Fleming files Medicaid Reform Act

Via press release

Editor’s Note: This is a Republican press release about one of their priority bills, HB 2. Obviously, it is a major piece of legislation. For now, we will simply run the press release as is. After various experts and advocacy groups have a chance to analyze the bill, we will share their analysis of it.

Kentucky’s Medicaid program would be transformed to better meet the needs of Kentuckians under legislation filed today by Representative Ken Fleming (R-Louisville), House Chair of the Medicaid Oversight and Advisory Board (the Board). Specifically, House Bill 2 aims to improve health outcomes, streamline program operations and service delivery, increase oversight and accountability at all levels of the program, reduce fraud, and align Kentucky’s Medicaid program with the new requirements in the federal H.R. 1.

“Transforming Medicaid is critical because we have seen significant increases in program enrollment, unsustainable growth in our Medicaid budget, and changes to the program at the federal level that will impact our state,” said Fleming. “To help identify solutions to Medicaid growth, we took a proactive step and created the Medicaid Oversight and Advisory Board in 2025. The Board conducted a comprehensive review of the program last year and will continue its examination of policies, practices, and expenditures throughout this year.”

HB 2 is informed in part by the Board’s findings and recommendations and shaped by testimony from key stakeholders, including program administrators, providers, advocates, associations, and enrollees. This interim work gave Board members a better understanding of program operations and identified inefficiencies, as well as how future federal changes required by H.R. 1, also known as “the One Big Beautiful Bill Act,” will impact Kentucky.

One of the most significant changes in H.R. 1 that states must implement is the new federal community engagement requirement, also referred to as a work requirement. While H.R. 1 does establish new community engagement requirements, these requirements are narrowly targeted and do not apply to everyone. Exempt populations include children, pregnant women, caregivers, and individuals with serious health conditions, including those on the current home and community-based waivers.

“First and foremost, this bill does not take away Medicaid coverage from those who it was created to serve or impose work requirements on vulnerable individuals, such as pregnant women or those with serious health conditions,” said Fleming. “Our goal with this legislation is to create a healthier Kentucky, and that starts by transforming Medicaid to be more accountable and to better serve Kentuckians’ needs.”

Fleming also emphasized the General Assembly’s commitment to making sure affected Kentuckians are prepared and the key role community organizations will play in this process.

“We remain committed to making sure Kentuckians have access to the resources and support needed to meet new federal community engagement requirements,” said Fleming. “Kentucky is home to many community organizations that will help connect Medicaid enrollees to workforce, education, and community engagement supports. As we work to implement these new requirements, we are exploring strategic ways to create partnerships with these organizations and further support their important work in communities.”

Organizations including Volunteers of America Mid-States, Family Scholar House, and Appalachian Regional Healthcare, along with many others, will play an important role in helping Medicaid enrollees transition from crisis to career as Kentucky implements the new federal community engagement requirement in H.R. 1.

Jennifer Hancock, President & CEO of Volunteers of America Mid-States, said, “Volunteers of America Mid-States is proud that we already provide pathway-to-work programs for Medicaid participants, and look forward to assisting them with meeting the community engagement requirements. Through VOA Work — our employment services division — we combine comprehensive case management with practical supports like financial literacy, workforce training, job placement, help securing continuing‑education credits, transportation assistance, and connections to safe, stable housing through VOA Home. With clear goals, accountability, and a person‑centered approach, we can help participants move from benefits to meaningful, sustainable employment, delivering measurable outcomes that strengthen families and communities.”

Cathe Dykstra, President & CEO of Family Scholar House, shared, “At Family Scholar House, we have seen in our work across the Commonwealth and in other states the positive impact of providing wraparound services and workforce support to people transitioning off of Medicaid. Our goal is always to ensure the smoothest pathway to workforce participation and the ability to have employer-based health insurance for the employees and their children. Helping families thrive supports Kentucky’s economy.”

In addition to aligning Kentucky’s Medicaid program with changes at the federal level, this legislation also aims to streamline program operations and service delivery. One proposed change aimed at achieving this goal is through language to improve the state’s Non-Emergency Medical Transportation (NEMT) Program, designed to provide transportation to Medicaid-covered appointments for eligible enrollees who lack other means of transportation. Specifically, this legislation would allow hospitals and skilled nursing facilities to be reimbursed for providing NEMT services to eligible patients and residents and would strengthen oversight and accountability in the program through reporting and performance thresholds.

Appalachian Regional Healthcare (ARH) and the Kentucky Coalition for Aging Resources and Empowerment (KCARE), two key stakeholders that would be impacted by this proposed policy change, addressed the benefits it would have on their patients and residents.

