Medicaid Best Practices | Center for Health Transformation

Best Practices in Medicaid - Kentucky

The Center for Health Transformation is inviting leaders from all 50 states to share their transforming solutions for the Medicaid program. In order that key decision-makers and industry leaders from around the country may learn from others’ successes, it is our intention to provide this interactive resource for showcasing the most innovative practices in the country. Please note that the following contributions have not been edited by CHT staff and will remain open indefinitely to future updates.

View Kentucky's Official Medicaid website >>

Introduction

Kentucky has embarked on an ambitious Medicaid modernization program, called KyHealth Choices, which is fundamentally changing the way that Kentucky delivers and finances health care for its Medicaid members. Kentucky was the first state in the nation to utilize the unprecedented flexibility of the newly passed Deficit Reduction Act (DRA) and selected waiver options to transform Medicaid into a 21st century health plan that emphasizes improved health outcomes, individual empowerment, and long-term financial sustainability. The KyHealth Choices initiative grew from Gov. Ernie Fletcher’s decision, in the face of Medicaid’s dire fiscal situation in 2003, to pursue comprehensive reform of the 1960’s-era program while working hard to avoid drastic cuts to the Medicaid eligibility rolls.

In announcing federal approval of KyHealth Choices, the first comprehensive reform package under DRA, Health and Human Services Secretary Mike Leavitt applauded Kentucky for “leading the nation in crafting Medicaid benefit packages to meet the needs of its residents.”

In order for Medicaid to become a 21^st Century health plan, Governor Fletcher and Secretary Mark D. Birdwhistell focused on three main areas for Medicaid modernization: technology, benefit design, and care management.

Kentucky completely revamped its approach to care management by utilizing technology and targeted data to improve care, especially for those with intensive medical needs. Kentucky replaced its outdated Medicaid Management Information System (MMIS) with a new state-of-the-art system designed to support the changes in benefit design and the information needs for targeted care management.

A cornerstone of Kentucky’s modernization effort is the elimination of the one-size-fits-all approach to benefits and the move to targeted benefits packages for the different populations covered by Medicaid. For the general Medicaid and SCHIP populations, KyHealth Choices will mean increased engagement in their health care. For adults with mental retardation and other developmental disabilities, acquired brain injuries, physical disabilities and the frail and elderly, this approach will provide real choices around accessing needed long-term care services with an emphasis placed upon receiving the right care, in the right setting, at the right time.

KyHealth Choices features four distinct benefit packages that target the level of care needs and categorical eligibility of individual Medicaid members. These packages include two that focus on the two largest Medicaid populations:

Global Choices (231,798 members) will cover the general Medicaid population, including adults, foster children and medically fragile children.
Family Choices (257,573 members) will cover most children, including the SCHIP eligibility group.

Two other KyHealth Choices benefit packages focus specifically on the more intensive care needs of older and disabled individuals:

Optimum Choices (3,429 members) will cover individuals with mental retardation and developmental disabilities in need of intermediate long term care services.
Comprehensive Choices (27,978 members) will cover individuals who are elderly and in need of a nursing facility level of care, as well as individuals with acquired brain injuries.

In addition to targeted benefit packages, KyHealth Choices also has modest cost sharing and service limitations to encourage personal responsibility and involvement in care decisions. Most members enrolled in KyHealth Choices will be required to share in the cost of covered services. However, the maximum amount of cost-sharing shall not exceed five percent of a family’s income per quarter. In addition, there is a maximum out of pocket expense of $225 per calendar year for prescription drug copayments or coinsurance and a $225 per calendar year for medical copayments or coinsurance.

In the same way that members with private insurance have limits on the number of visits, KyHealth Choices hassome limits on services and prescriptions. For example, prescription medicines are limited to a total of four per month. Physical therapy and occupational therapy are limited to 15 visits per year, as another example. These limits are intended to be “soft” limits which can be increased if additional prescriptions or visits are medically necessary, especially for individuals with chronic conditions. More than a year after implementation, KyHealth Choices has had no access to care issues as a result of these changes.

