Laura Kelly will be the first Democrat to negotiate KanCare contracts. Why does that matter?

Kansas Gov. Laura Kelly, an early critic of the state’s privatized Medicaid system, will be the first Democrat to negotiate new contracts for the program since it was first privatized under former Gov. Sam Brownback in 2012.

The Democratic governor cannot use the $3.9 billion contracts to expand Medicaid eligibility, a goal that has eluded her for five years.

But the contracts present a key opportunity for her to dramatically alter the social safety net in Kansas and resolve long running concerns about the health coverage for more than 400,000 people. Currently three companies hold contracts but state law does not mandate three, granting the administration purview to hire more or less.

Last year, Republicans blocked Kelly from negotiating her contracts in her first term in hopes her GOP challenger Derek Schmidt could oversee the process if he won. But after narrowly winning reelection last year, Kelly will be the third governor to shape the contracts, which are some of the largest in the state.

This fall the Kelly administration is scheduled to release its request for proposals detailing what it wants from potential Medicaid contractors.

The state’s current contractors, Aetna, United HealthCare and Sunflower Health Plan are expected to submit new bids alongside several newcomers who provide care in other states.

“We see the procurement process as being a really, really measure and important step toward a more equitable Medicaid system and really being able to optimize the services we provide in Kansas to people in KanCare,” said April Holman, executive director of the Alliance for a Healthy Kansans which advocates for Medicaid Expansion.

The significance of the process was underscored Wednesday when an Ohio-based nonprofit joined a collection of Kansas organizations in a news conference announcing plans to put in a joint bid for a piece of Medicaid administration in Kansas. They pledged to improve the way Medicaid is administered in Kansas.

CareSource, a nonprofit that manages Medicaid plans in Ohio, Georgia and Indiana, formed an alliance for its bid with Interhab, the Children’s Alliance of Kansas and the Association of Community Mental Health Centers.

“We believe that we can significantly build on the good work that Kansas medicaid has done and really help it move into the next generation,” said Erhardt Preitauer, CEO of CareSource.

Opportunities for change

Through the request for proposal the administration can request that contractors provide certain services or meet specific performance benchmarks.

“We’re hoping to improve the experience of KanCare members,” said Sarah Fertig, Kansas’ director of Medicaid. She said the request for proposal will go out this fall and new contracts will begin in 2025.

Advocates see a clear opportunity to resolve issues with waiting lists for services, slow credentialing and insufficient data as well as expand the network of providers in Kansas.

“This is their first chance to make their mark in terms of incorporating any lessons learned or requirements into these new contracts,” said Sheena Schmidt an analyst at the Kansas Health Institute, a nonpartisan research organization.

Cindy Samuelson, a spokeswoman for the Kansas Hospital Association, said hospitals are looking for a more standardized system for Medicaid credentialing so they can gain approval and get care to patients more efficiently.

In a privatized system, contractors can also offer “value added” benefits in their bids. This means additional services they can provide to Medicaid recipients using their plans.

Holman, with the Alliance for a Healthy Kansas, and Sonja Bachus, CEO of the Community Care Network of Kansas, both highlighted a need for services that address the social determinants of health — factors within an individual’s life that influence health outcomes outside of healthcare.

Bachus said she’d like to see Medicaid contractors do more to ensure clients have transportation to non-emergency health care appointments, access to nutritious food and stable housing.

She said this could mean connecting clients with existing services or committing funds to directly help with access.

“This is an opportunity for us to have some real legs behind and financial support behind addressing social determinants,” Bachus said.

The move has some bipartisan support. Rep. Brenda Landwehr, the Wichita Republican who chairs the Kansas House Health and Human Services Committee, said she’d like to see contractors do more to address transportation concerns. She referenced an existing program for United Health Care members in Johnson County.

But she cautioned against duplication of efforts on issues like housing and nutrition.

“Fragmentation is a big problem in anything in government runs, it’s just rampant,” Landwehr said. “You gotta get the coordination of all those people who are providing services.”

When CareSource announced its bid Wednesday they placed a high premium on addressing the social determinants of health. Preitauer said this has been a key priority for CareSource in other states.

“We are nonprofit and that’s meaningful because, without being beholden to shareholders, we can use our resources differently,” he said. The combination of their history addressing those determinants plus the expertise of the Kansas based groups, he said, would drive an approach to the issues tailored for Kansas.

Original contracts struck under Brownback

Matt Fletcher, the executive director of Interhab, said he sees an opportunity in procurement under the Kelly administration that was missed under Brownback.

“During the time that we engaged Gov. Brownback we found him to be compassionate and interested in the needs of the IDD population in Kansas. I don’t think that there was very good execution in carrying that out,” he said.

“What I see that is different in the Kelly administration … there is a desire and ability to operationalize the elements that need to be done to improve the lives of Kansans with intellectual and developmental disabilities.”

The first round of contracts, awarded under Brownback, were embroiled with controversy.

In 2014, former state Sen. Dick Kelsey, a Goddard Republican, said he had been interviewed by the FBI for an investigation that scrutinized how the KanCare contracts were awarded. No indictments came from the probe.

Former Gov. Jeff Colyer, a Republican who served for one year, opted to retain two of the state’s existing contractors and replace one in 2018.

“The content of the RFP definitely has very important implications for the health of the population, for the provider infrastructure in the state and for how effective Medicaid is as a health insurance program for the people enrolled,” said Andy Schneider, a professor at the Georgetown University Center for Children and Families.

Republican lawmakers are cautious of Kelly’s leadership.

When lawmakers delayed procurement last year they expressed a broad distrust in the Kelly administration’s ability to write a fair request for proposals and negotiate good contracts.

Landwehr said the process so far has not reassured her. She’s frustrated that, after raising alarms about the forced delay, the administration will not issue new contracts until 2025. And she is concerned the administration will tailor its request for proposals to one specific company.

“We’re gonna take a hard look at what they do come in and do,” Landwehr said.

Rep. Barbara Ballard, a Lawrence Democrat who is on the Legislature’s KanCare oversight committee, said she believes Kelly will draw on her experience in the Legislature to ensure contractors address issues that have been raised by providers and consumers.

These issues, Ballard said, include a need for better mental health coverage and better compensation for home-based and care.

“We look at the areas that need to be strengthened, areas where people complain and that is where I believe the governor should be addressing,” Ballard said.

As the state prepares to begin formally seeking bids, Fertig said she’s hoping for a very competitive process and does not have specific companies in mind.

“All we care about is who is best equipped to give the state the best possible services at the best price,” she said.

Senate President Ty Masterson, an Andover Republican, said he hopes Kelly will prioritize services for Kansas’ elderly and disabled residents.

“Elections have consequences and the governor now has full authority to carry out the RFP process. I would hope she does so with the best interests of our most vulnerable Kansans in mind,” he said.