The Kentucky Cabinet for Health and Family Services announced two weeks ago that Lawrence Kissner, the commissioner of the state’s Department for Medicaid Services, was resigning at the end of this month to take a private-sector job with an unnamed, out-of-state company. Insider Louisville has learned that Kissner will take a prominent job with Aetna, which owns Coventry Cares, one of the Medicaid managed care companies Kissner has been in charge of regulating over the past two and a half years.
And while state ethics rules prohibit Kissner from working directly on projects that involve Kentucky for six months, patient advocates and others who have watched his agency relax oversight of managed care say they’re not surprised he’s returning to the private sector after a brief and rocky stint in state government.
Facing a staggering $1.3 billion shortfall in 2011, Kentucky changed its Medicaid system from the usual fee-for-service model to a managed care model, in which private insurers receive a set amount of money from the state per patient that is supposed to be used to directly pay health care providers. It was a difficult transition, and by the time Kissner became commissioner the next summer, Kentucky was inundated with complaints about the new system as patients were denied treatment or had difficulty finding providers. Meanwhile, doctors and hospitals found long payment delays, if not outright denials, from managed care organizations (MCOs).
Kissner was supposed to fix all that. He came to state government with 30 years of experience in the private insurance industry and 17 years in the managed care industry, serving as CEO of one of Mississippi’s two Medicaid MCOs.
But many of the same problems patients and providers faced then continue today. And although they began well before the Affordable Care Act was implemented in Kentucky, some are concerned that the dramatic increases in Medicaid beneficiaries under the law could exacerbate the problems.
According to an Aetna spokesman, Kissner will become CEO of Aetna Better Health Illinois, a Medicaid MCO operating in the greater Chicago area, next month. Aetna is the parent company of Coventry Cares, the MCO that covers roughly 30 percent of Medicaid patients in Kentucky and has been the target of criticism from both providers and patient advocates.
Sheila Schuster, executive director of the Kentucky Mental Health Coalition, has criticized Kissner’s lack of enforcement of MCOs in Kentucky. Mental health patients have been denied services, and many programs offered by providers have been forced to close during his tenure. She says she’s not surprised Kissner is taking a position with Aetna.
“He’s a private insurance guy, and he always has been,” Schuster tells Insider Louisville. “He tried to run state Medicaid like it was a private operation, so it doesn’t surprise me that he’s leaving with the administration winding down. And I’d like to think that he’s never going to say a word to Aetna about anything having to do with Kentucky, but I also don’t think there’s any way that we’ll ever know if that’s the case or not.”
According to the post-employment restriction rules of the Kentucky Executive Branch Ethics Commission, a commissioner can go to work for a company his agency regulates straight from state government but cannot work on state projects for six months. In addition, he must refrain from representing his new company before his former agency for one year.
Asked if Kissner plans to work in Kentucky on behalf of Aetna or Coventry in the near future, a Cabinet spokeswoman said: “State ethics laws restrict Commissioner Kissner from working in Kentucky on behalf of his new employer for at least 12 months. He and his wife will soon be moving to Chicago to begin his new job. They plan only to visit Kentucky to see family and friends. He has no immediate plans to return to Kentucky for business purposes. However, he and his wife love Kentucky and may eventually retire somewhere in this area when that time comes.”
Richard Beliles, chairman of the government watchdog group Common Cause Kentucky, says Kissner’s move to the parent company of an entity he regulated “doesn’t look good. This isn’t illegal, but its not really a healthy system when that can happen.”
As a state legislator, Republican Julie Denton was known as one of the harshest critics of the managed care system and its lack of oversight in Frankfort. Denton, who was just recently sworn in as a member of Louisville’s Metro Council, was known for grilling Kissner and Cabinet officials over poor reimbursements and late payments, as well as the commissioner telling providers to go settle their issues with the MCOs on their own.
“There have been a lot of problems, and one of the big problems has been a lack of regulation in enforcement of contracts,” Denton tells Insider Louisville. “They’ve been in breach of contracts on numerous occasions, especially Coventry. And [Kissner’s move] could explain, potentially, as to why there was not enforcement, but I don’t know that for certain. But I’ve always been confused as to why the contracts were not enforced when they should have been.”
According to the Kaiser Family Foundation’s database of the Medicaid managed care market, there has not been a single instance of an MCO being sanctioned in Kentucky.
“I think from a consumer, family member and advocacy perspective, I’d have to give him a failing grade,” Schuster says. “He was very unresponsive to the concerns that we raised. I think the state under his leadership absolutely took a hands-off approach to the managed care companies in terms of enforcing the contracts, in terms of hearing what all of us out here are affected by, and by that I mean members, family members, advocates and providers.”
As of last summer, state government had paid Coventry nearly $3 billion to cover patients through Medicaid. In the first two quarters of 2014, 80 percent of the money the state gave to Coventry was paid to providers — the lowest percentage among Kentucky’s five MCOs — with 7.5 percent going toward administrative expenses. The remaining 12.5 percent — nearly $95 million — went to Coventry’s earnings before interest, taxes, depreciation and amortization. Aetna — which operates in 33 states and has Medicaid managed care contracts in 11 states — reported $1.9 billion in net income in 2014.
Though Denton freely criticized Kissner’s oversight of the managed care system, she says the blame falls at the feet of the Cabinet and the administration of Gov. Steve Beshear.
“The secretary and the governor could have changed all this at any time they wanted,” she says. “They were the ones who made the decision to bring in Kissner in the first place, and they let him do or not do what he did while he was here. So whether they were his ideas or whether they were his actions specifically, in terms of the genesis of how things were carried out, the ultimate responsibility goes back to the secretary, and ultimately back to the governor.”
In a statement announcing Kissner’s resignation two weeks ago, Cabinet for Health and Family Services Secretary Audrey Tayse Haynes praised Kissner’s work in transitioning the state to a managed care system.
“Commissioner Kissner’s knowledge of and experience in managed care brought a great level of stability to the Medicaid program during a time of significant change,” Haynes said. “He freely shared his wisdom and experience with those who interacted with him, the greatest beneficiaries of which were the staff in Medicaid, to whom he was a tremendous teacher. The staff will continue to benefit from their time with Commissioner Kissner long after his departure. He will be truly missed.”
Deputy Commissioner Lisa Lee has been named to fill Kissner’s position. Schuster says she is optimistic about Lee and praised her past work on Medicaid programs for children. Still, she is wary of what Kissner left behind in the department.
“It makes me a little nervous about what lessons he taught them,” Schuster says. “If he taught them to think about themselves as a private insurer, well, that’s not the role of government. I’m sorry. It’s just not. The role of government is to take care of its people who have legitimate needs.”