Beshear announces 3 new companies to manage Medicaid statewide, narrowly balances '12 Medicaid budget

07/07/2011 01:21 PM

FRANKFORT — Democratic Gov. Steve Beshear has made good on his promise to balance the Medicaid budget within itself, leaving a $200,000 surplus in the Medicaid budget for fiscal year 2012.

Beshear announced three companies, CoventryCares, WellCare and Centene Corp. of Missouri would create three Kentucky-based companies to manage Medicaid statewide.

The contract of Passport, which manages Medicaid in Louisville and 15 surrounding counties, was renewed for one year. The other three companies have three-year contracts.

If a federal waiver for the proposal is granted, Kentucky Medicaid patients could start enrolling with one of the three companies starting Oct. 1.

The announced plan is projected to save $97.5 million in fiscal year 2011, coming barely over the $97.3 million that was budgeted for by the General Assembly. For the length of the three year contracts, a $700,000 surplus was created, with $339.3 million in savings to cover a $338.6 million hole.

The plan would save $1.3 billion over the life of the contracts, Beshear said.

Beshear also took the opportunity to take a veiled shot at his Republican gubernatorial opponent, David Williams, who led a charge with his fellow Senate Republicans to implement across the board cuts in the general budget to make up for the Medicaid shortfall.

The Senate Republicans were foiled when the House surprisingly passed their plan and adjourned out of a special session early to allow Beshear to veto any measure he didn’t approve of. Beshear vetoed all of the Senate’s plan.

Having achieved the measure of savings he promised, Beshear said it showed across the board cuts were unnecessary and that the savings he promised were real.

And he furthered that thought by saying that trimming a budget is best accomplished by small, precise cuts instead of taking a “meat axe” to it.

In a release sent out yesterday, Williams disputed Beshear’s math and said that in reality, Beshear proved Williams point by not announcing the plans on July 1.

Williams said Beshear missed his original mark of $140 million in savings in fiscal year 2012 and that the new numbers show a $122 million miscalculation.

“As of this date, not one Kentucky Medicaid recipient is enrolled in a plan and the Governor now says he saved $52 million during the past year which is needed to pay Medicaid fee for services through October,” Williams said in the release. “It’s highly suspicious how the Governor could achieve $52 million in savings during the past three months when he couldn’t achieve all of the $125 million in savings he originally promised. Once again, the Governor’s history of playing fast and loose with budget numbers is on display.”

And Williams said he doesn’t think Beshear will be able to get the three new companies up and enrolling by Oct. 1.

“In short, there is no certainty that provider systems can be set up and in place by October 1 nor is there any certainty that any true savings can be realized,” Williams said. “If it is true that $1.3 billion can be saved over the next three years, one can only wonder what took Governor Beshear so long to implement this plan.”

House Speaker Greg Stumbo agreed with Beshear in a statement, saying the approach he and the governor took proved to be the correct way.

“Today’s announcement is concrete proof of two things: First, that Governor Beshear and the House took the right approach earlier this year when we fought to make up the Medicaid shortfall within that program and not needlessly cut classroom funding or other necessary state services; and, second, that the House was right to let the governor manage this situation as his predecessors have done in the past,” Stumbo said. “Having said that, the General Assembly will maintain diligent oversight of this historic transition to ensure that proper care is maintained statewide and that the savings are realized.”

The new contracts are expected to create 543 jobs, related to the three new Kentucky-based offices being opened. CoventryCares is expected to create 63 jobs, WellCare will create 280 jobs and Centene Corp. will create 200 jobs, Beshear said.

Additionally, the Cabinet for Health and Family Services will receive monthly, quarterly and annual reports from the managed care companies in order to make the contracts transparent, Beshear said.

-Reporting by Kenny Colston and Don Weber. Video production by Don Weber.

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