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Committee backs bill to 'stabilize' Kentucky Medicaid, tighten reporting and transparency
Summary
The committee voted to report House Bill 695, as amended by PHS 1, which places short-term limits on Medicaid program changes, requires new reporting and record-retention, and directs the cabinet on procurement and prior-authorizations to provide additional oversight while a Medicaid advisory board is established.
House Bill 695, amended by PHS 1, was advanced out of the House Appropriations and Revenue Committee on March 4, 2025, with a committee vote of 16 yes, 1 no and 3 passes; the measure will move to the House floor with a favorable report.
Representative Adam Bowling (R) summarized the bill and told the committee the intent is to "stabilize the program" while the legislature awaits more information and the creation of a Medicaid oversight and advisory board. "Let's hold things where they are. Let's see what comes down the pipe from the federal government. Let's get some more data, some more information as we work through it," Bowling said.
Major provisions described in committee testimony include: - Sections 1–3: Limit the cabinet's authority to make programmatic changes via new waivers, state-plan amendments or coverage expansions while the stabilization period is in effect. - Section 4: Authorize the cabinet to proceed with an 1115 community engagement waiver and require reports on progress. - Section 5: Create a Kentucky Medicaid pharmaceutical rebate fund; testimony said the state now receives about $1,500,000,000 in annual rebates and the measure does not restrict how the cabinet may use those rebates under current practice. - Section 6: Require the cabinet to notify the Legislative Research Commission (LRC) of waiver applications, renewals and state-plan amendment applications. - Section 7: Require quarterly reporting to interim committees and the Office of Budget Review. - Section 8: Require record retention for not less than seven years. - Section 9: Limit certain billing codes to no more than one hour per day and no more than 100 hours in a calendar year. - Section 10: Require the cabinet to report implementation barriers for Medicaid-related bills within seven days after a standing committee reports a bill should pass. - Section 11: Direct the cabinet to reinstate prior authorizations for behavioral health as they existed on Jan. 1, 2020. - Section 12: Require the cabinet to procure new Managed Care Organization contracts effective no later than Jan. 1, 2027. - Section 13: Require MCOs to collaborate on a shared scorecard for behavioral health and substance-use disorder treatment.
Committee members asked whether the new pharmaceutical rebate fund would be an escrow and whether funds would be restricted to Medicaid use. Bowling replied, "No, it's not an escrow account and no there are no restrictions. The cabinet can use it how they used it yesterday, and moving forward that way." On whether the General Assembly could appropriate the rebate money for other priorities, Bowling said that appropriation decisions remain with the legislature and that, "everything is always up for consideration."
Members also pressed questions about risks that administrative requirements could lead to eligible people losing coverage. Bowling said implementation varies by state and program design; committee discussion recorded no specific evidence in the hearing that the community engagement provisions had produced mass terminations in Kentucky. Several members expressed support for creating the oversight board while cautioning against legislative micromanagement of executive functions and concern about the fiscal impact of federal match changes.
The committee adopted PHS 1 and reported the bill favorably. The committee recorded 16 yes votes, 1 nay and 3 passes. The committee summary will accompany the bill to the House floor for further consideration.
What to watch: the measure includes an emergency clause to make portions effective immediately; it also directs new reporting and procurement deadlines that will affect the Cabinet for Health and Family Services and contracted managed care organizations.