“Transportation should never be a barrier to healthcare, yet for far too many of our patients throughout Eastern Kentucky, it remains one of the biggest obstacles to getting the care they need,” said Hollie Harris, President and CEO of the Appalachian Regional Healthcare (ARH) system. “Representative Ken Fleming’s Medicaid non-emergency medical transportation provision will help close these gaps by ensuring patients have timely access to reliable transportation so they can get to the follow-up, routine, preventive medical appointments they need to help them stay healthier and avoid more serious health issues.”

Harris added, “As the region’s largest provider of care to patients covered by Medicaid, we support the transformation efforts underway for the Medicaid program and the patient-focused work of the Medicaid Oversight and Advisory Board as it prepares for the future of healthcare. We appreciate Representative Ken Fleming’s leadership and strongly support this important effort, which will improve access to care for the patients we serve.”

Adam Mather, President of the Kentucky Coalition for Aging Resources and Empowerment (KCARE), added, “Facility-provided non-emergency medical transportation is crucial to ensuring Kentucky’s long-term care residents are able to attend medically necessary appointments when brokered transportation is unavailable. Medicaid reimbursement for facilities who provide this transportation helps ensure timely care, support safe transitions between care settings and reduce missed appointments, improving quality of life for residents.”

In addition, this legislation seeks to improve the delivery and administration of Medicaid-covered dental services. Specifically, this legislation would transition Medicaid-covered dental services to an administrative services organization (ASO) delivery model in Kentucky to help improve programmatic efficiency, oral health access, and overall health outcomes in the Commonwealth. This proposed shift, designed to strengthen Kentucky’s Medicaid dental program, has garnered support from the Kentucky Dental Association.

“Representative Fleming’s bill reflects the work and discussions that have taken place through the Medicaid Oversight and Advisory Board and represents an important step toward stabilizing the structure of Kentucky’s Medicaid dental program,” said Dr. Steve Robertson, Executive Director of the Kentucky Dental Association. “By increasing reimbursement while adding transparency and oversight, this legislation helps move care upstream – keeping patients out of emergency rooms, saving healthcare dollars, and bringing dental providers back into the Medicaid program so patients can establish a true dental home in their communities.”

Another key provision in the bill includes establishing a healthcare transparency dashboard to hold managed care organizations (MCOs), providers, and the Department for Medicaid Services (DMS) accountable for their outcomes and performance. This bill also aims to increase program integrity and reduce fraud by requiring the Kentucky Auditor to periodically conduct intensive, comprehensive audits of the Medicaid program.

Fleming emphasized the importance of this transformational bill and spoke about the future of Kentucky’s Medicaid program.

“As a program that provides coverage to one-third of Kentuckians and is our second largest state expense, we have a responsibility as lawmakers to ensure it is being run properly for our most vulnerable citizens and the taxpayers who fund it,” said Fleming. “Ultimately, House Bill 2 represents the first step toward transforming our Medicaid program and creating a healthier Kentucky.”

Highlights from the Kentucky Medicaid Reform Act proposal include:

Community Engagement

• Requires implementation of federally established community engagement requirements by January 1, 2027, as required under federal law
  • Note: These requirements are narrowly targeted and do not apply to everyone. Exempt populations include children, pregnant women, caregivers, and individuals with serious health conditions, including those on the current home and community-based waivers.
• Sets clear community engagement demonstration requirements and participation timelines for enrollees
• Prohibits the Cabinet for Health and Family Services (CHFS) from requesting a federal exemption or waiver of the community engagement requirements without legislative approval.
• Requires community engagement standards remain in place if federal rules are repealed

Cost-Sharing

• Imposes minimum cost-sharing requirements, aligned with current federal law amounts, on applicable Kentucky enrollees for select services from January 1, 2027 to September 30, 2028
• Establishes a minimum cost-sharing amount of $20 for all services, except for inpatient services and prescription drugs to align Kentucky’s Medicaid program with newly established federal cost-sharing requirements beginning October 1, 2028
• Protects families with a 5% income cap on total cost-sharing as required under federal law and exempts people under 100% of the federal poverty level (FPL) from the cost-sharing requirements.

