Kentucky Medicaid bill would reduce managed care organization contracts to three

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Lawmakers frustrated with the court decision to squeeze in a sixth MCO are pushing back.


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Gov. Andy Beshear spoke out against a bill that would reduce the number of companies with Kentucky Medicaid contracts from six to three.

The bill, Senate Bill 56, includes language that would allow it to go into effect immediately if passed by the General Assembly and signed into law by the governor. That could have a significant bearing on a months-long, expanding legal fight over how the state awarded five contracts last May.

“We have had in our history, of having [Managed Care Organization], one quit,” Beshear said at a press conference on Tuesday, referring to Kentucky Spirit Health Plan abandoning its Medicaid contract in July 2013 with about a year left in the contract. “And if we only had three [Medicaid companies] and one quit, a huge number of people would be without service and would be in a very difficult spot that could be the difference between life and death.”

He acknowledged the potential frustration of lawmakers critical of the Medicaid program seeing a sixth Medicaid company added to the program through an order from the judge presiding over the Medicaid lawsuits.

The bill’s sponsor Sen. Stephen Meredith, a Republican from Leitchfield, Kentucky, said of Beshear’s response: “That’s a typical response from state government because we never approach things from a business model.

“If you truly apply the principles of the business world, there is no way that you would justify six [Medicaid] companies.”


Sen. Stephen Meredith, R-Leitchfield, is sponsoring a bill that would cut down the number of Medicaid companies in the state to three. There are six companies operating in Kentucky now.

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Meredith, a retired hospital executive, said the bill would remove administrative redundancies and inefficiencies from the Medicaid program and for the health care providers that interact with Medicaid companies — especially small and rural health care providers.

Meredith has run a version of Senate Bill 56 every year since 2018. His first session was in 2017. He called his previous failed attempts to get the bill passed an “educational process” to help legislators understand the bill.

His case for passing the bill includes references to the importance and the plight of rural health care providers. He believes that reducing the number of Medicaid companies would bring them some financial relief, say that about 28 rural Kentucky hospitals are vulnerable to closure. Often, rural hospitals are major employers in rural communities and provide access to care that would not otherwise be easily accessible.

The legal foofaraw around the Medicaid contracts, in part, inspired Meredith to run the bill again in 2021, even after he told me he wouldn’t do so. In an October interview, he said there was a lack of interest from legislative leadership who he said “turned a deaf ear” on the matter.

He also said that the Medicaid lawsuits and the perceived expansion of bureaucracy with the sixth Medicaid company have Increased political buy-in for the bill, even while the General Assembly tackles other major pieces of legislation prompted by the coronavirus outbreak and the Beshear administration’s reaction to it.

The bill has been assigned to start its legislative journey in the Senate health and welfare committee, where Meredith is vice-chairman. He said the bill is slated to be heard in February.

“I think the Covid situation has actually kind of helped this bill and that [other legislators] recognize the challenges to hospitals, particularly rural hospitals, in trying to stay profitable, and literally survive, and that we can provide some kind of relief,” Meredith said.



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