Skip to Main Content.
  • Kentucky Managed Care Medical Necessity Guidelines and Issuance of Request for Proposal for 2020 Managed Care Contracts

On May 16, 2019, the Kentucky Department of Medicaid Services (DMS) and the Office of Procurement Services released the Request for Proposal (RFP) for the 2020 Medicaid Managed Care contracts. The RFP addresses an issue of persistent confusion regarding the applicable use of medical necessity criteria in the Commonwealth.

Most Kentucky Medicaid enrollees are members of Managed Care Organizations (MCOs) that provide Medicaid benefits on behalf of the Commonwealth. DMS’ contracts with the MCOs have, since 2017, contained language that appears to require the MCOs to use only the InterQual criteria in their utilization management programs. However, in practice, the MCOs have consistently used both the InterQual criteria and the MCG guidelines, notwithstanding the provisions in the MCO contract. As a result, Medicaid providers have, for the past two years, had little clarity as to whether the MCG Guidelines may be applied in the Medicaid context.

The 2020 MCO contract in the recently released RFP will eliminate this uncertainty by explicitly permitting the MCOs to adopt either InterQual or MCG as the primary criteria for evaluating claims for Medicaid benefits.

Clearing up Confusion in Kentucky Medical Necessity Criteria

When Kentucky launched the Managed Care program in 2011, the original Managed Care contract required MCOs to adopt nationally recognized standards and criteria, subject to approval by DMS. From the inception of Managed Care in Kentucky, the MCOs have used the InterQual and MCG (then known as “Milliman”) criteria, both of which are nationally recognized. DMS codified this “nationally recognized” requirement into regulation in 2013.

In 2017, DMS amended the MCO contract to require the MCOs to only use the InterQual criteria. However, the 2013 regulation requiring the use of nationally recognized criteria remained unchanged. In a series of injunctions (available here), the Franklin Circuit Court prohibited DMS from enforcing the amended provisions in the 2017 MCO contract, and in any future MCO contract, unless and until DMS amended the regulation.

In 2018, the Kentucky General Assembly passed HB 69, which requires the Insurance Commissioner to conduct a competitive process and issue a Final Order designating which medical necessity criteria MCOs must use for each Medicaid service area. (This provision of HB 69 was codified as KRS 304.38-240, available here). Following the passage of HB 69, DMS amended its medical necessity regulations to permit MCOs to use “nationally recognized criteria as approved by the department” until the Department of Insurance issues its Final Order.

Therefore, although the new langue in the 2020 MCO contract will not change current MCO practices, it will help eliminate ongoing ambiguity as to what criteria the MCOs may use when evaluating claims for Medicaid benefits.

Impact on Kentucky Medicaid

Despite the 2017 injunctions and the passage of HB 69, Kentucky’s MCO contracts have continued to contain language that that appears to require the MCOs to use InterQual when evaluating claims for Medicaid benefits. This has contributed to ongoing confusion for Kentucky Medicaid providers, especially as DMS has, in compliance with the injunctions, never enforced the InterQual requirement.

By modifying the language in the 2020 MCO contract to explicitly permit the MCOs to use either InterQual or MCG, DMS has taken steps to remove this lack of clarity and made it clear that MCOs and the providers in their networks may continue to use either set of criteria until such time that the Department of Insurance issues a Final Order designating mandatory criteria.

To date, the Department of Insurance has not promulgated any regulation governing the competitive process that will be used to make its designation. Therefore, it is not anticipated that any Final Order concerning mandatory MCO medical necessity criteria will be issued any time soon.

Ongoing Updates

The five current MCOs (Aetna, WellCare, Passport, Humana, Anthem), and any other prospective contractor may submit a technical proposal in response to the RFP for DMS’ consideration. Technical proposals must be submitted to Amy Monroe, the Commonwealth Buyer, by July 5 at 3:30 p.m. EDT

Further updates will be provided after the MCO contracts are awarded to assess the impact of the new MCO contacts to business in Kentucky, especially if one or more current MCOs do not receive contracts for the 2020 fiscal year.