Committee approves bill tightening MCO audit, notice and parity oversight for providers

The House Standing Committee on Health Services on Tuesday approved House Bill 785 as amended by House committee substitute 1, a bill the sponsor and provider groups said would tighten notification rules for contract amendments, set standards for managed-care audits and strengthen enforcement of mental-health parity requirements.

Representative Kim Mosier, the bill sponsor, said the substitute combines the language of House Bill 785 and 787 and seeks to improve “notification to providers about changes in contracts and denial of claims and strengthens the ability to audit claims.”

John Inman, assistant general counsel at BrightView Health, said managed-care payments for substance-use-disorder services are often far lower than comparable physical-health payments and are sometimes indexed to Medicare at levels that providers find inadequate. “We’ve seen disparity between those payments… oftentimes 50 to 60% of the Medicare rate,” Inman said, and he urged contract language and sampling rules to monitor parity between behavioral and physical-health rates.

Michelle Sanborn of the Children’s Alliance and providers from the field described what they called burdensome audit practices. “We had 20 [audit] requests from the same MCO within three days with 663 records,” Sanborn said, and related another example of a provider receiving a 376-page recoupment notice and having about $88,000 withheld while the appeal proceeds. A provider identified as Kelly McCormick described receiving multiple large requests on short deadlines: “One MCO sent us two significant audit requests within four days… we had eight days to turn those in.”

Supporters said the bill would add standards and transparency to audits and appeals and require an annual report of Medicaid claims, appeals and grievances. The sponsor also pointed to a new section added to KRS Chapter 205 that would require Department for Medicaid Services and managed-care organizations to allow at least two billable evaluation-and-management (E&M) services per physician, per patient, per day, to permit addressing multiple problems in a single visit.

Committee members questioned oversight roles. Representative Fleming asked about the balance of responsibility among providers, managed-care organizations and the Medicaid agency; witnesses described limited practical recourse to the agency for live disputes and urged clearer enforcement authority. Representative Mosier noted the bill authorizes the commissioner of the Department of Insurance to suspend or revoke an MCO certificate of authority for willful or repeated failure to comply with mental-health parity laws.

Testifying against the bill, Tom Stevens of the Kentucky Association of Health Plans said the measure would be hard to implement amid federal uncertainty around Medicaid and recommended addressing some issues through the larger Medicaid oversight panel established by another bill recently passed in the House.

After questions and debate, the committee adopted the committee substitute and voted to send the bill forward with a favorable report. The record roll call showed members present voted in favor; the committee announced, “House bill 785 as amended by House committee substitute 1 passes with favorable expression.”

The bill contains both contractual-notice and audit/appeal provisions and a parity-monitoring requirement; it passed the committee on a roll call and will proceed in the legislative process.

Votes at a glance: The committee recorded a favorable roll-call on the amended House Bill 785. The committee chair announced the bill passed with a favorable expression.

What happens next: The bill will move from committee for further consideration by the House. Any statutory changes cited in the bill reference KRS chapter 205 as amended in the substitute.