Missouri Medicaid chief warns against halting contracts with insurers

Wednesday, April 18, 2012 | 6:12 p.m. CDT

JEFFERSON CITY — Missouri's Medicaid chief fears a "nuclear scenario" of "mass confusion" and "turmoil" if a judge blocks the state's new Medicaid insurance plans for which hundreds of thousands of low-income residents can begin enrolling Thursday.

The two-month open-enrollment period for the Medicaid managed care program is proceeding as planned, despite a lingering lawsuit from a spurned insurer seeking to halt registration and re-start bidding for the $1.1 billion of contracts.

A hearing on a preliminary injunction request is scheduled for April 27, and coverage under the revised insurance plans is scheduled to begin until July 1.

MoHealthNet Division Director Ian McCaslin warned of dire consequences if the lawsuit is successful and the judge grants an injunction.

"If this injunction is granted, I don't have a contract to run managed care at all July 1. I have a nuclear scenario on my hands," McCaslin said in an April 11 deposition during which he was questioned by attorneys for various health insurers and the state. Although part of the court case, the deposition had not been previously released publicly.

McCaslin said in the deposition that there is no guarantee Missouri would be able to negotiate an extension of coverage with the existing contractors, or that it would receive favorable terms, if a rebidding process pushes the start of the new Medicaid contracts past July 1. Making matters worse, Medicaid recipients already have received packets of information about the new plans, and insurers already are negotiating new deals with doctors, hospitals and other medical groups, he said.

"It's an all bad story if this injunction is granted for the state of Missouri, the providers of the state and for, most importantly, the patients covered by managed care," McCaslin said in the deposition. "It will be mass confusion, turmoil, turbulence."

Missouri has about 900,000 Medicaid recipients, about 430,000 of which are covered under managed care contracts in the St. Louis, Kansas City and Columbia/Jefferson City areas. In other parts of the state, medical providers are paid a fee for each time they treat a patient.

Since Missouri began using a managed care model in certain parts of the state in 1995, any insurer who has met the state's criteria has been able to participate.

But in the latest round of contracts, Missouri capped the number of participating insurers to three. McCaslin said in the deposition that the limit was intended to save money for the state in administrative oversight and by allowing insurers to use larger patient pools to negotiate better rates with hospitals and medical groups. An actuarial analysis estimated the state could save $16 million over two years, department spokesman Seth Bundy said Wednesday.

The three contracts were awarded to HealthCare USA of Missouri (a subsidiary of Coventry Health Care), Missouri Care Inc. (a subsidiary of Aetna Inc.) and Home State Health Plan Inc. (a subsidiary of Centene Corp.) Of those, only Centene was a new insurer in Missouri's managed care plan.

Among the losing bidders was Alliance for Community Health, a subsidiary of Molina Healthcare Inc., which currently covers about 80,000 people under Missouri's Medicaid managed care program. Molina filed suit in the 19th Circuit Court for Cole County, contending the state wrongly capped the number of winning bidders and illegally altered the bidding rules when — after the initial proposals were submitted — it changed some of the information on the applications from requirements to suggestions. Molina is seeking an injunction blocking the open-enrollment period and preventing the new contracts from being implemented.

Molina spokeswoman Laura Hart declined to directly comment Wednesday about the assertion in McCaslin's deposition that scrapping the contacts and re-starting the bid process could have a devastating effect on the Medicaid program.

"Since the contracts were announced, we have been anxious to get in front of a judge to hear our arguments," the company said in an emailed statement sent by Hart. "But in the meantime, we remain committed to this population and want to ensure that our members continue to have access to quality health care and that there is no disruption in their patient/physician relationships that have been established over the past 16 years."

Centene already has spent more than $1 million preparing to implement its new Medicaid managed health care service in Missouri — money which the company may not be able to recoup from the state if the contract is invalidated, said attorney Chuck Hatfield, who is representing Centene. Halting patient enrollment would harm the company financially, even if its contract is eventually upheld, he said.

"Everything we've done has been based on the assumption there would be a 60-day open-enrollment period," Hatfield said. "To shorten enrollment by any period of time is a huge problem for us and the other providers."

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