Passport Files Formal Complaint over Louisville Medicaid Contracts

Kentucky officials are once again facing the prospect of lawsuits over efforts to expand managed health care within  Medicaid. 

This time, it’s Passport Health Plan that is threatening to sue, based on what they call broken rules and promises made to them. 

Passport is a group of doctors and other medical personnel that has operated as a managed care operator for decades in Louisville’s Medicaid region. Passport is facing competition for the first time next year, thanks to the state awarding contracts to Coventry Cares, WellCare and Humana for that region. 

Passport CEO Mark Carter claims that his group was promised 41 percent of the Louisville Medicaid membership, based on their ability to have contracts with nearly every doctor and hospital in the region. 

But the state actually assigned Passport only 27 percent of the members. Coventry and WellCare each received 25 percent and Humana received 23 percent.  That’s a 73 percent reduction in the membership Passport currently manages.

Because of that, Passport has formally asked for the state to stop the process of implementing the new Louisville region contracts until the issue is resolved. And if the state refuses, Passport has threatened to sue. 

But Passport Vice President Jill Bell says she hopes it doesn’t get to lawsuits.

“Actually we’re committed to working with the state to find a reasonable solution and I’m pleased to let you know that we have been in contact with them, so we hope to reach a resolution very soon,” she said.

Passport claims it should receive its potential maximum allotment of 41 percent because it has the best network of agreements with doctors and hospitals, while Humana has to build theirs from the beginning. WellCare also has to build a Louisville network, but operators statewide. Coventry Cares also operates statewide, but has few contracts after their broke many of them. Coventry currently does not have contracts with Kentucky One Health or Norton Hospitals, two main hospital networks in the region. 

Regardless of outcome, Bell said Passport will aggressively market itself to Medicaid to sign up with them during open enrollment. 

Medicaid Meltdown update: Passport files formal complaint against state over Medicaid contracts

By Staff | Published: November 2, 2012

Mark Carter, Passport CEO.

Another salvo has been fired in the widening war over the Beshear Administration’s Medicaid reforms.

Passport Health Plan, the Louisville-based non-profit Medicaid managed care organization, filed a formal protest yesterday opposing how patients are being divvied up its area, Region 3, after state officials brought other MCOs into the region.

Region 3, which includes Louisville and 15 surrounding counties, covers about 180,000 Medicaid members.

Passport executives filed the protest after “discussing concerns around the assignment of members to health plans with officials from the Cabinet for Health and Family Services’ Department for Medicaid Services,” according to a news release.

Kentucky officials announced in May they would issue a request for proposal to add other MCOs in Region 3 despite the fact that the National Committee for Quality Assurance.and even state officials rated Passport the state’s most efficient and problem-free Medicaid managed care provider.

The move added Humana, WellCare Health Plans and Coventry Health Care to Region 3, potentially cutting Passport’s business by 75 percent.

Now, Passport executives are saying the patient assignment plan is flawed.

From the release:

The assignment of members was arbitrary and will cause unnecessary and harmful disruption of patient’s continuity of care and, moreover, inappropriately increase the cost of providing Medicaid services to the Commonwealth and ultimately the taxpayers. “Passport exists for one reason and that is to help Kentuckians lead healthier lives, which is embodied in our mission statement of improving the health and quality of life of our members.” said Mark B. Carter, Chief Executive Officer. “Our organization doesn’t exist to generate a return for shareholders. We exist as forceful advocates for some of the least fortunate people in our community. I am convinced that patients will be harmed if the arbitrary assignment process is utilized. I am also concerned that the cost of providing care in Region 3 will be materially increased to the detriment of Kentucky tax-payers.” continued Carter. “We shared this information with the Commonwealth and the DMS went forward with the assignment process. We felt compelled to take this action.”

What this all means is unclear. CHFS officials were not in their offices when Passport executives announced the complaint Thursday evening.

This is the latest skirmish after the Beshear Administration implemented a new Medicaid managed care system one year ago, replacing a fees-for-services system.

Medicaid managed care contracts were awarded in July, 2011 to three bidders – St. Louis-based Centene Corp., Tampa-based WellCare Health Plan and Bethesda, Md.-based Coventry Health Care – in the other seven Medicaid regions in Kentucky outside Region 3.

The result has been that outside Passport’s area, doctors and other providers have gone unpaid and physicians groups and clinics have been ejected from insurer networks in the poorest parts of Kentucky as the insurers struggled to deal with huge and mounting losses.

There have been suits and counter-suits. Late last month, Centene, which operates in Kentucky as Kentucky Spirit, announced it was terminating its Kentucky contract and suing the state after $120 million in losses.

In the suit filed in Franklin Circuit Court, Centene executives charged state cabinet officials misled Centene officials 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.

The Centene suit also claims Kentucky officials submitted incorrect data to the insurer after rushing to stand up a Medicaid managed care system.

More as we know more.

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.

