Kansas Attorney General Opinion 2022-005

March 25, 2022
ATTORNEY GENERAL OPINION NO. 2022- 5
The Honorable Christina Haswood
State Representative, 10th District
State Capitol, Room 54-A
Topeka, Kansas 66612
The Honorable Kathy Wolfe Moore
State Representative, 36th District
State Capitol, Room 47-S
Topeka, Kansas 66612
The Honorable Heather Meyer
State Representative, 29th District
State Capitol, Room 54-S
Topeka, Kansas 66612
The Honorable Susan Ruiz
State Representative, 23rd District
State Capitol, Room 173-W
Topeka, Kansas 66612
Re: 	Constitution of the State of Kansas–Legislative–Legislative Power
Constitution of the State of Kansas–Legislative–Appropriations
Mentally Ill, Incapacitated and Dependent Persons; Social Welfare—Social
Welfare—Powers 	and 	Duties 	of 	Secretary 	for 	Children 	and 	Families;
Community Work Experience Programs; Disbursal of Property Including Food
Stamps; Division of Services for the Blind; Children and Youth Service
Program; Medical Care for Needy Persons; Payment Schedules for Health
Care Providers; Centralized Payment of Welfare Expenditures
Mentally Ill, Incapacitated and Dependent Persons; Social Welfare—Social
Welfare— Implementation of Managed Care System to Provide Medicaid
Services; Contracts; Areas of State Selected for Implementation; Waivers;
Managed Care Implementation Committee; Reports; Managed Care Project at
University Of Kansas Medical Center Terminated
Synopsis: 	The 	Kansas 	Legislature 	has 	broad 	authority 	to 	establish 	and 	alter
appropriation and procurement processes for state agencies. 2022 Substitute
House Bill 2463 delays the onset of a new MCO procurement cycle and
extends the existing KanCare system by one year, which could potentially

Representatives Haswood, Meyer, Wolfe Moore, and Ruiz
Page 2
expose the state to litigation related to challenges to the procurement process.
Cited herein: K.S.A. 2021 Supp. 75-3738–3744; K.S.A. 2021 Supp. 39-7,112;
Kan. Const., Art. 2 § 1; Kan. Const., Art. 2 § 16; Kan. Const., Art. 2 § 24; 2022
Substitute House Bill 2463; 42 U.S.C. § 1315; 42 U.S.C. § 1396; 42 C.F.R.
pts. 430–56; 42 CFR § 431.412; 42 C.F.R. § 431.420; 42 C.F.R. § 438.806.
* 	* 	*
Dear Representatives Haswood, Meyer, Wolfe Moore, and Ruiz:
In your respective official capacities, you request our opinion on whether it is lawful for the
Legislature to alter the procurement process and extend contracts for specific companies
and whether such action exposes the state of Kansas to potential litigation. You raise this
question against the backdrop of the introduction of 2022 Substitute House Bill 2463, which
would extend the current KanCare system and which you assert is intended “to block the
procurement process and give [the current] three [Managed Care Organizations] special
treatment and eliminate all competition.”
As presented, the question broadly inquires into the Legislature’s power to change the
statutory procurement process. 	Within the context of your letter, however, it appears that
your inquiry could be also be specific to the Legislature’s power to alter the particular
procurement process for KanCare contracts with the Managed Care Organizations (“MCO”)
in the state. 	We will first evaluate the Legislature’s general powers to modify the
procurement process. 	Later, we will address the scope of that power with respect to
KanCare and MCO contracts.
Background
Sub. HB 2463 has four subsections related to procurement actions under KanCare, the state
Medicaid program. 	Section 1(c) provides instructions to the Secretary of Health and
Environment (“Secretary”), who “shall negotiate and take actions necessary to extend
contracts with managed care organizations, as existing on the effective date of this act, for
the administration and provision of benefits under the medical assistance program through
December 31, 2024.” 	Section 1(d) also instructs the Secretary to “submit to the United
States centers for medicare and medicaid services any approval request necessary to
implement this section.” 1
Section 1(e) provides a safety valve, declaring that Sub. HB 2463 does not preclude any
state agency from taking actions required by an act or appropriation of the legislature, federal
law, or the Centers for Medicare and Medicaid (“CMS”).
1 We confine this Opinion to an analysis of applicable state law and authority. We express no opinion on the
application of federal law but note that any change in state procedure would need to conform with applicable
federal requirements, if any, as contemplated by Section 1(d).