Consumer-directed care demonstrations (include number of beneficiaries served now and in any expansion plans)

Kentucky has a number of options that allow consumers to direct and control what services they receive and by whom. Consumer-directed care is a critical piece of Governor Fletcher’s drive to encourage more personal responsibility and involvement and offer more choice, freedom, independence and self-determination in Kentucky’s assistance programs.

Seniors, individuals with physical and developmental disabilities, and individuals with acquired brain injury who are eligible have the choice to utilize Consumer-Directed Options (CDO) for non-medical and non-residential services or utilize traditional service providers. Enrollees can hire individuals (relatives, friends or service providers of their choosing) to provide services, such as personal care, homemaker services, respite care, etc., rather than using a specific home health agency or other service provider.

Kentucky also allows a blended package of services that allows consumers to pick and choose the options that best meet their needs. Services provided via the CDO may be “cross-walked” to a service offered under the traditional service option, enabling consumers to transition seamlessly between the CDO and traditional service options with no lapse in service delivery. The goal of the CDO is to increase consumer independence, satisfaction, and quality of life, while supporting seniors and individuals with disabilities to remain in their homes and communities.

Kentucky’s CDO is also a model for cooperation among agencies to break down the bureaucratic silos between programs. CDO in Kentucky is a joint effort between the Department for Medicaid Services and the Department for Aging and Independent Living. Joint planning took the number of forms required from 22 down to just four. Area Agencies on Aging (AAA) administer CDO through Support Brokers and Fiscal Intermediaries, allowing coordination of services across the full spectrum of needs.

In addition to CDO, Kentucky is undertaking the next step toward greater consumer direction by offering on a pilot basis Self-Directed Options (SDO). Authorized under the DRA (1915)(j), SDO will provide individuals with disabilities, who are eligible for long term supports, the ability to craft a highly personalized budget within their allocation, as long as the budget does not exceed the total allocation. Their individual allocations will be determined using typical assessments common to all eligible beneficiaries, which are then discounted by 5%, combining greater individual control with fiscal benefits for the Commonwealth. This demonstration is predicated on increasing safety and health by concentrating on committed long term relationships and community connections, as well as on safe and affordable housing when necessary outside the natural home. In addition, this initiative allows individuals to use their budgets to pay for items that increase independence and decrease dependence on human assistance (such as employment services).

Another consumer directed care component of KyHealth Choices under development currently is Get Healthy Benefits. This program will allow individual members with targeted conditions to earn additional benefits by participating in certain healthy practices as identified by the Commonwealth. Individuals with diseases including diabetes, asthma, and heart disease will earn benefits, such as additional dental and vision services or nutritional and smoking cessation counseling, for participation in approved disease management and prevention programs.

Delivering high quality, coordinated, long term care for the disabled and/or the infirm

The vision for KyHealth Choices includes transforming the coordination of aging, mental health, mental retardation/developmental disabilities, substance abuse, public health, wellness and physical health services.

With the new flexibility offered under the DRA, Kentucky embarked on the Long Term Living Initiative that sought a comprehensive redesign of aging and long term care services and programs. This meant breaking down silos between agencies and programs to enable easy consumer access, a full continuum of services to match consumer needs, and delivery of quality services in a timely manner.

Two of the four benefit packages in KyHealth Choices focus specifically on the needs of individuals with long term care needs allowing improved coordination of care rather than the one-size-fits-all approach of traditional Medicaid. The Optimum Choices package focuses on the populations with mental retardation/developmental disabilities who are receiving care either in an ICF/MR or through supported community living services. The Comprehensive Choices package focuses on populations needing nursing facility level of care. All Medicaid members currently receiving long term care services will be enrolled in one of these two KyHealth Choices packages.

