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Medicaid, SCHIP, & Federal Authority

  • The Deficit Reduction Act of 2005 (DRA)- While not a coverage expansion, Kentucky has recently undertaken a redesign of its Medicaid program. In May 2006, Kentucky received state plan amendment approval from the Centers for Medicare and Medicaid Services (CMS) to move forward on plans to redesign its Medicaid program using DRA flexibility. The new plan, KyHealth Choices, offers four different benefit packages tailored to specific populations, increases cost sharing, and expands access to community-based long-term care. The new targeted benefit plans replace the Medicaid benefit package with “Secretary-approved” coverage. The four plans are:

    Global Choices: Global Choices is designed for pregnant women, working parents up to 68 percent of the federal poverty level (FPL), foster children, medically fragile children, Supplemental Security Income-related groups, and women with breast and cervical cancer. Global Choices covers basic medical services with new benefit limits and increased cost sharing. Long-term care services are excluded.

    Family Choices: Family Choices is designed for most children, including children enrolled in Kentucky’s State Children’s Health Insurance Program (SCHIP) program. Family Choices offers the same benefit package as Global Choices except there are no prescription drug limits and there is a higher vision care maximum benefit.

    Optimum Choices: For individuals with developmental disabilities and mental retardation in need of long-term care services, Optimum Choices covers all the benefits in Global Choices as well as three levels of long-term care services.

    Comprehensive Choices: For the elderly and individuals with disabilities in need of nursing facility level care, Comprehensive Choices offers all the benefits of Global Choices plus two levels of long-term care, including services offered through the state’s current home and community-based services waivers.

    Kentucky also implemented new cost sharing requirements in June 2006. There are no co-pays for preventive services. Pregnant women and mandatory children are exempt from cost sharing. KyHealth Choices includes new benefit limits; however, services beyond the benefit limits may be approved through a prior authorization process. KyHealth Choices also includes an employer-sponsored insurance option.

High-Risk Pools

  • Kentucky’s high-risk pool, Kentucky Access, became operational in 2001 and is financed by program participant premiums, tobacco settlement funds, and assessments on insurers. The program’s premium cap is set at 175 percent of market rate for comparable coverage but the program currently sets rates at 130 percent. As May 2006, approximately 3,700 persons were enrolled in the program.


Limited-Benefit Plans

  • In 2005, the Kentucky legislature passed HB278, the Small Business Insurance Relief Act, which creates a state-established basic health benefit plan to make insurance more affordable by tailoring benefitsto specific needs, creates a uniform system for physicians to receive credentials with insurers or hospitals, and establishes an advisory committee to help Kentucky provide patients with quality and cost information about their health care. The basic health benefit plan is available to individuals and employers with fewer than 50 employees.


State Specific Strategies

  • In 2006, the Kentucky legislature passed the Insurance Coverage, Affordability and Relief to Employers (ICARE) Act. ICARE will provide a subsidy to employees of small firms (2-25 employees) of $40 to $60 per employee per month. The subsidy is reduced by increments of between $10 and $15 each year. The program is available to small firms whose employers pay at least 50 percent of total premium, who are uninsured for 12 months or have one employee with a high-cost medical condition, and whose average employee wage is less than 300 percent FPL. All carriers who currently write in the Kentucky small group market are required to offer three ICARE benefit packages including: basic, enriched, and high deductible coupled with an account. The ICARE program is authorized for four years. The program began in November of 2006.