Kansas lawmakers get overview of Medicaid financing as costs rise; capitation payments largest driver

Megan Leopold, a fiscal analyst with the Legislative Research Department, told the Committee on Welfare Reform on Oct. 27 that capitation payments to managed care organizations and several recent legislative changes are the primary drivers of rising Medicaid spending in Kansas.

Leopold said the Medicaid budget is split between the Kansas Department of Health and Environment and the Kansas Department for Aging and Disability Services. "KDHE oversees the medical piece of the program ... and the administrative piece of the program," she said, while KDADS manages behavioral health services, nursing and waiver programs.

The presentation outlined three funding drivers committee members asked about: capitation payments to MCOs, the federal medical assistance percentage (FMAP) and provider-related policies such as hospital provider assessments.

Why it matters: Capitation payments — the per-member, per-month payments KDHE sends to the state’s three contracted managed care organizations — account for the majority of Medicaid spending. As those payments and the rates that underlie them rise, state costs increase…