KS- House bill delays rebidding state’s $3.9 billion Medicaid contracts until after governor’s race

MM Curator summary

[MM Curator Summary]: Legislators want to give the next governor a say in the MCO contract renewals.


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Skeptics worry about no-bid contract extensions, reform delays and federal scrutiny


Rep. Brenda Landwehr, R-Wichita, said the Kansas Legislature should approve a bill blocking until after the 2022 election for governor the rebidding of Medicaid contracts with managed care organizations serving about 400,000 people enrolled in KanCare. (Thad Allton for Kansas Reflector)

TOPEKA — A bipartisan cluster of House members, three Kelly administration agencies and a core group of advocates for the 440,000 Kansans in Medicaid shared unease with legislation blocking the rebidding of KanCare contracts with managed-care companies until after the governor’s race in November.

Officials working for Democratic Gov. Laura Kelly have been preparing to launch in October a competitive bidding process among for-profit companies and nonprofit organizations leading to selection in 2023 of three Medicaid contractors. Recipients of those contracts would share responsibility for delivering $3.9 billion in services to low-income children and adults as well as people with physical, intellectual or developmental disabilities.

The current contracts expire at the end of 2023, but legislation pending in the House would extend those deals to the end of 2025.

Rep. Brenda Landwehr, a Wichita Republican and chairwoman of the House Health and Human Services Committee, said the goal of the bill was to enable the Legislature to seize greater control of KanCare during a period covering the gubernatorial election and a portion of the next four-year term of a governor.

“The idea is to give whomever the next administration is the opportunity to go into long-term contracts with KanCare,” Landwehr said. “By extending it, then the next administration comes in and deals with it. That’s the intent.”

KanCare, the state’s privatized system of Medicaid, was launched in 2013 by Republican Gov. Sam Brownback. He extended the initial KanCare contracts by issuing an executive order, not by permission of the Legislature. Sunflower State Health Plan and United Healthcare have been KanCare contractors from the start. In 2018, GOP Gov. Jeff Colyer announced selection — seven months before his term as governor ended — Aetna Better Health of Kansas would replace the third original KanCare contractor Amerigroup Kansas.

Under House Bill 2463, the executive branch in Kansas would not have authority to make “substantive or material” changes to Medicaid until Jan. 1, 2026.

It would order the Kansas Department of Health and Environment to negotiate contract extensions with Sunflower, United Healthcare and Aetna. KDHE would be forced to seek federal approval to continue operating KanCare in the manner of an experimental program, but the state’s Medicaid director said any request for an extension of federal authorization beyond one year would be rejected by the U.S. Centers for Medicare and Medicaid Services.

Rep. Kathy Wolfe Moore, a Democrat from Kansas City, Kansas, said the bill deviated from a process established by Republican governors in which the executive branch took the lead in developing contracts with managed-care companies. So far, Kansas governors have guaranteed Medicaid recipients three options among MCOs.

She said the bill risked the state running afoul of federal regulators and jeopardized $2.9 billion in federal funding for Medicaid. A law requiring contracts with specific companies would soften the state’s leverage in management conflicts, she said.

“This would set up a no-bid process because these contracts would automatically stay. I’d love to be a contractor with the state if I knew I could do anything,” Wolfe Moore said.


Rep. Kathy Wolfe Moore, a Democrat from Kansas City, Kansas, expressed concern about a bill forbidding until 2026 a new round of competitive bidding on state contracts with Medicaid managed-care companies. A Republican legislator said the objective was to block progress until voters decided in November whether to give Democratic Gov. Laura Kelly a second term. (Sherman Smith/Kansas Reflector)


Political motivations?

Kelly, who is seeking re-election to a second term as governor, has supported proposals to expand Medicaid eligibility to include at least 100,000 more Kansans. So far, the House and Senate have not consented to expand access to Medicaid. Kelly’s likely Republican opponent in November would be Attorney General Derek Schmidt, who has opposed Medicaid expansion and authorized legal challenges of the Affordable Care Act.

None of the current KanCare contractors expressed support for the bill during the public hearing in Landwehr’s committee. Two Cabinet secretaries in the Kelly administration, the state’s Medicaid director and representatives of four health advocacy organizations opposed the legislation. Three organizations, including the Kansas Medical Society, raised objections but didn’t declare outright opposition.

