Health Providers Call Kansas Cash Flow Issue ‘David vs. Goliath’

Ashby House in Salina, Kan.

By John Celock

Almost three years after the formal launch of KanCare – Kansas’ Medicaid program – hospitals and small providers are continuing to cite delays in reimbursements from the managed care organizations in the program, saying the delays are causing cash flow problems.

The issues with reimbursement delays – in light of a state law requiring reimbursement within 30 days of a “clean claim” being submitted – have been mentioned for several years to a state legislative committee charged with overseeing the committee and have been heard by state lawmakers involved with the issue. The Salina Regional Health Center and Ashby House, a provider of addiction treatment services in Salina, both told The Celock Report of similar issues for their facilities. At the same time providers and state regulators have said the issues have been largely solved and delays are likely because the original claims did not provide all the information.

“Currently we have with all of these claims, it affects our cash flow,” Bryan Anderson, administrator of Ashby House told The Celock Report. “We’re at a point that if we are doing treatment at no cost. How long can we do that and how many can we do? Without that reimbursement it is difficult for us, difficult for us to keep our doors open.”

Joe Tallon, chief financial officer at Salina Regional Health Center, reported similar concerns, saying that he has had KanCare reimbursements from the three MCOs in the program head up to 150 days past the submission of the initial claim. He said that the issues are with the KanCare MCOs – United HealthCare, Sunflower and Amerigroup – and not in other insurance reimbursements. He said Medicare claims are paid on time.

Tallon said that he has been tracking the issues since KanCare was created by Gov. Sam Brownback (R) and the state Legislature and that the hospital has seen cash flow issues at times but is largely helped by the size of the facility. He said though that smaller rural hospitals are not as fortunate as SRHC.

“For us it doesn’t hurt as badly as it does for smaller hospitals,” Tallon said. “We are surrounded by small critical access hospitals that are running on the smallest possible margins.”

Anderson said that at times the delays in reimbursements have led him and other Ashby House officials to worry about making payroll. Ashby House runs a series of programs in Salina, including a homeless shelter for women and families, residential addiction treatment programs, employment training and a residential facility for pregnant teens.

Several lawmakers involved in health policy expressed concern for smaller hospitals and providers in the state, particularly in rural areas, where the next facility could be an hour’s drive away. Sen. Laura Kelly (D-Topeka), the ranking minority member of the Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight, said that she and other lawmakers have been hearing concerns regularly about the small providers needing to cover the cash flow issues.

“It is one thing for a big hospital or have the funds to cover a delay,” Kelly told The Celock Report. “When you have the small providers who are living month to month. If they don’t get the money they are taking out lines of credit and that can put them out of business.”

Kelly, along with Rep. Jim Ward (D-Wichita), a KanCare Oversight Committee member and Rep. Barbara Bollier (R-Mission Hills), a retired physician who regularly attends oversight committee meetings, told The Celock Report that the joint oversight committee has heard regular testimony from providers on the reimbursement issues over the last several years. They also said the reimbursement issue has been brought up by others during the meetings.

A review by The Celock Report of the minutes of the KanCare Oversight Committee shows the issue raised in several meetings, including a January 17, 2014 meeting where an unnamed committee member asked then state Aging and Disability Services Secretary Shawn Sullivan about cash flow issues between MCOs and providers. Sullivan, now the state budget director, told the committee at the time that changes were being made to the billing system and the state could provide funds to the providers if needed.

At the January 23, 2015 oversight committee meeting, Karen Hastert and Danica Case from Newman Regional Health in Emporia submitted testimony that the delays in being reimbursed have caused cash flow issues at Newman. Among the issues cited by Hastert and Case were decreased cash flow, regular change of financial staff at the MCOs and hospital billing staff spending more time on following up KanCare claims than working with patients. The two wrote that Newman “has forced to add additional staff to manage KanCare claims.”

Anderson expressed similar concerns, noting that counseling staff at Ashby House has been forced to spend more time on settling the KanCare claims than on working with patients. Tallon also noted that he has seen, with Sunflower in particular, an increased turnover in staff, meaning claims have to be explained to new people as the process continues.

