(Editor’s note: This piece was originally posted on the Kentucky Health Policy Institute website. It is reposted here with permission.)

By Dr. Peter HasselbacherKentucky Health Policy Institute

Insider Louisville has been out front in reporting on the emerging lawsuits by at least one major Medicaid provider against at least two Medicaid MCOs that are handling Medicaid managed care for the Commonwealth of Kentucky.

Thank you!

I have already expressed my opinion that these suits are like canaries in the coal mine, telling us something is very wrong with the health of Medicaid in the state and by implication, for the health of Medicaid beneficiaries, medical providers, and those who finance the system.

Keep it up!

I am still confused by the nature and details of the claim by Coventry Cares that they were treated differently than at least one other MCO by the state in terms of their requirement to have Appalachian Regional Healthcare (ARH) in their provider network. (I too assumed that the “other” was Kentucky Spirit, but in his letter to ARH, Mr. Nolan of Coventry seems careful not to name the other organization.)

From their lawsuit against Kentucky Spirit (KS), it appears that ARH opted not to sign a full provider contract with KS that would have required it to accept the payment rates of KS as well as other contractual agreements. That would make ARH an out-of-network provider for KS. Despite this, KS continued to authorize – and therefore agreed to pay for – at least some patient services from ARH.

From the letter by Coventry, it appears that ARH did not sign a full uniform provider agreement with Coventry either, and that ARH may also have been considered as an out-of-network provider for Coventry.

Coventry did apparently agree to pay higher-than-regular Medicaid rates for some or all of these patients. What then is the specific basis for the claim that the Commonwealth treated Coventry and the “other” differently?

  • Is it a third MCO that had the different relationship?
  • Was Coventry paying for all of its covered members treated by ARH, and KS paying for only some if its patients?
  • When does the Commonwealth consider that a given provider is mandated and actually in the adequate statewide network required for an MCO to operate in the state?
  • Is it a full and regular provider agreement that gives reciprocal protections to the MCO, the provider, the Commonwealth and the Medicaid patient?
  • Is it the fact that the provider is willing to see, and the MCO to pay for all covered Medicaid beneficiaries that present themselves for medical services?
  • Does the amount the MCO pays matter?
  • Does a non-discriminatory requirement for preauthorization have anything to do with it?
  • When Coventry refers to ARH as a “non-par[ticipating provider],” what exactly does that mean? Is it the same thing as being out-of-network, not willing to see covered patients, not willing to accept the rates that other providers accept, or some more technical meaning such as that used by Medicare to categorize its providers?

If indeed the Commonwealth treated one MCO differently in such a fundamental matter, that would be unfair indeed.

Because I myself am confused, I do not understand what underlies Coventry’s claim that it was treated differently, and therefore what might have driven any shifts of patients from another MCO to Coventry. I do think the public deserves to know.

It seems clear to me there is a good bit of frustration and perhaps even bad feelings out there in the Medicaid market. To avoid such things is of course one of the major reasons why businesses sign agreements among themselves.

Lawsuits are one of the strategies that businesses, (even medical businesses) use to settle disagreements or to leverage their point of view upon their presumed partners. I fear that this matter will take a long time to work itself out.

In the meantime, some of the most vulnerable among us are at risk for something worse than a bad bottom line. I care about having a sustainable Medicaid Program of appropriate and non-discriminatory quality. While insurers, providers, and the Commonwealth maneuver, what I want to hear from all three is how Medicaid beneficiaries will be protected. Seems to me that all three have, if not a legal fiduciary, then a moral responsibility to hold harmless those they claim to serve.

The back story on Medicaid changes in Kentucky: In April, 2011, state officials asked health insurers to submit managed-care proposals for the $6 billion worth of care 800,000 poor and elderly Kentuckians receive annually under the federal/state Medicaid program. At the time, Kentucky Gov. Steve Beshear touted the switch to managed care from fee-for-services as saving the state $375 million over the life of the initial three-year contracts. Insiders said officials in other states such as Georgia took as long as 18 months to make the change while Kentucky tried to do it in less than six months.

About Dr. Peter Hasselbacher: Peter Hasselbacher MD is Emeritus Professor of Medicine at the University of Louisville.  He has been a medical educator, clinician, scientist, and healthcare executive for 35 years.  He is currently president of KHPI.

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