Appeals process for denied medical claims by Medicaid managed care organizations heads to Senate floor

01/13/2016 04:56 PM

FRANKFORT — Medical claims denied by Medicaid managed care companies would be subject to appeal under a bill that passed the Senate Health and Welfare Committee on Wednesday.

Senate Bill 20, sponsored by Sen. Ralph Alvarado, moved to the chamber’s floor on a 10-0 vote.

The Winchester Republican said his legislation is based on similar laws in Georgia and Virginia, where three out of the five managed care organizations in Kentucky also operate.

“The Department of Insurance currently has an appeals process for prompt payments, but not for utilization review or for medical necessity, and currently the only appeals process that medical providers are afforded is to repeatedly appeal to the MCO itself over and over again,” said Alvarado, R-Winchester, in his committee testimony.

“It appears that some of our MCOs are using this denial method in an inappropriate fashion under the guise of managed care,” he continued, “and clearly an appeals process, which I consider is something that is fundamentally American, is needed in this case.”

Nina Eisner, chair of the Kentucky Hospital Association’s psychiatric and chemical dependency forum and CEO of The Ridge Behavioral Health System, offered examples of denials by Medicaid managed care companies involving Kentucky children and adolescents with mental health issues.

In one, a student brought a 9mm Glock to school to shoot another student who had been bullying him. Eisner said a teacher found the gun, and a claim for the child’s admission to a psychiatric hospital in April was initially denied by a managed care organization because it believed the child had an air gun rather than a semiautomatic handgun.

An extended stay at the hospital was denied after the managed care group reversed course on its initial denial, Eisner said, because the child had threatened others in the hospital.

“The hospital requested reconsideration through the MCO’s internal review process, which we’ve spoken of, for four additional days of care, which were needed before the patient could be safely discharged,” she said.

“And after four months — and that’s how long it took the MCO to render a final denial — they upheld their denial of these days of care.”

SB 20 would require the attorney general’s office to handle medical claim appeals against managed care groups, with the losing party owing the agency $100 in fees to help offset costs associated with the procedure. Alvarado said the attorney general’s office was “OK with the language” in the bill while the Cabinet for Health and Family Services remained neutral.

But Senate Majority Whip Jimmy Higdon, R-Lebanon, said the attorney general’s office had expressed concerns with him regarding the $100 in fees, saying that amount paled in comparison to the funds needed to conduct such administrative hearings.

“I think that’s one of the things we need to really be cautious about in state government now is that we’re not setting, just arbitrarily reaching up in the air and grabbing a number and saying that’s the fee,” he said. “We need to do something realistic with what the actual costs are on that fee.”

Sen. Reginald Thomas, D-Lexington, also noted that the bill would impact the attorney general’s budget and suggested the legislation have a fiscal note attached, as did Senate President Pro Tem David Givens, R-Greensburg.

Alvarado said one has been requested but has not been completed by the Legislative Research Commission. Speaking to Georgia officials last year in drafting a similar bill, Alvarado said that state spends about $4 million per year on administrative hearings and has about three times the Medicaid population.

Thomas also expressed his concerns that the attorney general’s office could face an ethical conflict in hearing an appeal from a doctor the agency might be investigating for fraud.

Alvarado said the attorney general’s office had reviewed the bill and “didn’t raise any of those same concerns, but it might be something we could discuss with them as well.”

A similar bill that would require CHFS conduct the appeals hearings unanimously passed the Republican-led Senate on a 35-0 vote last year.


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