Former Kansas Medicaid Director Suggests Changes For Streamlining Program

A former Kansas Medicaid director has authored a paper proposing ways to streamline Medicaid programs that he says are too fragmented in many states.

Andy Allison, who also previously ran the Arkansas Medicaid program, presented the paper last month at a conference of state Medicaid directors.

Routine enrollment increases along with expanded eligibility under the Affordable Care Act have made Medicaid the largest jointly funded state/federal program in U.S. history, Allison wrote, and by 2025 the program is expected to cover 75 million Americans at a cost of $1 trillion.

It’s time to step back and look at ways states can restructure their Medicaid programs so they operate more efficiently and effectively, according to Allison.

“The sheer size of Medicaid, its expected growth and the significance of state program choices in the coming years — none more substantial than whether to participate in the ACA’s now-optional expansion — have drawn attention to the adequacy of its administration,” Allison wrote. “The leaders of state Medicaid programs face a sobering magnitude of challenges — challenges that will only continue to grow.”

Allison is a former researcher for the Kansas Health Institute, the parent organization of the editorially independent KHI News Service. He led the Kansas Medicaid program for about six years while serving as deputy director and executive director of the Kansas Health Policy Authority and director of the Kansas Department of Health and Environment’s Division of Health Care Finance from December 2005 to November 2011.

In a breakout box within the paper, Allison highlighted Kansas’ switch in 2013 to managed care Medicaid under KanCare as an example of the high-dollar policy changes Medicaid directors make.

KanCare was conceptualized during Allison’s tenure but implemented after he left for Arkansas. Under KanCare, Kansas signed contracts worth about $3 billion total with three private insurance companies to run Medicaid. The program was expected to save the state $800 million over its first five years, Allison wrote.

Most of the approximately 425,000 Kansans now covered by KanCare are low-income children, new mothers, people with disabilities or elderly adults needing long-term care who have exhausted their personal resources.

Kansas is among the 20 states that have not expanded eligibility for Medicaid under the ACA. Expansion would extend KanCare coverage to non-disabled adults with incomes up to 138 percent of the federal poverty level: annually $16,105 for an individual and $32,913 for a family of four. Currently adults are eligible for coverage only if they have dependent children and earn less than 33 percent of FPL: $7,870 for a family of four.

Allison also wrote about the bureaucratic challenges Medicaid directors face.

In many states, Medicaid’s financial administration is housed at the sub-Cabinet level within large state agencies, like KDHE in Kansas, even though the Medicaid budget dwarfs all of the agency’s other functions.

Medicaid services also are spread among agencies in many states, including Kansas. But when federal officials perform audits, all of the responsibility for errors falls on Medicaid directors, even if they did not have direct control over the error, Allison wrote.

He said Medicaid directors, on the whole, need more authority and better compensation, given the size and scope of the programs they oversee.

States like New York, Arizona and Tennessee have taken innovative approaches, Allison said, making their Medicaid programs standalone, Cabinet-level agencies with high degrees of administrative independence.

“This report makes the case that the populations Medicaid covers and the providers who serve them should not be fragmented,” Allison’s said in the report, “and that a unified Medicaid organizational structure with clear accountability is consistent with a strategy of consolidating payments and integrating services to best meet the needs of states.”

Allison now works as a consultant for McKinsey and Company, which declined to make him available for an interview.

Allison’s report was published by the Milbank Memorial Fund, a New York-based foundation dedicated to improving the health of populations by providing policy suggestions based on evidence and experience.

Scott Brunner, another former Kansas Medicaid director and Kansas Health Institute employee, said he and Allison have long discussed some concepts in the paper.

The Kansas Health Policy Authority was an attempt to gather more of Medicaid under one administratively independent roof, Brunner said. But that approach quickly lost legislative support and the health policy authority was absorbed by KDHE in 2011.

Brunner doubts there is much appetite in Kansas to move back toward the consolidated agency approach recommended by Allison’s paper, especially after the launch of KanCare.

“That’s such a significant change in approach,” he said. “My opinion is that change alone is probably what providers want to have settled and let that kind of sit for a while and absorb what the managed care transition means.” 

The KHI News Service is an editorially independent initiative of the Kansas Health Institute.