15 months in, hospitals say managed care experiment still isn't working especially for ERs

02/20/2013 07:58 AM

Doctors, mental health agency leaders and hospital executives are still throwing their hands up in frustration when asked about the system of managed care companies that took over in November 2011.

The state accomplished its main goal: It turned over decisions about cost control to three private companies. The state wrote one big check to each firm and it has been up to them to pay the medical bills for the roughly 700,000 Medicaid patient enrolled in the managed care plans.

Hospital executives, however, say the way those companies have gone about saving money is still to delay payment of claims — or deny them outright. That leaves hospitals to pick up the tab.

Managed care company officials, Kentucky Hospital Association representatives and Health and Family Services Secretary Audrey Haynes are scheduled to testify before the House budget subcommittee on health Wednesday. It’s the latest in a long string of legislative hearings on the process, including the third since the 2013 session began.

Vicki A. Darnell, president and CEO of the non-profit Ephraim McDowell Medical Center in Danville, told Pure Politics this week that accounts receivable — payments hospitals are waiting to get — have gone from 22-40 days for Medicaid patients to as much as 120 days or more since managed care companies took over.

Darnell said the managed care companies also have never clarified how to properly code treatments, especially emergencies. She said that has led managed care to deny payments for emergency room treatments for clear emergencies, such as a child’s broken arm. Here’s that segment of the interview with Darnell:

Hospitals can appeal billing disputes to the Department of Insurance and the cabinet for Health and Family Services. Some lawmakers, such as House Speaker Greg Stumbo, have said the cabinet shouldn’t be an arbitrator because it has an inherent interest to save money.

And so far, the Department of Insurance has received just 38 of those complaints, Insurance Commissioner Sharon Clark told lawmakers earlier this month. But Darnell said she expects that number to increase as hospitals change strategies from focusing more on negotiating to outright complaining.

Darnell said Ephraim McDowell is short $5 million from serving Medicaid patients this year.

And while cabinet officials say managed care has at least cut down unnecessary use of emergency rooms, Darnell said the data doesn’t show it. Here’s what cabinet officials and Darnell have told Pure Politics in recent weeks:

Cabinet officials concede that the transition starting in November 2011 was difficult, but say they believe it’s getting better. And they said many of the problems were caused by incompatible billing codes between the managed care companies — Kentucky Spirit, CoventryCares and Wellcare — and the firms hospitals hire to handle billing. Here’s a clip of what Haynes told me last month:


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