Federal judge grants injunction in Appalachian Medicaid case

Medicaid contractor must keep paying

Written by
Mike Wynn
The Courier-Journal

LEXINGTON, KY. — A federal judge granted an injunction Wednesday that requires Medicaid contractor Coventry Cares to continue paying for services at Appalachian Regional Healthcare until patients in Eastern Kentucky have a chance to switch Medicaid companies.

Coventry Cares, one of three new managed-care organizations in the state’s Medicaid program, was planning to terminate its contract June 30 with ARH, a nonprofit chain of eight hospitals and other clinics in the region.

But in a 23-page opinion, U.S. Senior Judge Karl S. Forester wrote that ARH has “shown sufficient public interest and irreparable harm” if Coventry is allowed to end payments before the new open enrollment period for Medicaid takes effect Nov. 1.

The move allows thousands of ARH patients to transfer to WellCare of Kentucky, another managed-care organization that contracts with the hospital chain.

Forester noted that Medicaid comprises about 24 percent of ARH’s business and concluded that court intervention was necessary to prevent patients from being “thrown under the bus.”

“The health and well-being of thousands of these patients hang in the balance, and many have already suffered hardships, stress and confusion as a result of Coventry’s sudden notice of termination,” the judge wrote.

Coventry covers 64,000 members in the region, and after it issued a notice in April to terminate the contract, the two sides negotiated for weeks without success.

Coventry and the state Cabinet for Health and Family Services have argued that Coventry’s network of health-care providers would remain adequate and still meet driving distance standards for patients if the contract was allowed to expire.

But Forester disagreed, writing that “driving times calculated by Coventry’s methodology … were grossly incorrect and entitled to no weight.”

The judge also ordered Coventry to provide a list of Medicaid patients so ARH could notify them of the upcoming open-enrollment period this fall.

“The important thing is people will be given a chance to have their choice of providers,” said ARH attorney Steve Price.

Coventry CEO defends move

Michael Murphy, CEO of Coventry Cares of Kentucky, appeared before the state’s joint Committee on Health and Welfare on Wednesday to field questions over coverage issues, but said he had not had a chance to read the court opinion.

Still, Murphy defended recent decisions to terminate contracts with ARH and others, arguing that Coventry had suffered a $50 million loss in the state during the first quarter.

He said the loss was due to bad data provided by the state and the health cabinet’s failure to fairly pay Coventry for covering a riskier and more costly pool of patients compared to other Medicaid contractors.

“We’d like the state to fix the funding disparities — it is obvious that the program is underfunded,” he said. “Utilization is so much different than what it was anticipated to be.”

But several lawmakers used the hearing to criticize Coventry, which has generated several points of concern as a managed-care organization over payments and contracts.

“I really don’t care what Coventry has to say,” said state Rep. John Will Stacy, D-West Liberty. “I think anything they say is a load of crap.”

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