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Controversial Coventry, Humana in three-way split with Passport as Beshear 'reforms' Louisville area Medicaid system

by Terry Boyd

We wondered how long it would take the Beshear Administration to break the only part of Kentucky’s Medicaid system that works.

Now we know. Multiple sources confirm that tomorrow, Kentucky’s Cabinet for Health and Family Services officials will reveal that Coventry Cares, Humana and Passport Health Plan will get Medicaid managed care contracts for our region, which is Medicaid Region 3 in bureaucratese.

The Beshear Administration’s Medicaid “reform” plan that has produced multiple lawsuits and clinical meltdowns in Eastern Kentucky is officially coming to the Louisville area as of Jan. 1, 2013.

We asked Gov. Steve Beshear’s spokeswoman Kerri Richardson for comment, but Richardson replied there is “nothing to announce at this point.”

The region, which is the largest and most populous of the state’s eight Medicaid regions, includes about 170,000 Medicaid members in Jefferson and 14 surrounding counties. Until now, Region 3 has been the purview solely of Passport, which has won glowing performance appraisals from state officials and national accrediting agencies.

Yet last May, state officials issued requests for proposals for Passport’s region saying the federal government was ordering them start to increase competition in the Medicaid space.

It’s news that Humana, the giant Louisville health insurer/health care provider, is entering Kentucky’s Medicaid space, though hardly surprising since Humana is vying for Medicaid contracts in other states including Florida.

But the big news is that Coventry is being allowed to invade Region 3 after multiple problems in Kentucky.

One year ago, Kentucky officials dealt out about $700 million in Medicaid managed care contracts to three publicly traded insurers: Centene Corp. of St. Louis, Tampa, Fla. based WellCare Health Plan and Coventry Health, based in Bethesda, Md. Since then, there’s been hell to pay, with law suits, denied care, insurer-vs-provider showdowns and more law suits.

The RFP for Region 3 came after Coventry earned the ire of providers from Eastern Kentucky to Louisville. The most public of the many, many suits and public showdowns was between Coventry and Appalachian Regional Healthcare after Coventry notified ARH last March it was terminating its Medicaid contract effective May 4.

In turn Lexington-based ARH, which operates eight hospitals and a number of smaller clinics in Eastern Kentucky, sued Coventry in federal court … and got a huge victory in June from Federal Judge Karl S. Forester.

In a scathing injunction in ARH’s favor, Forrester ruled Coventry has to resume living up to its contract with ARH through this month. And he rapped the knuckles state officials for doing nothing after Conventry gutted its provider network.

ARH also sued the Commonwealth of Kentucky Centene in state court. But the most interesting exchange was a letter acquired by Insider Louisville in which Coventry’s vice president wrote ARH officials, blaming the whole crisis on Beshear Administration officials.

All this from a “reform” meant to cut the state’s Medicaid costs, yet has cost insurers, MCOs and the state millions in legal fees in the 10 months this whole thing has been in affect.

The announcement tomorrow comes days after a consultant issued a finding this week that Passport has been successful in controlling Medicaid costs and improving health care delivery for members.

The report, “Assessment of Passport Health Plan’s Value to Kentucky’s Medicaid Program” evaluates Passport’s performance in terms of cost effectiveness, quality of services, and access to care – precisely the results the Beshear Administration said it was trying to achieve.

The full report, sent to us by Special Needs Consulting Services and commissioned by Passport, can be downloaded at the SNCS website here.

Here are the key findings, and go to the heart of the suits between Coventry, providers and the state.

  • Quality: The National Committee for Quality Assurance has for years ranked Passport above all other Medicaid health plans operating in the central or southern United States. Passport implements a variety of educational, outreach, and tailored programs to promote and monitor quality of care.
  • Medicaid Cost Savings: Passport’s per capita medical costs increased 1.5 percent annually from 2008 to 2011, compared to statewide annual per capita cost increases in Kentucky’s Medicaid program averaging 7 percent in the eligibility groups Passport serves. Passport’s average per capita revenue decreased between 2008 and 2011. After factoring in administrative costs, SNCS estimates that the Kentucky Medicaid program’s contract with Passport has yielded total Medicaid savings of $277 million during that period, representing a percentage savings of 8.4 percent.
  • Access to Needed Care: Whereas Medicaid beneficiaries around the country often have difficulty obtaining care from “mainstream” providers who serve persons with private insurance, Passport provides its members with access to essentially the entire provider community in its service area. Passport’s provider network includes all hospitals in the 16-county service area as well as approximately 1,000 primary care physicians and 4,000 specialists. The vast majority of practicing physicians in the 16-county service area participate in Passport’s network. Passport also implements a comprehensive set of programs to promote access to preventive care and to indicated treatment, many of which contribute to the excellent quality scores and member satisfaction ratings Passport has achieved.
More as we know more, with state and MCO executives more likely to Thursday after the announcement.

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