Mike Rust

In an odd development this week, we started getting email copies of a story from the Murray Ledger & Times. And indeed, the little newspaper has scooped the big city news media.

Staff writer Angie Hatton covered a meeting of the Murray–Calloway County Hospital Board of Trustees, which sounds like a yawner, right?

Na-uh.

Because the speaker was Mike Rust, president of the Louisville-based Kentucky Hospital Association.

Who proceeded to talk about how Kentucky’s switch to a Medicaid managed care system from fee-for-services is going to put a financial hurting on hospitals, physicians and dentists.

Our first thought was, “Where was Mr. Rust six months ago” when the Kentucky Cabinet for Health and Family Services issued the request for proposal to managed-care insurers? Or when the contracts were handed out in July?

That said, Rust was extremely candid with our friends in Western Kentucky, going so far to conjure up a scenario where the out-of-state companies that got billions in Kentucky’s Medicaid contracts might end up waking away.

The move to managed care is lauded by state officials as a move to save Kentucky $1.3 billion over three years, with $320 million in savings coming before June 30, 2012.

Managed care systems depend on the insurers monitoring the care Medicaid recipients get. But Rust told the Murray physicians and administrations he expects big reductions in utilization review denials.

The managed-care companies do not plan to make any cuts that would result in hundreds of millions in savings required by state officials, he claims.

Hatton quotes Rust as saying:

Each of these three companies is only required to put up a $25 million performance bond … what our concern is, if come July 1, 2012, these companies have only saved $100 million, and there’s still $220 million left that they didn’t save, they’re just going to write $25 million checks, and leave the hospitals and the dentists on the hook for all this money and all these receivables.”

Excuse me?

There’s more.

Rust also said most hospitals haven’t signed on the dotted line with the managed-care insurers in their region, hinting the November 1 deadline for implementation will pass just as the October 1 deadline passed.

Moreover – and we’re reading between the lines, here – if those for-profit companies such as WellCare Health Plans and Centene Corp. fly the coop, does that mean non-profit Passport would end up trying to administer 120 Kentucky counties in addition to its 15 counties around Louisville including Jefferson County?

Insider Louisville tried to reach Rust, but we haven’t heard back.

But insiders told Insider Louisville back in April the switch to managed care from fee-for-services was being rushed as Gov. Steve Beshear tried to push past the Passport spending and conflicts of interest fiasco while dealing with Kentucky’s Medicaid deficit.

Insiders said officials in other states such as Georgia took as long as 18 months to make the change while Kentucky tried – and failed – to do it in less than six months.

With each missed deadline, those “budget savings” vanish, or are at least diminish, insiders tell us.

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Terry Boyd
Terry Boyd has seven years experience as a business/finance journalist, and eight years a military reporter with European Stars and Stripes. As a banking and finance reporter at Business First, Boyd dealt directly with the most influential executives and financiers in Louisville.

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