Eligibility Integrity

• Requires implementation of federally required six-month eligibility redeterminations beginning July 1, 2026
• Requires CHFS to access and review information from all available federal and state data systems when conducting eligibility determinations
• Establishes processes and reviews that prevent dual enrollment in more than one state, ensuring only Kentucky residents are enrolled in the Kentucky Medicaid program
• Requires CHFS and agencies responsible for enrolling individuals in the Medicaid program to receive and review information from state agencies that could suggest a change in eligibility and to complete a full redetermination of eligibility when such information is received
• Prevents CHFS from seeking a temporary hardship waiver from community engagement requirements without legislative approval, except for a county where the unemployment rate is 10% or greater
• Requires hospitals to assist presumptively eligible individuals in submitting a full Medicaid eligibility application
• Prohibits self-attestation of income, residency, and age when submitting a full Medicaid eligibility application

Managed Care Organization (MCO) Accountability

• Creates and codifies MCO contract standards and penalties for contract violations
• Holds MCOs more accountable for quality and health outcomes of enrollees, as well as the administration of the Medicaid program and delivery of Medicaid-covered services
• Creates the Medicaid Managed Care Compliance Fund that would use penalties assessed to MCOs for non-compliance to fund provider reimbursement improvements
• Protects providers by requiring MCOs to review their appeals or grievances related to claims in a timely manner and allowing them to receive interest on payments owed to them
• Prevents provider claims fraud by establishing processes and procedures for MCOs to conduct provider audits
• Expands legislative oversight over MCOs by requiring a yearly December report be submitted by DMS to the General Assembly related to Medicaid claims, appeals, and grievances for the previous state fiscal year

Non-Emergency Medical Transportation (NEMT) Services

• Improves the quality, reliability, and cost-effectiveness of NEMT services by establishing statewide performance standards and reporting requirements for regional brokers of NEMT services
• Improves access to NEMT services by allowing hospitals or skilled nursing facilities to be reimbursed for providing NEMT services to eligible Medicaid-enrolled patients and facility residents
• Increases legislative oversight of Kentucky’s NEMT Program by requiring DMS to submit a yearly July report to the General Assembly outlining established reporting requirements beginning in 2027

1915(c) Home and Community-Based Services (HCBS) Waiver Programs

Note: The 1915(c) HCBS waiver programs aim to cover individuals who are aged or have a disability and require long-term support to remain living at home or in the community.

• Standardizes 1915(c) HCBS waiver programs’ administration
• Creates residency requirements and timelines for individuals seeking enrollment in waiver programs to prioritize Kentucky residents
• Creates procedures for identifying and eliminating waste, fraud, and abuse in 1915(c) HCBS waiver programs
• Increases legislative oversight of 1915(c) HCBS waiver programs by requiring CHFS to submit quarterly reports to the General Assembly on waiver program expenditures and waiver service utilization rates beginning July 1, 2026
• Creates a tiered priority waitlist for 1915(c) HCBS waiver programs to ensure Kentuckians with the greatest needs get access first

Medicaid Dental Delivery Model

• Transitions the administration of Medicaid-covered dental services to an administrative services organization (ASO) delivery model by January 1, 2028 to help improve programmatic efficiency, oral health access, and overall health outcomes in the Commonwealth
• Requires DMS to hire a full-time Medicaid Dental Director by July 1, 2027, responsible for overseeing the administration of Medicaid-covered dental services
• Requires the Medicaid Oversight and Advisory Board to establish a Dental Services Transition Subcommittee to provide recommendations on the transition from a managed care to an ASO delivery model for Medicaid-covered dental services
• Requires DMS to establish a Dental Services Advisory Panel by January 1, 2028 to provide ongoing consultation, recommendations, and guidance to the department to continually improve administration and delivery of Medicaid-covered services
• Increases legislative oversight of the administration of Medicaid-covered dental services by requiring a yearly report be submitted by DMS, in collaboration with the Dental Services Advisory Panel, to the General Assembly on outlined ASO performance metrics by August 1, 2029, and August 1 each year after

Medicaid Data Sharing

• Provides the Legislative Research Commission (LRC) with full access to CHFS data to promote effective, data-driven, and evidence-based policymaking and appropriation of funds to the Kentucky Medicaid program by the General Assembly

Healthcare Transparency Dashboard

• Creates a comprehensive, consolidated public healthcare transparency dashboard to track health and program performance indicators
• Requires oversight of the dashboard development by a subcommittee of the Board and expands subcommittee expertise

Audits of the Medicaid Program

• Requires comprehensive Medicaid examinations be conducted by the Kentucky Auditor at least once every five years and results be reported to the General Assembly
• Requires DMS to pay for the audit and take all necessary steps to draw down federal funds

Medicaid Impact Statements

• Requires Medicaid impact statements to accompany legislation that makes or directs a change to the Medicaid program
• Requires independent fiscal and economic analysis of Medicaid legislation be produced by an economic consulting firm retained by the LRC

Medicaid Administrative Regulations

• Requires CHFS to submit a draft of an administrative regulation and implementation plans to the Board for review at least 30 days before filing it to ensure consistency and alignment with legislative intent
• Requires CHFS to consider any comments or recommendations of the Board before filing the regulation

If passed, this legislation would take effect immediately upon its passage and approval by the Governor or upon its otherwise becoming a law.

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