To: All State Employees
From: Governor Kathleen Sebelius
Date: November 9, 2004
Re: Reorganization

Today, I am announcing a comprehensive plan to address the health care crisis in Kansas. While this plan involves reorganization of state government health care purchasing, it does not include privatization of publicly funded health programs. As the largest purchaser of health care services in the state, and to ensure the health care reform initiative is coordinated and sustained, I have ordered all of the state’s major health care programs be centralized in a new business division within the Department of Administration called the Kansas Health Care Authority.

The reorganization will result in the coordination of the state’s health care purchasing and planning under the Health Care Authority. On July 1, 2005, medical services including Medicaid, MediKan, and HealthWave will be transferred from SRS to the Health Care Authority. The State Employee Health Plan, already located in the Department of Administration, will also transfer to the Health Care Authority. Employees who work in or support the programs that are moving to the Health Care Authority will transfer with the program. Likewise, employees who work in or support the programs that remain at SRS will remain at SRS. I will submit an executive reorganization order to the 2005 Legislature that reflects this change.

It is important to note that while health care purchasing and planning will be coordinated, Medicaid, MediKan and HealthWave will not be combined with the State Employee Health Plan. By federal law Medicaid must be a stand-alone program.

The Department of SRS will be renamed the Department of Human Services to more accurately reflect its focus on direct services to Kansans. Services remaining with the Department of Human Services include economic and employment support services, child support enforcement, vocational rehabilitation, child welfare services, mental health services, addiction services and community supports and services to persons with physical and developmental disabilities.

The purposes of the reorganization are to:
• Align state health care purchasing and data analysis to maximize the state’s over $1.6 billion in purchasing power;
• Coordinate health planning among state agencies;
• Reduce duplication and maximize administrative efficiencies by streamlining currently uncoordinated health care purchasing programs; and to
• Develop a broader state health care infrastructure that continues to be efficient and responsive to consumers and business partners.

Specifically, the medical services that transfer from SRS to the Kansas Health Care Authority include:
• The Medicaid, MediKan and HealthWave programs, except as noted below.
• All staff and functions that support the administration of the State Medicaid plan, including federal Medicaid reporting.
• Eligibility policy will shift to the Health Care Authority, but eligibility determination and the way Kansans access services will not change.

Programs related to medical services that remain with the newly renamed Department of Human Services include:
• All existing waivers currently managed by SRS.
• Specialty medical services, including: mental health, behavioral management, substance abuse treatment, and disability services, including Medicaid funding related to these areas.
• Nursing facilities for mental health, state institutions, Institutes for Mental Disease (IMDs), and Level V and Level VI homes, and private Intermediate Care Facilities for the Mentally Retarded (ICF/MRs).
Management of nursing facilities and the Home and Community Based Services waiver for the frail elderly will remain with the Kansas Department on Aging.

The reorganization also includes a transfer of the administration of the Health Care Data Governing Board from KDHE to the Health Care Authority. It is expected that the administration of the Board will move, but will not involve transfer of existing KDHE staff.

As indicated above, the reorganization is intended to maximize the state’s purchasing power and coordinate state health care purchasing and planning. I am confident that employees who work in and support state health care purchasing will continue the great work that they do in a more streamlined and coordinated fashion under the Kansas Health Care Authority.