Senate Appropriations Committee adopts substitute and gives House Bill 695 favorable report

At a meeting of the Kentucky Senate Appropriations and Revenue Committee, members adopted a committee substitute for House Bill 695 and then voted to report the bill favorably by roll call, registering 11 ayes and no nays.

Senator McDaniel, chair of the committee, opened the meeting noting the panel had a quorum. Senator Mayes Bledsoe presented the committee substitute, saying the document before members summarized the changes and deletions under consideration. "First, we added in here the Medicaid Oversight Advisory Board," Mayes Bledsoe said, and then described a series of edits in numbered sections of the substitute.

The committee substitute makes several programmatic and administrative changes to Kentucky's Medicaid statute and program operations as summarized by Mayes Bledsoe on the record. Among the principal changes the presenter listed:

- Adds the Medicaid Oversight Advisory Board (MOAB) into the bill.

- Exempts changes to the Medicaid program that are necessitated by requirements imposed by the federal Centers for Medicare & Medicaid Services from the statutory requirement that the General Assembly authorize Medicaid program changes (section 1.5).

- Extends that exemption to any payment program for university hospitals (revising section 1.6).

- Clarifies that the community engagement program described in KRS 205.5371 shall be a mandatory community engagement waiver program (section 4).

- Moves the Kentucky Medicaid pharmaceutical rebate fund to the Cabinet for Health and Family Services and requires that monies in the fund be expended by the Department for Medicaid Services in accordance with federal law for the purpose of providing Medicaid-covered services (section 5).

- Revises certain Medicaid managed care reporting requirements and narrows quarterly demographic reporting for Medicaid enrollment (section 7 and section 7.4 as described by the presenter).

- Deletes provisions that had provided Medicaid coverage for psychoeducational services and replaces that coverage provision with a monitoring requirement: the Department for Medicaid Services must monitor utilization rates and expenditures for all Medicaid-covered behavioral health and substance use disorder treatment services and report to the Legislative Research Commission only those services for which utilization or expenditures increased by more than 10% over a 12-month period (section 9).

- Adds a new section stating that the Medicaid program may be administered under fee-for-service, managed care, or other delivery systems permitted under federal law.

- Incorporates the provisions of a separate measure described by the presenter as House Bill 9 (the Medicaid oversight and advisory bill) into sections 12–19 of the substitute.

- Authorizes the Department for Medicaid Services to submit a state plan amendment application if required to implement certain sections of the act (section 20).

- Establishes that any entity that failed to comply with Medicaid managed care organization reporting requirements established in 2024 RSHB 6 shall be ineligible to receive a new MCO contract (section 21), and requires the Department for Medicaid Services—not the MCOs—to develop a behavioral health and substance use disorder treatment service scorecard (section 22). The presenter also said language relating to a long-term managed care waiver program was removed from the substitute.

After the presentation, the committee adopted the committee substitute (motion and prior voice action recorded during the meeting). A subsequent motion to report House Bill 695 favorably was made by Senator Richardson and seconded by Senator Nunn. The committee secretary called the roll for the final vote. The roll-call yeas recorded in the transcript were: Senator Boswell, Senator Funke Frauemeyer, Senator Givens, Senator Maden, Senator Mayes Bledsoe, Senator Nunn, Senator Rawlings, Senator Richardson, Senator Webb and Chair McDaniel; the committee recorded a total of 11 aye votes and no nay votes, and the measure passed with a favorable report.

The committee did not take additional action at that meeting. Chair McDaniel closed the business noting the measure passed with a favorable expression and no other business was raised.

Ending — The committee-approved substitute for House Bill 695 moves the package of Medicaid-related reporting, administration and fund-management changes forward to the next stage in the legislative process with a favorable committee report. Additional administrative steps described in the substitute (for example, any required state plan amendment) would be carried out by the Department for Medicaid Services if necessary to implement the substitute's provisions.