For individuals needing long term care services, KyHealth Choices will also include various levels of care within each benefit package. The level of care for each member will be determined by individualized plans of care. It is the Commonwealth's intent that the plans of care will create a seamless process which will allow an individual to shift through these levels as their needs change. Case management, individualized plans of care and the greater flexibility in services under KyHealth Choices will allow more seamless integration of services.

In addition to targeted benefit plans, Kentucky Resource Markets throughout the state now serve as a single point of entry and one stop shop for all aging and disability services and programs, including Medicaid services. The Kentucky Resource Markets are part of the Long Term Living Initiative overseen by the newly created Department for Aging and Independent Living. Partner agencies in the Kentucky Resource Market include the state departments for Medicaid Services, Mental Health and Mental Retardation, and Community Based Services. Kentucky’s Area Agencies on Aging administer the Kentucky Resource Markets, working with service providers; aging and disabilities advocates; local community programs and consumers to coordinate services across a variety of programs for clients.

In May 2007, Kentucky also received $49.8 million over five years from CMS through the Money Follows Person Grant program to help seniors and individuals with disabilities to remain in their homes and communities. Included in the DRA, Money Follows the Person initiatives in Kentucky and around the country are intended to shift Medicaid’s traditional emphasis on institutional care to a system offering greater choices that include home and community-based services for people of all ages with disabilities or chronic illnesses.

For Medicaid clients with chronic conditions, KyHealth Choices provides a new focus on wellness, prevention and disease management exists. Wellness and prevention efforts are now coordinated between Medicaid and the Department for Public Health (DPH), connecting Medicaid clients to the experts in healthy living through the state and local health departments. KyHealth Choices, for instance, now covers smoking cessation services and nicotine replacement products at no cost to Medicaid members who enroll in the Quit Line counseling offered by the DPH Tobacco Prevention and Cessation Program. Medicaid is also committed to working with local health departments ondisease management. Medicaid is working with 6 local health departments that have Diabetes Centers of Excellence. Medicaid contracts with local health departments to offer diabetes education classes to Medicaid clients with diabetes.

In addition, the traditional Medicaid system prevented true integration of services for many individuals with mental illness, mental retardation and/or chemical dependency who have more than one diagnosis. This is especially true for adults with Severe Mental Illness (SMI) and adolescents with Severe Emotional Disabilities (SED). KyHealth Choices plans to utilize a 1915 B waiver to integrate physical and co-occurring health care.

Use of health information technology (electronic health records, e-prescribing, electronic billing, etc)

Kentucky Medicaid has completely overhauled its health information management systems to enable greater use of electronic billing, care management, disease management and utilization review. The program has contracted with a pharmacy benefits administrator to improve electronic management of pharmacy utilization and claims. Kentucky has also enhanced its Medicaid Management Information System and the KYHealth-Net system, which allows providers instant electronic access to member information and claims submission, including real time adjudication of claims.

In 2005, Governor Fletcher signed innovative legislation that called for the creation of a statewide electronic health network and established the Kentucky e-Health Network Board. The e-Health Board is a public-private entity that is responsible for advancing the utilization of health IT in Kentucky and moving toward the ultimate goal of an integrated and secure electronic health network. Kentucky’s Medicaid commissioner is a member of the e-Health Board, ensuring that KyHealth Choices, which covers one in six Kentuckians, is involved in every aspect of these efforts.

In February 2007, Kentucky was awarded a $4.9 million Medicaid Transformation Grant from the Centers for Medicare and Medicaid Services to develop the Kentucky Health Information Partnership or K-HIP. K-HIP is a Medicaid-led alliance of health care stakeholders that have agreed to work together with the Kentucky e-Health Board and the Kentucky e-Health Corporation to develop a statewide health information exchange portal that will provide the foundation for more robust HIE activities throughout Kentucky.