Representatives Haswood, Meyer, Wolfe Moore, and Ruiz
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Under Section 1(f), a state agency may approach the Legislative Coordinating Council
(“LCC”) while the Legislature is not in session to make a substantive or material change to
KanCare prior to January 1, 2025, and the LCC may approve such a change. When it was
originally introduced, Sub. HB 2463 sought to extend KanCare and the current MCO
contracts by two years, but it was amended before being passed out by committee to shorten
the extension to one year. Sections 1(e) and (f) were also added in the amendment.
Medicaid is a joint federal-state program designed to assist needy individuals and families
“whose income and resources are insufficient to meet the costs of necessary medical
services.” 2 	States opt into the program, but once a state chooses to participate, it must
comply with the requirements of Title XIX of the Social Security Act 3 and with regulations
promulgated by the Secretary of the United States Department of Health and Human
Services. 4
In establishing the statutory framework for KanCare, the Kansas Legislature passed, inter
alia, K.S.A. 2021 Supp. 39–7,112(a), which provides as follows:
“Subject to applicable federal guidelines and regulations, the provisions of
appropriations acts and the provisions of this section, the secretary of social
and rehabilitation services shall, consistent with guidelines developed by the
managed care implementation committee established under subsection (d),
negotiate and enter into contracts with one or more service providers to
implement a managed care system in accordance with this section to provide
medicaid services for Kansas medicaid-eligible residents which may utilize
capitation and other reimbursement methodologies. No contract entered into
under this section shall be subject to the competitive bid requirements of
K.S.A. 75–3739, and amendments thereto.”
Pursuant to this statute, the state signed contracts with three MCOs in 2012 to provide
services under KanCare. These contracts were set to expire in 2016, a year earlier than the
initial KanCare model. 	The state extended the MCO contracts for one year without a
competitive bid process. 5
2 42 U.S.C. § 1396.
3 42 U.S.C. § 1396 et seq.
4 42 C.F.R. pts. 430–56.
5 In addition to state control through legislation, regulation, and rulemaking, KanCare is subject to federal
regulation and oversight. Federal regulations govern many aspects of KanCare, including administrative
matters such as extending the Section 1115 demonstration, procuring MCO contracts, and extending MCO
contracts. “A request to extend an existing demonstration under sections 1115(a), (e), and (f) of the Act will
be considered only if it is submitted at least 12 months prior to the expiration date of the demonstration when
requesting an extension under section 1115(e) of the Act or 6 months prior to the expiration date of the
demonstration when requesting an extension under section 1115(a) or (f) of the Act.” 42 CFR § 431.412(c).
Federal regulations further state that “Approval of a new demonstration or a demonstration extension will
generally be prospective only and Federal Financial Participation . . . will not be available for changes to the
demonstration that have not been approved by CMS.” 42 CFR § 431.412(d). CMS regulations require
approval prior to extending MCO contracts over a certain value and establish that federal funds will not be
paid under MCO contracts extended without CMS approval. 42 C.F.R. § 438.806(b), (c). These regulations
do not forbid the state from extending its Medicaid program without prior approval, but they do establish

