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Kansas legislators hear how capitation, rate cells and FMAP drive Medicaid costs
Summary
Legislative staff and the state’s actuarial vendor explained how Kansas pays managed-care organizations, how rate cells are built and why small FMAP changes and legislative rate increases can materially affect the state general fund.
Megan Leopold, analyst with the Kansas Legislative Research Department, told the Robert G. (Bob) Bethell Joint Committee that most state Medicaid spending flows through capitation payments the Kansas Department of Health and Environment (KDHE) sends to managed care organizations (MCOs).
The capitation payments are “per member per month” amounts set for groups of beneficiaries called rate cells, Leopold said, and those payments are the main driver of Medicaid costs. “These are the state payments or the payments that the state makes to the MCOs,” she said.
The committee then heard from Seth Adamson, managing director and actuary for CABIS Optimus, the actuarial firm that advises KDHE. Adamson described the regulatory and technical framework for setting capitation rates. He said federal law and CMS…
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