During its last meeting of the 2025 Legislative Interim, the Medicaid Oversight and Advisory Board discussed its preliminary findings and recommendations.
The board is a statutory committee comprised of lawmakers, agency officials, and other key stakeholders. It was created by the General Assembly during the 2025 Regular Session to provide stronger oversight of and improvement to the state’s Medicaid program.
To gain a better understanding of program operations, board members heard testimony from many stakeholders over the course of the 2025 Legislative Interim, including community members, enrollees, providers, advocates, managed care organizations (MCOs), and Cabinet for Health and Family Services (CHFS) leadership.
The board also reviewed available data, consulted with research firms, and engaged with many other individuals and organizations regarding how to improve the Medicaid program in Kentucky.
The board observed that the cost to run the state’s Medicaid program has more than doubled over the past five years, program enrollment has increased dramatically, cost per enrollee has increased by more than 100 percent, and the cost to taxpayers has skyrocketed by over 200 percent. However, Medicaid enrollees are no healthier than they were five years ago. It also became clear that the program suffers from weak eligibility criteria compliance, poor data and resource management, and lack of oversight and administration.
These general observations helped form the basis for the board’s preliminary findings and recommendations:
Finding #1: Administrative process inefficiencies negatively affect service operations, service delivery, and provider participation.
Recommendations:
- Tighten and modernize eligibility processes, including better data-matching and duplicate-enrollment checks, to reduce rework, error corrections, and conflicting eligibility determinations across programs.
- Clarify and streamline overlapping home and community-based services (HCBS) and adult day-care waiver services to reduce duplication, simplify provider contracting, and standardize processes across programs and contractors.
Finding #2: Medicaid program is not aligned with workforce participation to comply with HR 1.
Recommendations:
- Create statutes required to codify federal law regarding Medicaid work/community engagement requirements by:
- Establishing compliant work/community engagement standards effective 1/1/2027.
- Creating urban/rural pilot programs for state fiscal year 2026-27 that intentionally connect Medicaid enrollees to workforce, education, and community engagement supports. These pilot programs will lay the groundwork for statewide scaling of work/community engagement connections and supports that enable continuity of care using a holistic approach.
- Providing a structured pathway for enrollees with work capacity to transition from long-term public assistance into sustainable employment.
Finding #3: Medicaid budget growth is unsustainable.
Recommendations:
- Adopt a set of fiscal integrity and cost-control measures, including:
- Bringing statutes into conformity with federal law by permitting appropriate cost sharing for certain eligibility groups, adding a modest front-end utilization and cost-sharing tool while preserving protections for vulnerable populations as required by federal rules.
- Requiring the State Auditor to conduct a comprehensive audit of all aspects of the Medicaid program every five years, with interim compliance reviews, to identify cost drivers, program integrity issues, and opportunities for structural savings across MCOs, waivers, and fee-for-service.
- Conducting a comprehensive review of Medicaid covered services to determine if services are essential, duplicative, or prone to fraud, waste, and abuse.
Finding #4: Rural Health Transformation Fund development lacked transparency and legislative involvement.
Recommendations:
- Require disclosure of the CHFS Rural Health Transformation Fund application, which is consistent with more than 30 other states, and require disclosure of subsequent scoring and any resulting funding award.
- Require CHFS/Department for Medicaid Services (DMS) to provide a detailed update on funding and progress at each Board meeting as well as in writing.
Finding #5: HR 1 requires provider tax changes that will significantly impact Medicaid providers.
Recommendations:
- In collaboration and cooperation between the Board, CHFS/DMS, the Interim Joint and Budget Review Committees of Health Services and Families and Children, require DMS to develop a detailed plan of action with solutions for the upcoming provider tax changes.
Finding #6: HR 1 requires state directed payment program changes that will significantly impact Medicaid providers.
Recommendations:
- In collaboration and cooperation between the Board, CHFS/DMS, the Interim Joint and Budget Review Committees of Health Services and Families and Children, require DMS to develop a detailed plan of action with solutions for the upcoming state directed payment changes.
Finding #7: Insufficient transparency into Medicaid spending and performance.
Recommendations:
- Authorize the legislature’s Office of Health Data Analytics to access CHFS data and systems to enable oversight of DMS, inform policy and funding decisions, and allow LRC to verify fiscal impacts provided by the Agency.
- Require the development of a public, web-based transparency dashboard that centralizes Medicaid cost and utilization data and displays key health and performance indicators for DMS and the MCOs.
Finding #8: Network adequacy reporting is inaccurate, leading to insufficient access to medically necessary services.
Recommendations:
- Require MCOs to maintain an adequate network and report only providers who are actively taking Medicaid patients. Require monetary penalties for non-compliance.
- Require and hold DMS accountable to develop and implement a rate review schedule for each provider group, prioritizing those provider groups whose rates have remained unchanged and/or for which there are significant shortages, particularly in rural areas. Require regular updates to the Board on progress.
- Consider developing an alternative dental delivery model to improve provider participation, network adequacy, and reimbursement.
Finding #9: Current Medicaid delivery model in place since 2011 is not improving health outcomes, yet the budget is growing unsustainably.
Recommendations:
- Research and evaluate alternative Medicaid delivery models.
- Develop and codify stronger, enforceable MCO contract standards—including clear performance requirements, audit, claw back authority, and monetary penalties for non-compliance.
- Amend the Non-Emergency Medical Transportation (NEMT) contract to include performance withhold requirements. Determine what changes could improve access to transportation, including provider types not currently included in the broker system.
Finding #10: DMS oversight and accountability for the Medicaid program is inconsistent.
Recommendations:
- Strengthen Board and General Assembly oversight by advancing a core oversight package:
- Giving lawmakers ongoing, real-time access to CHFS/DMS data systems for independent analysis.
- Requiring a unified, web-based Medicaid performance dashboard with standardized measures across MCOs and key program areas.
- Mandating recurring, comprehensive Medicaid audits with follow-up compliance checks on corrective actions.
- Codifying and enforcing specific contract standards and penalties for MCO performance failures, including audit-driven claw backs.
Finding #11: Lack of solutions and follow-up to stakeholder feedback and questions.
Recommendations:
- Establish a process for receiving questions and feedback from providers, stakeholders, and legislators that provides transparent and timely responses.
- Incorporate standard enrollee and provider experience metrics into a Medicaid transparency dashboard and use those metrics to guide structured stakeholder engagement and annual program improvement reports.
Finding #12: Behavioral Health service delivery is fragmented and not integrated with physical health services.
Recommendations:
- Consider delivering behavioral health services through the Certified Community Behavioral Health Clinic (CCBHC) model by moving from the current four regions to a statewide program.
As a program that serves a third of the state’s population, we have an obligation to help Medicaid enrollees attain better health outcomes and to make sure that the program is effectively and responsibly run. Moving forward, the board’s findings and recommendations will provide us with a solid foundation for improving the program, helping us make sure it is as efficient and effective as possible and benefits the most vulnerable among us.
As always, I can be reached anytime through the toll-free message line in Frankfort at 1-800-372-7181. You can also contact me via email at Samara.Heavrin@kylegislature.gov and keep track through the Kentucky legislature’s website at legislature.ky.gov.
By Rep. Samara Heavrin, R-Leitchfield
