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DMS outlines managed-care oversight, value-based purchasing and service-cap safeguards
Summary
Agency officials told the committee they use contract monitoring, value-based purchasing with a 2% withhold and reporting (including HEDIS) to track MCO performance; they also described EPSDT protections for children and procedures to request exceptions to therapy visit caps for adults.
The Department for Medicaid Services told the Health Budget Review Subcommittee the agency monitors managed-care organizations (MCOs) through contract reporting, external quality review and a recently implemented value-based purchasing arrangement.
Commissioner Lisa Lee said DMS implemented a value-based purchasing agreement in which the department withholds 2% of MCO capitation payments until contracted quality measures are met. "We have implemented this year a value based purchasing agreement with our managed care organizations whereby we have a 2% withhold of their capitation payment," Lee said. DMS gave maternal health outcomes as one example of measures embedded in those agreements.
Why this matters: Oversight mechanisms determine whether MCOs meet quality and access standards for members, particularly in behavioral health where the committee and agency both identified elevated concerns about utilization trends.
Quality tracking and dispute resolution: DMS said MCOs submit routine reports, including HEDIS measures and health-risk screenings, that allow the department to monitor performance year over year. The agency also contracts with an External Quality Review Organization (EQRO) to validate performance; DMS identified IPRO as the current EQRO contractor and agreed to provide EQRO reports and follow-up actions to the committee on request.
Service limits and clinical exceptions: On service limits, DMS said the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit ensures children under 21 may receive medically necessary services without arbitrary caps. For adults, DMS said there is a standard limit (for example, a 20-visit cap that bundles physical, occupational and speech therapy) but providers may request extensions by initiating peer-to-peer reviews so an appropriately qualified clinician can review medical necessity on a case-by-case basis.
Behavioral-health trends: Several members and DMS staff said behavioral-health billing and utilization trends have been a national concern and are reflected in Kentucky's audits. DMS said they use analytics and cross-division reviews to identify high-use codes and examine provider-level patterns within group practices.
Ending: The department agreed to provide the committee with EQRO reports, scorecard materials and documentation of how disputes and appeals are handled and resolved.