The Newman representatives testified that they were not using a clearinghouse for the claims and noted that dealing with three separate MCOs can cause issues, according to the January 2015 meeting minutes. Case said that Newman was resubmitting claims but was experiencing issues in terms of the MCOs having the information of prior authorizations for treatments. The minutes also show Hastert saying that Newman had issues with Sunflower paying claims in a “timely manner.” An unnamed committee member asked about the Sunflower issues and Sunflower CEO Michael McKinney said that a variety of issues could be at the root of the delays and said the MCO had reviewed claims over $500 to Newman and that Sunflower had made errors in the amount of $12,000, which was being sent to Newman. He also indicated that Sunflower officials were planning to visit Newman soon.

At an Oct. 7, 2013 oversight committee meeting, an unnamed committee member asked Kari Bruffett, then health care finance director for the state, about cash flow issues and reimbursement times. Bruffett, now aging and disability services secretary, said that state officials at the time were “less satisfied” with the time frame for claims processing, but said the time for claims processing was improving. Bruffett also said the percentage for denied claims were similar to pre-KanCare numbers.

The oversight committee minutes do not state the names of which committee members asked particular questions.

Chad Austin, the head of government affairs for the Kansas Hospital Association, told The Celock Report that the association has been tracking KanCare implementation issues for three years and has formed a technical advisory group on the subject. He said that the TAG has been meeting regularly for three years on a series of implementation issues, including MCO claim reimbursement. Austin said that the “number of issues has decreased, however, the TAG continues to push towards more standardization among the MCOs as it related to credentialing, claims denials, etc.”

In 2014, state lawmakers passed a law requiring “clean claims” under KanCare to be reimbursed with 30 days and all claims be paid or denied within 90 days, or face penalties. State regulations define a clean claim as:

“‘Clean claim’ means any claim that can be processed without obtaining additional information from the provider of the service or from a third party. This term shall include any claim with errors originating in the state’s claims system. This term shall not include any claim from a provider who is under investigation for fraud or abuse.”

State Department of Health and Environment spokeswoman Sara Belfry told The Celock Report that KDHE Medicaid officials report that the MCOs have been complying with the 2014 law and the clean claims have been handled within 30 days and all claims within the 90-day window.

Belfry said that KDHE has not been hearing from providers on delays with the MCOs on payments. She said the agency encouraged providers having issues with billing to inform the agency of issues.

Anderson and Kathy Allen, Ashby House’s program director who has been the point person in dealing with MCOs, say that the organization has been submitting clean claims and the MCOs have been delaying or pushing back asking for additional information in order to process the claim.

Sunflower did not return a call for comment on the reimbursement issue, while Amerigroup referred the call to KDHE. A spokeswoman for United Healthcare said the MCO is in compliance with Kansas law and is working with providers on “isolated issues.”

“We work closely with providers as well as their association to address isolated issues as they arise and are proud to share that we have been, and continue to be compliant with all requirements on payments,” United spokesman Molly McMillen said in an emailed statement.

Austin, with the Kansas Hospital Association, told The Celock Report that KHA has been regularly communicating with hospitals on KanCare issues, including delays past the 90-day mark for reimbursement. Among the issues the association is looking for is why the MCOs are delaying payment, including any issues with the coding of the denials or the policies for reimbursements. He said that KHA’s advisory group has been working to develop new programs to educate hospital billing staffs on billing questions.

He said that hospitals have expressed concerns with how the claims are being paid.

“We are not hearing much about not paying claims within 30 days,” he said. “We do hear that the claims are not being paid correctly, which then causes more work from the hospitals to ‘clean up.’”

Rep. J.R. Claeys (R-Salina) said that he has heard of the issues from Ashby House and Salina Regional Health Center. He said that he wants to work to address the issue, deeming what he has heard as a “systemic issue.”

“When the system was created I can’t imagine anyone intended for it to operate the way that it is when it comes to the MCOs and the way that the providers are being treated,” Claeys told The Celock Report. “I would expect better. If it requires changing the law to accomplish that, we should take a long hard look at that.”

Claeys, who does not serve on the KanCare oversight committee or other health related panels, said that he wants to talk with other lawmakers and state officials on the issue to explore what can be done. He criticized the clean claim regulation, describing the wording as a “loophole” to provide increased delays.

