Kentucky Seeking HHS Approval for Medicaid Overhaul

Kentucky submitted a waiver to the Department of Health and Human Services on Wednesday that would overhaul the state’s Medicaid program to transition people who are eligible for Medicaid to private insurance plans. Under the proposal, people who are eligible for Medicaid under the federal expansion regulations would retain those benefits.

The proposed program, called Kentucky HEALTH, seeks to improve health outcomes in the state, Governor Matt Bevin, a Republican, said Wednesday at a press conference. The plan, if approved and implemented, would lead to $2.2 billion in savings over five years, he said.

Bevin said he was confident HHS would approve the proposal. Without federal approval, Medicaid would not remain expanded in Kentucky, he said. “The commonwealth’s expansion of Medicaid is now going to lie in the hands of CMS,” Bevin said, referring to the Centers for Medicare and Medicaid Services, a department within HHS.

Kentucky officials and federal health officials have been in regular communication over the proposal, Bevin said. But there are still negotiations to come. Ben Wakana, a spokesman for HHS, said the department is prepared to “continue our dialogue for as long as it takes to find a solution that continues progress for the people of Kentucky.”

“We are hopeful that Kentucky will ultimately choose to build on its historic improvements in health coverage and health care, rather than go backwards,” he said in an email. “Kentucky is only beginning the Medicaid waiver process and has not yet submitted a waiver to CMS. When it does, we will evaluate the waiver based on our longstanding principles.”

Under Bevin’s plan, Kentuckians under 138 percent of the federal poverty level would remain eligible for Medicaid and would receive the same insurance coverage as state employees. Enrollees could earn additional coverage, such as vision or dental insurance, through a rewards program that would require them to prove they were either volunteering or taking a health risk assessment.

“We want to create an environment where people are incented to become a part of their own health care,” Bevin said.

The state is also seeking to encourage people to transition off of Medicaid and onto private insurance coverage. Eligible enrollees between 34 percent and 138 percent of the federal poverty level would be required to pay monthly premiums between $1 and $15, which Bevin said would require them to be involved in their own health coverage.

Medicaid enrollees eligible for employer-sponsored health coverage would be required to shift themselves and their families onto that coverage after one year on Medicaid, though there would be a wraparound benefit to ensure no one loses benefits.

Over five years, the state projects the number of people enrolled in Medicaid would be less than the number of those enrolled without the proposed new program.

Bevin took over the state’s governorship from Democrat Steve Beshear, who was blocked from running again because of term limits in January. Bevin campaigned on reversing the state’s Medicaid expansion policy, but he then reversed course and said he would maintain Medicaid but make changes to Kynect, the state’s health insurance marketplace that was widely praised throughout the Affordable Care Act rollout.

Thrity-one states have expanded Medicaid under the 2010 health care law, and those that haven’t are overwhelmingly led by Republican governors or legislatures. States that have expanded Medicaid have seen uninsurance rates decrease more than states than haven’t done so.

Kentucky’s proposal is modeled similarly to parts of Indiana’s expanded Medicaid program. Some states, such as Indiana and Arkansas that are currently led by Republican governors, have used federal waivers to expand Medicaid nontraditionally, meaning the states have received additional federal funds for the program while being able to implement new policies.

The waiver request from Kentucky also seeks approval for a pilot program focused on treating substance use disorders. Nearly 90,000 Kentuckians that are newly enrolled in Medicaid could be eligible for substance use disorder treatment, the waiver says.

That pilot program would waive a rule that blocks federal funds from financing patients’ stays at Institutions of Mental Disease with more than 16 beds and allow Medicaid to cover 30-day stays at such institutions for eligible adults between ages 21 and 64. The state would look at 54 high-risk counties to consider where to roll out such a program, Vickie Yates Brown Glisson, the state’s cabinet secretary for health and family services, said.

The proposal is open for public comment for the next 30 days.