The statewide K-HIP web portal will have two main areas of functionality. First, a clinical information site will deliver a patient health summary to treating clinicians, including a medication history; inpatient, emergency and outpatient visits; diagnoses; lab and diagnostic test history; and patient demographic information. The other portion of the site will offer single-sign on access to common administrative transactions, such as checking eligibility and benefits across multiple payors.

With data from most of the major payors in Kentucky, K-HIP would have information for as many as 60 percent of Kentucky’s 4 million residents. Estimated cost savings be $40 – 125 million in reduced emergency room and prescription drug costs.

Expanding coverage through private sector initiatives

In 2006 under Governor Fletcher’s leadership, Kentucky introduced and passed legislation creating a state small business insurance assistance program called the Insurance Coverage Affordability and Relief to Small Employers or ICARE program (HB 380). Kentucky provides financial assistance to those small employers who have not previously offered coverage or that are facing a big jump in insurance costs due to high cost employees. The ICARE program now has enrolled around 1000 employees from 250 small businesses around the state.

Transparent and publicly-accessible measurements of patient outcomes and/or quality improvements

A multi-level evaluation process will provide pertinent data and feedback to Medicaid’s leadership and stakeholders. Kentucky expects to use clinical, functional and cognitive measures from assessments of member experiences and services. Medicaid anticipates developing and utilizing longitudinal as well as point-in-time assessments. These will be service, condition, and delivery system oriented. The Commonwealth will also develop and utilize financial measures of services delivery, examining whether KyHealth Choices is achieving lower overall costs than traditional Medicaid has incurred on a per member, per condition, or per delivery system basis. Measures of efficiency, efficacy, and optimality will be developed by Medicaid to guide the monitoring and evaluation process.

The data and evaluation information that is generated by the Medicaid program will be integrated with the Secretary’s Advisory Committee on Transparency that is part of the overall Cabinet for Health and Family Services effort to provide consumers with meaningful information about health care quality and costs.

The Fletcher Administration has also worked to make more health care cost and quality information available to Kentuckians, so that they can truly “shop around” for the best value and make sound decisions about their health care. In 2005, Secretary Mark D. Birdwhistell created the Secretary’s Advisory Committee on Health Care Transparency (HB 278). In 2006, Kentucky then enacted requirements to create Kentucky’s transparency initiative (HB 380) allowing the Cabinet for Health and Family Services to post hospital quality and cost information online. Through the Kentucky Health Care Information Center, consumers now can compare the quality of hospital care for a variety of procedures.

What are your future plans?

Implementation and expansion of the KyHealth Choices Medicaid Modernization efforts continues with plans to expand coverage efforts in 2008, including:

ICARE 4 Kids – This initiative is aimed at making private health insurance more affordable. The ICARE 4 Kids program will provide premium assistance to families and employers through an expansion of the Kentucky Children’s Health Insurance Program (KCHIP).
Long Term Care Partnership Program – Also part of the DRA, this program incentivizes the purchase of private long term care coverage, thereby reducing the use of Medicaid for long term care costs later in life.
Ticket to Work Medicaid Buy-In Program – This initiative under development currently in Kentucky will remove barriers to employment by allowing eligible working individuals with disabilities to “buy-in” to Medicaid.

Further work will also continue in our efforts to eliminate barriers to appropriate care and expand coverage including:

Single Point of Entry - Creating a single point of entry and expand the continuum of care for the long term care populations, including a combined screening and eligibility tool and “No Wrong Door” approach to services for seniors and individuals with disabilities.
Small Business Insurance – Expanding the ICARE (Insurance Coverage Affordability and Relief for Small Employers) program from businesses with 2-25 to 2-50 employees. The expansion will also include the creation of an ICARExchange to expand opportunities for individuals and small employers to access more affordable health insurance coverage. The ICARExchange will provide a small business with the same administrative options as a large business, improve access to health care providers, create a clearinghouse for health care information and access to available programs and services to support consumers and businesses with coverage options. Read a Bureau of National Affairs article about ICARE >>