July 1, 2015.