We knew it had been too quiet on the Kentucky Medicaid Meltdown front for too long.
Sure enough, an Eastern Kentucky health care provider system is petitioning the state courts, asking for permission to join in a suit against Conventry Health Care.
King’s Daughter Medical Center in Ashland has a filed a motion to intervene in Eastern District Court of Kentucky, asking to join Appalachian Regional Healthcare and eight other hospital systems in southeastern Kentucky as a plaintiff in a suit against Bethesda, Md.-based Coventry.
And we have to say, the KDMC introductory paragraph is one of the snappier we’ve ever read in a legal document:
In Kentucky’s Medicaid managed care program, history has a way of repeating itself. Just months after abruptly cutting ARH, the predominant healthcare provider in southeastern Kentucky, from its network in an effort to force its way into lower rates, limit member claims, and purge its rolls of costly high-risk patients, Coventry Health and Life Insurance Company is at it again. This time, Coventry has purported to cut its ties with King’s Daughters, a group of non-profit entities1 that provide care to thousands of patients in northeastern Kentucky. This move further weakens Coventry’s illegally anemic provider network in Eastern Kentucky, threatens King’s Daughters’ business, and further limits access to care for some of the most economically challenged and medically needy people in the Commonwealth.
(You can see all 150 pages of the motion to intervene here.)
Last March, ARH sued Coventry after Coventry notified ARH it was terminating its Medicaid contract effective May 4, replacing it with a contract with lower reimbursement rates.
(ARH also sued the State of Kentucky and another Medicaid managed care company, St. Louis-based Centene Corp., in state court.)
In June, Federal Judge Karl Forester ruled in ARH’s favor big time, castigating Coventry in a long, blunt injunction.
Now, apparently, it’s King’s Daughter’s turn to take on Conventry, part of the year-plus round of suits and counter suits brought on by the Beshear Administration’s 2011 flawed implementation of a switch to Medicaid managed care organizations from fees for services.
From the King’s Daughter news release about the suit, issued today:
Coventry’s process for paying King’s Daughters’ healthcare claims has resulted in consistent underpayment of millions of dollars for services rendered. King’s Daughters has attempted to resolve these issues, but no resolution is in sight. In our opinion, Coventry is cancelling provider contracts in eastern Kentucky to pursue profits in other, more lucrative parts of the state. Beginning January 1, 2013, Coventry has been awarded a contract by the state to provide managed care services to Region 3, which includes Louisville and surrounding counties. We are concerned, however, that Coventry’s actions in cancelling provider contracts here will leave much of the Medicaid population of eastern Kentucky without adequate access to necessary healthcare services.
The King’s Daughters complaint alleges KDMC is having many of the same problems with Coventry that caused ARH to file the suit in the first place. In an order entered June 20, 2012, in that lawsuit, Federal District Court Judge Karl Forester said Coventry was behaving “as though it wants to ‘cherry pick’ the healthiest of patients in order to improve its bottom line and push the sickest patients to another MCO.” He entered an injunction against Coventry, preventing it from cancelling the ARH contract until Coventry’s members had the opportunity to exercise their right to transfer to another MCO during the fall open enrollment. The Judge also expressed the hope that in the meantime Coventry would make the necessary improvements to its network. Instead, Coventry told its members in September it had cancelled its contract with King’s Daughters, causing many of them to change to a different MCO during the open enrollment that ended October 20, 2012.
Forester found that without the ARH hospitals in Coventry’s network, there was an “enormous geographic hole” in the MCO’s coverage.
Now that Coventry has cancelled its contract with King’s Daughters, that hole has doubled in size and includes 24 out of the 33 counties in eastern Kentucky, according to the King’s Daughters release.
To us, this has always been a “who’ll get stuck with Eastern Kentucky?” shell game, with the insurers who got sucked into the Kentucky MCO scheme – WellCare Health Plans, Centene Corp. (which does business as “Kentucky Spirit”) and Coventry – only trying to get even after being sold a bill of goods by the Beshear Administation.
Back in October, Centene, based in St. Louis, sued Kentucky, charging officials with the Cabinet for Health and Family Services, Finance Cabinet and the Kentucky Department of Medicaid Services, misled the insurer about the overall health of Kentucky’s Medicaid members during the period leading up to the awarding of $6 billion in contracts back in November 2011.
Once the contracts were awarded, the MCOs immeadiately started losing money, claiming the rates paid to the MCOs by Kentucky under the Medicaid plan don’t cover the care needed by poor Kentuckians.
The bottom line in all this: The poorest, unhealthiest people in Eastern Kentucky are the poorest, unhealthiest people in the entire United States.
About King’s Daughters Medical Center: King’s Daughters Medical Center is a tertiary care regional referral center. It was recently recognized by Healthgrades as one of the nation’s Top 100 Hospitals for Cardiac Surgery. It is also recognized as a leader in stroke and pulmonary care, among other services. As a nonprofit institution, KDMC provided $135 million in charity and unreimbursed care in FY 2012 alone.
The back story on Kentucky’s Medicaid Managed Care Meltdown:
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, 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.
The three companies receiving MCO contracts were Centene, WellCare and Coventry Cares, all publicly traded companies. (Passport Health Plan, a Louisville-based non-profit controlled by providers, is the managed care insurer for Jefferson County and 17 surrounding counties.)
Each bid for the Kentucky MCO business was based on per-member, per-month health care costs projections. Low-bidder Centene bid $330 per member, per month, according to documents submitted to Insider Louisville. WellCare bid was based on $400 per member per month, and Coventry bid $436 per member per month.
The algorithm state officials used to choose the winners favored the low-cost plans, obviously, because therein lies the savings.
The state methodology initially assigned members to a plan, with the two lowest cost plans getting more members than the highest.
If Centene’s manged care system actually got each member to spend less than $330 per month, they’d make a profit. But crucial to getting costs that low would mean cutting reimbursements to health care providers such as doctors and pharmacies, which meant losing some of those providers.