Representatives Haswood, Meyer, Wolfe Moore, and Ruiz
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While developing the application for a five-year renewal of the Section 1115 demonstration
waiver, the state launched a Request for Proposal (“RFP”) process for the three MCO
contracts. 	Five companies submitted proposals and talked with state agencies, and
ultimately three were chosen, with Aetna replacing AmeriGroup as one of the three MCOs.
AmeriGroup and one other losing bidder unsuccessfully sued the state to overturn the RFP
decision. 	CMS approved those contracts in conjunction with approving the Section 1115
extension request, initiating KanCare 2.0.
In determining the legality of the proposed legislative procurement action in Sub. HB 2463,
we follow the rules of statutory interpretation and construction.
[T]he 	interpretation 	of 	statutes 	and 	administrative 	regulations 	presents
questions of law subject to de novo review. In this endeavor, [the courts] must
give effect to the intent expressed by the plain language of the text. 	This
means [the courts] give common words their ordinary meanings, without
adding to or subtracting from the text as it appears. [The courts] only resort to
textual construction when the language is ambiguous. 6
Legislative Power Over the Procurement Process
Article 2 of the Kansas Constitution vests the legislative power of the state government in
the House of Representatives and the Senate.7 This vested power includes authority over
appropriations. 8 Under this authority, the Kansas Legislature has established procurement
authority for numerous state agencies.
Further, the Kansas Legislature has delegated procurement authority to the Department of
Administration and other state bodies in numerous bills. 	Statutes throughout K.S.A. 2021
Supp. 75-3738–3744 identify procurement procedures and authority for the Department of
Administration. 	In recent years, the Legislature has revised procurement statutes to give
potential preference to certain businesses, such as those owned by disabled veterans and
paper product suppliers that use the most recycled materials. 9 	There is neither a
constitutional nor a statutory mandate that all contracts with the state go through a
competitive bid process, and the Legislature, as the appropriating authority for the state, has
the constitutional power to determine how state funds are allocated and spent.
While the Kansas Legislature has provided procurement authority to numerous agencies, it
has not shed its ultimate power over appropriations and the spending of state funds.
possible consequences for such a course of action, up to and including complete withholding of federal
funding participation. If the U.S. Secretary of Health and Human Services “determines that the State has
materially failed to comply with the terms of the demonstration project,” the state Medicaid Section 1115
demonstration could be terminated in whole or in part. 42 C.F.R. § 431.420(d)(1).
6 Central Kansas Med. Center v. Hatesohl, 308 Kan. 992, 1002 (2018) (internal citations omitted).
7 Kan. Const., Art. 2 § 1.
8 Kan. Const., Art. 2 § 24.
9 K.S.A. 2021 Supp. 75-3740.

Representatives Haswood, Meyer, Wolfe Moore, and Ruiz
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Carrying out or developing procurement practices is an inherently administrative act to
implement a legislative mandate; thus, issuing a legislative change or addition to prior
statutory direction is well within the Legislature’s power. 	Article 2, Sec. 24, of the Kansas
constitution requires that the Legislature exercise its power over the expenditure of money
“by law.” Therefore, the constitutional limitations on the Legislature’s ability to alter or amend
its previous enactments regarding appropriations or procurement are the constitutional
requirements for enacting law.
Construing your question broadly, the Legislature may lawfully alter the procurement
process for a state agency through new legislation. 	This includes modifying, delaying, or
eliminating the competitive bid process and directing the Secretary in its management of the
KanCare system.
Potential Legal Challenges
You further inquired whether a legislative enactment changing the procurement process as
contemplated by House Bill 2463 “exposes the state of Kansas being potential litigation?”
(sic). While the procurement provisions of Sub. HB 2463 are within the legal authority of the
legislature to alter or amend state law, they may still expose the state to litigation. This has
happened in the past; for example, as noted above, a former MCO and another unsuccessful
bidder previously sued the state when they failed to secure a KanCare 2.0 MCO contract.
Conclusion
The Kansas Legislature broadly has the power under the state constitution to establish and
alter procurement and appropriations processes for governmental entities. The procedure
by which the Legislature does so is enactment of law. The procurement actions proposed
under Sections 1(c)-(f) of Sub. HB 2463, if enacted into law, would be within the ambit of
this broad constitutional power. It is beyond the scope of this Opinion to speculate whether
the federal government or any potential litigants would accept that enactment or would seek
to challenge it.
Sincerely,
Derek Schmidt
Kansas Attorney General
Robert C. Hutchison
Assistant Attorney General
DD:SS:RCH:sb