The committee asserts in its report that the key to better health care and lower Medicaid costs is preventative services. With children comprising more than half of Medicaid consumers, the new model would reward providers by keeping them healthy until they outgrow the system.
If the regional care organization is unable to improve the health of its members through preventive services, provide more effective health care delivery and meet other requirements, the State Medicaid Agency would be able to replace them.
One area where supporters of the new plan hope achieve significant cost savings is in fewer emergency room visits. It is not unusual for a child with asthma to visit the emergency room for a breathing treatment that could have been prevented by timely trips to a doctor's office. Substituting high tech trauma room care for routine doctor's visits cost taxpayers millions in budget dollars annually.
Kentucky's experience with a managed care company contracted to provide Medicaid services offered a lesson to Alabama. That company didn't see enough profit and left the state and its patients in limbo.
The reorganization plan under consideration attempts to put steps in place to insulate taxpayers against the substantial financial risk that Kentucky faced. The bill requires any company wanting to be a regional care organization to put $2.5 million in escrow and have other reserves that would be ceded to the state agency if they stop doing business.
Those requirements may set the financial bar too high for local consortiums considering being the provider for a region. If no RCO comes forward, commercial management care companies, referred to in the legislation as "alternative providers," will be tapped by the Medicaid agency to run the region's health care.
The language of the bill allows an organization that's public, private or a combination thereof to be selected as the Medicaid administrator for each region.