Kentucky's Bevin Submits Updated Medicaid Plan That Calls for Active Consumer Engagement

As promised, Kentucky Governor Matt Bevin last week submitted to CMS a revised Medicaid plan that overhauls benefit design for individuals earning between 100% and 138% of the federal poverty level, or about $16,200 for an individual. Now, it will be up to CMS to weigh in on a Medicaid program that has been seen as one of the success stories of the Affordable Care Act (ACA).

With tweaks that reflect feedback on his original plan, Bevin (a Republican), asked CMS on August 24, 2016, to approve a program that relies heavily on something that evidence shows is not easy: engaging consumers.

Major changes from the Medicaid plan created by Bevin’s predecessor, Democrat Steve Beshear, are intact:

• The plan asks enrollees to pay monthly premiums on a sliding scale from $1 to $37.50 for services that are now basically free. The medically frail would now be exempt, and a premium would be charged on a household, not individual basis.
• Enrollees will need to work or volunteer for 20 hours a week, but caring for a disabled adult or elderly parent would now be credited for that requirement.
• A controversial “lock out” provision remains. This would cancel coverage for 6 months for those who miss premiums, unless they take health or financial literacy classes.

“The submission of this waiver is the result of many months of extensive research, planning and time spent traveling the statement,” Bevin said in a statement. The revised plan, he said, “will allow us to continue to provide expanded Medicaid coverage, but unlike the current Medicaid expansion under Obamacare, it will do so in a fiscally responsible manner.”

The governor has said that if CMS does not approve the waiver, he will rescind Beshear’s executive order that expanded Medicaid.

Bevin’s plan is a mix of carrots and sticks: it offers opportunities for enrollees to earn credits toward vision and dental care, which are no longer automatic benefits. Its deductible feature “exposes members to the cost of healthcare and encourages members to be active consumers … by evaluating cost and quality as they seek care.”

The state funds the $1000 deductible, and each year 50% of unspent funds can transfer into the “rewards” account that pays for vision, dental, and over-the-counter medication. It includes features to promote care for substance abuse and chronic disease, but with premiums that rise over time, the plan makes clear that recipients are expected to look for a job with health coverage.

The plan seeks to make enrollees aware of the actual costs of care—something that is increasingly common in high-deductible plans, both on the exchanges and in the private market. There are anecdotal examples of this: in recent weeks, high-deductible plans, alongside rapid cost increases, created pressure on the pharmaceutical company Mylan to introduce a generic version of the EpiPen, which was priced beyond the reach of many families.

However, new research on a 10-year experiment called Aligning Forces for Quality, found that getting consumers to be engaged in their own healthcare over an extended period is very, very hard, according to Donald M. Berwick, MD, MPP, president emeritus and senior fellow at the Institute for Healthcare Improvement.

Research is showing that consumer behavior that works well in other markets doesn’t translate easily into healthcare, and a 2015 survey by Deloitte found that the most engaged healthcare consumers tend to be those with higher incomes—not the Medicaid population.

An analysis in Health Affairs found several tenets of the Kentucky Medicaid plan to be counterproductive, especially those that put financial penalties on non-emergency use of the emergency department (ED) and the decision to not automatically cover dental benefits. The author, Roy Grant, argues excluding dental coverage has been shown to increase ED use.

“Many Medicaid waiver plans include punitive measures to discourage nonurgent (ED) use,” he wrote. “This is based on another myth about Medicaid—that is causes beneficiaries to seek care in emergency rather than in primary care settings. This, too, is contradicted by facts: only 10% of adults on Medicaid make nonurgent (ED) visits compared to 7% of commercially insured adults.”

Bevin’s changes to the final plan reflect input from hearings: activities that can count toward the rewards account include taking children for immunizations and earning a GED, which is now a covered benefit.

While the emphasis on work is seen throughout the plan, his core argument for changing course is that the current expansion design is not sustainable once the federal government stops paying the full cost next year.

The 2013 study that led to expansion projected enrollment of 147,600 in 2014, which would rise to 187,900 over 6 years, but the actual enrollment exceeds 428,000. “As such, the cost of these benefits to Kentucky taxpayers is estimated to increase from $74 million in 2017 to approximately $363 million by 2021, for a total of approximately $1.2 billion over the next five years,” the plan states.

“These costs have the potential to challenge the overall state budget and could create funding issues for other programs, such as education, pensions, and infrastructure, as well as also jeopardize funding for the traditional Medicaid program that covers the aged, blind, disabled, pregnant women and children.”

Critics of Bevin’s plan say his main savings will not be from smarter consumer behavior, but from enrollees becoming confused and discouraged over paying premiums or otherwise being eliminated from the program. One analysis predicts that 86,000 people would be removed from the program over 5 years.