“If there is no answer for the providers of Salina that come up, I will be happy to be the one to develop it,” he said. “If Salina loses a substance abuse treatment program that is significant. Having our hospital scraping for dollars from MCOs, that is not right.”

Claeys indicated that he’d have to do more research on the intricacies of the law before developing a specific plan.

Ward, the top Democrat on the House Health and Human Services Committee, said he believes there are two main ways to address the issue. He said one is to hold more meetings of the KanCare Oversight Committee, which has only held three of its mandated six meeting this year. Ward said that if lawmakers can spend more time overseeing the program then the issues can be aired in a public forum and MCOs would have to provide answers. He also called on KDHE to do more oversight.

“The biggest problem is there is no one in state government doing oversight of these people to make sure we get the quality care we need,” Ward told The Celock Report. “The most important thing that can be done is to fire the people who are doing the oversight. We need new people in the Legislature and the second floor.”

Ward’s “second floor” comment refers to the location of the Kansas governor’s office.

Kelly said that more information needs to be provided to the oversight panel.

“This has been going on since day one and it just continues. It is difficult for us on the committee to really get any information that makes any sense,” she said. “The MCOs tell us what they want us to hear. It is difficult to get beyond what is presented to us and difficult for us to do anything. There also isn’t much will on part of legislative leadership or the administration to drill down and do anything.”

Sen. Mary Pilcher-Cook (R-Shawnee), the KanCare Oversight Committee chairwoman, did not return a call for comment. Rep. Dan Hawkins (R-Wichita), the oversight panel’s vice chairman, told The Celock Report that he had not heard much on the reimbursement issue and could not comment. Under legislative rules, Hawkins will swap jobs with Pilcher-Cook in 2016 and become the oversight committee’s chairman.

Hawkins, who chairs the House’s health committee, told The Celock Report that he would like to see changes to how the KanCare Oversight Committee works. He said that with a new policy requiring the committee to hold two two-day meetings a year, he would like to have the meeting structured to allow for people to lay out issues they are having with the MCOs on one day and then give the MCOs time to provide answers to the issues on the second day.

“We never hear on how these problems are fixed,” he said. “What I want to do is have the first day to hear from the public, the consumers and then over the day and evening the MCOs can gather their facts and let us know.”

Ward said the second area he believes will address the issue is for the state to pass the Medicaid expansion. Ward has been pressing the issue for several years, including proposing a floor amendment earlier this year to tack the expansion on to a bill relating to breast milk reimbursements. Ward pulled the amendment after Hawkins agreed to allow the House health panel to have hearings on the expansion.

Ward pointed to the recent closing of a small hospital in Independence, citing budget issues, as part of his reasoning. He said that the expansion would allow more cash flow for rural hospitals, which he said would handle the cash flow issues being cited by Ashby and Salina Regional. He noted that the rural hospitals were needed to keep small towns in business, saying that businesses would not be in a community without a nearby hospital.

“Many of these hospitals are losing money,” Ward said. “There are a lot of things going on. Medicaid expansion would give them breathing room to handle all of the changes.”

Claeys disagreed with Ward on the Medicaid expansion, saying that the reimbursement issue would continue to cause issues.

“I fail to see how making more people eligible to enter a broken system, only to see those additional cases go unpaid for months, helps anyone, especially our rural hospitals,” he said.

Anderson said that “it is getting tough” for the small providers in Kansas. He noted that if the providers and small hospitals close their doors a “social service desert” could grow larger in the largely rural western part of the state. He said that the smaller providers do not have the resources of the larger hospitals or the MCOs. He said that maybe the smaller providers can form a trade association to help, but noted that the issue still needs to be explored.

Anderson said that Ashby House appealed one denied claim, where there were questions over whether the MCO had provided notice to Ashby House over the denial of the initial claim, saying that it was not a clean claim. He said that at the administrative hearing, the MCO brought in attorneys and executives to compete with his group’s staff. The appeal was unsuccessful.

“All we have is who works here at Ashby House,” he said. “We certainly can’t afford an attorney to try to get an appeal. It almost has a feeling of a little guy trying to fight a big guy. It is David vs. Goliath.”