Legislators were puzzled by absence of testimony from any organization or individual making arguments in support of the bill.

“It’s a little bit difficult when we don’t have a proponent,” said Rep. Doug Blex, a Republican from Independence. “The benefit of committee work is to hear all sides and make a somewhat intelligent decision.”

Democratic Rep. Susan Ruiz, of Kansas City, Kan., added: “I’m used to bills coming to us because we want to fix something or we want to enhance something. This is just out of that realm.”

GOP Rep. John Eplee, a physician from Atchison, said he was struggling to nail down purpose of the bill.

“I understand this is well-intentioned to provide more legislative engagement and oversight with this program,” Eplee said. “Without proponent testimony it’s a little hard for me to really embrace what the goal of this bill is.”



Sarah Fertig, Medicaid director at the Kansas Department of Health and Environment, said financial and legal problems would result from passage of a bill mandating extension of state Medicaid contracts with three companies until 2026. She said the bill jeopardized $2.9 billion annually in federal aid to Kansas. (Kansas Reflector screen capture from Kansas Legislature YouTube channel)


‘Uncertain, far-reaching’

Kansas Medicaid director Sarah Fertig, who is part of the Kansas Department of Health and Environment’s division of health care finance, said the federal government wouldn’t let Kansas secure more than a one-year extension of its current authority to operate KanCare.

KanCare functions under a so-called Section 1115 waiver of federal rules scheduled to expire Dec. 31, 2023. However, the bill would require the Medicaid program to remain frozen through Dec. 31, 2025, which would be two years after the state’s Section 1115 waiver expired.

She doubted federal officials would approve a “two-year, no-bid contract extension for our three MCOs in the absence of a clear operational need.”

Vague language of House Bill 2463 had “uncertain and far-reaching implications” on operation of Medicaid in Kansas, Fertig said.

If made into law, she said, it could interfere with adding new drugs, treatments and services to Medicaid coverage. It could block increases in medical provider reimbursements. It would interfere with extending coverage for postpartum women, behavioral health services and therapy for children with autism.

It would forbid the state from addressing workforce shortages for individuals working to care for people with disabilities. A prolonged hold on new contracts could jeopardize federal funding that made up two-thirds of the state’s Medicaid budget, she said.

“If even a portion of federal funding were lost as a result of the state’s compliance with HB 2463, the results would be devastating,” Fertig said.

DeAngela Burns-Wallace, secretary of the Kansas Department of Administration, said the House legislation could be problematic if it forced the state to extend contracts with a vender it no longer wanted to do business with.

“Language of the bill indicates that no substantive or material change can be made in the contracts. Vendors could argue that the state must retain the current vendor regardless of the vendor’s performance,” Burns-Wallace said.



Rachelle Columbo, executive director of the Kansas Medical Society, said legislation freezing Medicaid managed-care contracts until 2026 should include a provision allowing an increase in fees paid physicians caring for KanCare patients. Rates haven’t changed since 2006. (Sherman Smith/Kansas Reflector)


‘Harmful rigidity’

KanCare Advocates Network, a coalition of more than 50 organizations and individuals who advocate on behalf of participants in Medicaid, argued the House bill would unnecessary pump the brakes on broadly supported reforms of KanCare. Years of opportunity for progress could vanish, said Sean Gatewood of KanCare Advocates Network.

“The bidding process by the MCOs is needed to constantly adapt to the current environment as well as improve the overall system on a regular basis,” Gatewood said. “At the core of the KanCare program is the premise that competition will drive better outcomes. HB 2463 removes most of that competition.”

Denise Cyzman, chief executive officer of Community Care Network of Kansas, said 28% of patients at the network’s 34 clinics were covered by Medicaid. The network provides medical, dental, pharmacy, mental health, substance use disorder and case management services.

“The COVID-19 pandemic has demonstrated how important it is for our health care system to be nimble and adaptable. HB 2463 not only discourages adaptability, but imposes an unnecessary and harmful rigidity to the system,” she said.


Clipped from: https://kansasreflector.com/2022/02/04/house-bill-delays-rebidding-states-3-9-billion-medicaid-contracts-until-after-governors-race/