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Governor Steve Beshear's Communications Office
Governor announces innovations to rein in Medicaid Spending
Initiatives will rebalance the Medicaid budget and improve care and health outcomes
FRANKFORT, Ky.– Governor Beshear today announced further steps to balance Kentucky’s $6 billion Medicaid budget while still providing the care that vulnerable Kentuckians need from the program. Currently 815,655 Kentuckians depend on the Medicaid program for healthcare, and expenses for the program have been growing as a result of the national recession and increasing health care costs. The number of citizens eligible for services has been increasing by approximately 3,000 per month over the last two years.
A gap in the Medicaid budget of $100 million in state funds exists for fiscal year 2011 resulting from less federal funds in the budget than was enacted by the General Assembly. In addition, the enacted budget contemplated $125.5 million of state funds in cost containment measures to improve the efficiency of the Medicaid program in fiscal year 2011 and $83.6 million in fiscal year 2012.
Cost containment and management actions planned and taken to date by the Cabinet for Health and Family Services account for $86.5 million in savings in state funds in the current fiscal year and $80.2 million in fiscal year 2012. The remaining budget gap of $142.4 million in state funds over the biennium is being addressed by the updated rebalancing plan.
Features of the rebalancing plan
The plan to rebalance the Medicaid budget over the biennium includes:
- No additional General funds over the biennium at the expense of education, public safety or other state programs.
- Solving the problem over a two-year period to minimize the impact to vulnerable citizens who depend on the program and health care providers who make services available.
- Utilizing public-private partnerships to implement innovative cost saving measures and improve health outcomes. Requests for Information (RFI) are being issued concerning strategies used by other states to manage health care costs. Action plans to implement programs based on the results of the RFIs will be put in place in time to realize program savings during the biennium. RFIs for program innovations include:
- Performance-based managed care programs for all Medicaid eligibles in the Commonwealth;
- Pay-for-performance physician and primary care provider incentive plans;
- Performance-based managed care dental programs for children;
- Performance-based pharmacy capitation programs; and
- A long-term care coordination program for institutional and community-based care.
- Increased cooperation and collaboration with the United States Attorneys to bring the full arsenal of enforcement actions to bear on significant instances of fraud and abuse. This will include increased collaboration with federal authorities in bringing False Claims Act cases when appropriate in order to utilize the tools available in such actions.
- Issuing a Request for Proposal for a vendor to manage high cost radiologic and imaging services, which is estimated to save $7 to $10 million annually.
“These new initiatives will help us continue our efforts to make the Medicaid program as efficient as possible,” said Gov. Beshear. “While it is critical that vulnerable Kentuckians eligible for this program receive the care they need, it is just as critical that we manage every taxpayer dollar as wisely and resourcefully as possible. Our objectives are to utilize public-private partnerships to control cost growth, to provide incentives for health care providers to control costs and to improve the health status of our citizens. I also look forward to receiving the recommendations of the Medicaid Cost Containment Task Force and ideas they have to augment this proposal. We continue to be open to new ideas on how to save taxpayer funds and improve care for the vulnerable people served by this important program.”
Steps already taken
Governor Beshear noted that these steps are on top of several other steps the Beshear administration has already taken to control costs in the Medicaid program. These previous steps include:
- Reducing the unnecessary use of medical services, treatments and ER visits;
- Eliminating the ability of some patients to “doctor-shop” in order to obtain unnecessary drugs to manage pharmacy costs more effectively;
- Increasing efforts to collect payments from liable third parties for Medicaid services provided;
- Stopping payments to hospitals for hospital-acquired infections and errors;
- Partnering with the Department of Revenue to recoup payments to providers; and
- More aggressively identifying fraud and abuse, including contracting with Ingenix, a Minnesota-based company, on Oct. 4 to use the latest computer technology available to review medical claims from Kentucky Medicaid providers to stop waste and detect fraud and abuse.
Other states have taken more drastic measures
Gov. Beshear noted that, due to budget shortfalls over the past two years, 36 states have been forced to cut or freeze provider payments, 21 states have raised taxes and fees on healthcare providers, 13 states have reduced benefits and one state has cut eligibility for Medicaid. “Kentucky isn’t to that point yet, and with this plan we are unveiling today, we hope to avoid measures such as these,” said Gov. Beshear.
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Medicaid Charts
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