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SPOTLIGHT
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Privatization can work, but only if done right

Published on -5/19/2013, 3:11 PM

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By MICHAEL SMITH

Insight Kansas

Should Kansas privatize services for the intellectually and developmentally disabled (ID/DD) population? The issue has brought a lot of heat this month.

On one side are the members of the Kansas House Appropriations Committee. Like the Brownback administration, they are eager to include these expensive services in the state's new, contract-based approach to Medicaid.

Last week, House Appropriations leaders announced no money will be appropriated to reduce the long waiting lists for ID/DD assistance, until privatization is approved. Committee members believe they are tying cost savings to a shorter wait for services. Opponents call it extortion.

The proposal is rather sketchy. Generally, the Brownback administration and its House allies seek to replace the current approach, which relies on state employees along with nonprofits paid by the state. Their new system would rely on insurance companies to manage the cases and subcontract the services.

Yet the proposal has gone through multiple drafts and has yet to pass in final form, leaving many questions unanswered. For example, will county governments lose their role in overseeing such contracts? Will ID/DD clients lose their one-on-one relationships with their case managers? We do not yet know. Alarmed opponents are funding an anti-privatization ad campaign.

Even the pro-privatization Reason Foundation concedes that the problem is complex. Voucher programs, individualized funding programs, reimbursement programs and direct cash subsidy programs are four different approaches to privatization, with different strengths and weaknesses. Each has been implemented in several U.S. states and abroad. Regarding services for children, all four approaches result in more families keeping them at home, fewer in institutional settings.

Alas, the current controversy in Kansas concerns ID/DD adults, so this conclusion isn't very helpful. However, it may hint at the possibility of more developmentally disabled being cared for by family members at home, receiving some state support.

Deborah Auger of the University of Delaware surveyed the results of these privatization policies. Her bottom line: in order to work, the contracting process must be aggressively overseen by well-trained government employees with real authority. If done well, such policies may mean consumer choice, more opportunities to stay at home and cost savings. If done poorly, they can be a disaster.

Auger documents a long train of abuses: payments to providers that provided no care in Massachusetts, a private juvenile care facility in Colorado closed for gross mismanagement, a mental health system with no qualified oversight in Arizona, and $4 million stolen by employees of a New York group home for the mentally ill. Auger also notes that before embarking on a plan to contract, the state should ensure that there are indeed qualified providers throughout the state, able to deliver these services effectively.

If Kansas does this, it needs to start by establishing an office of qualified people who understand the ID/DD population and have real authority over contracting. Only such professionals can effectively survey the state's providers (including insurance companies), to see who is qualified. Next, they write the contracts. Finally, they back them with aggressive oversight.

For now, Gov. Sam Brownback and the House Appropriations Committee seem intent on putting forward a rather sketchy proposal, without the proper oversight in place.

Michael A. Smith is a professor at Emporia State University.

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