Passport Health Plan files protest with state over planned Medicaid competition

Business First by David A. Mann, Reporter

Date: Thursday, November 1, 2012, 6:32pm EDT – Last Modified: Friday, November 2, 2012, 12:15am EDT

 
Passport Health Plan has filed a formal protest with the Kentucky Cabinet for Health and Family Services related to contracts awarded to other Medicaid managed-care organizations.

For the last 15 years, Passport has exclusively managed Medicaid services in a 16-county region of the state, which includes Jefferson County, known as Region 3. Starting next year, four organizations — Passport, Humana Inc. (NYSE: HUM), CoventryCares of Kentucky and WellCare of Kentucky — will begin serving Medicaid members in the region. State officials said the U.S. Centers for Medicare and Medicaid Services had call for the implementation of a competitive managed-care system.

In a news release related to the protest, nonprofit Passport said the assignment of members to new managed-care organizations will cause unnecessary and harmful disruption of patients’ continuity of care. Further, the release said, the new system inappropriately increases the cost of providing Medicaid services to the commonwealth.

“Passport exists for one reason, and that is to help Kentuckians lead healthier lives, which is embodied in our mission statement of improving the health and quality of life of our members,” Passport CEO Mark B. Carter said in a news release. “Our organization doesn’t exist to generate a return for shareholders. We exist as forceful advocates for some of the least fortunate people in our community. I am convinced that patients will be harmed if the arbitrary assignment process is utilized.”

Carter told Business First that Passport’s annual revenue will be cut in half because of the new system, as the company will lose 82 percent to 59 percent of clients as a result of the implementation.

The company is considering what cost-cutting measures might be required to adjust to the lost revenue.

Click here to see a report from Business First’s Nov. 2 print edition on the impact the new competition is expected to have on the nonprofit Passport.

Passport Health Plan files protest with state over planned Medicaid competition

Passport Health Plan files protest with state over planned Medicaid competition

Business First

Date: Friday, November 2, 2012, 7:00am EDT

 
Passport Health Plan has filed a formal protest with the Kentucky Cabinet for Health and Family Services related to contracts awarded to other Medicaid managed-care organizations.
 
As Business First reported, Passport has for the last 15 years exclusively managed Medicaid services in a 16-county region of the state, which includes Jefferson County, known as Region 3.

Starting next year, four organizations — Passport, Humana Inc. (NYSE: HUM), CoventryCares of Kentucky and WellCare of Kentucky — will begin serving Medicaid members in the region. State officials said the U.S. Centers for Medicare and Medicaid Services had call for the implementation of a competitive managed-care system.

Click here to see a report from Business First’s Nov. 2 print edition on the impact the new competition is expected to have on the nonprofit Passport.

Kentucky violated bidding process in awarding Medicaid contracts, Passport says

Written by Tom Loftus The Courier-Journal
Oct. 31 courier-journal.com

FRANKFORT, KY. — The state violated its own bidding process and will spend as much as $80 million more than necessary per year under its new Medicaid managed care contracts for the Jefferson County region, Passport Health Plan charged Thursday.
In another bump for the state’s transition to Medicaid managed care, Passport Health Plan filed a formal protest of the process that resulted last month in the awarding of state contracts to four companies in the Jefferson County region now served exclusively by Passport.

Passport’s complaint is over the way the state Cabinet for Health and Family Services’ divided the region’s 170,000 Medicaid recipients among the four companies.
The protest letter says that Passport officials learned Wednesday that Passport will initially be assigned only 27 percent of the region’s Medicaid recipients while the contracting process and a cabinet official previously indicated it would get 41 percent. “I am convinced that patients will be harmed if the arbitrary assignment process is utilized,” Passport CEO Mark Carter said in a news release.

The protest asks that for a halt of the assignment process and for the cabinet to “make different decisions that will protect both the state budget and the Medicaid recipients.”
The cabinet released a statement late Thursday that said, “Passport is protesting issues that all bidders were advised of during negotiations. Passport was well aware of the assignment plan before it signed a contract.”

Passport, a nonprofit formed by local health care providers, has held an exclusive contract to manage the state’s Medicaid program in the Jefferson County region for 15 years.
In an effort to save money in the Medicaid program, the Beshear administration last year awarded contracts to managed care companies to serve the remaining 104 counties in the state. This year the federal government directed Kentucky to establish more than one managed care provider in the Jefferson County region.

That resulted in a long bid-negotiation process ending in the cabinet’s announcement a month ago that starting on Jan. 1, four companies will serve the region: Passport, Wellcare, Coventry Cares and Humana.

In its letter of protest, Passport said that discussions before and after contracts were awarded indicated that a formula for assigning members to one of the four companies would result in Passport getting 41 percent of the region’s Medicaid population.

The letter said that as recently as last week Passport was told by Medicaid Commissioner Lawrence Kissner that he believed Passport would get 41 percent. That’s because the formula is partly based on the company’s network of doctors, hospitals and other providers. Passport has had a comprehensive roster of health-care providers under contract in the region for more than a decade.

But on Wednesday Passport was told that under the formula, it will initially be assigned only 27 percent.

“To Passport’s knowledge, nothing has been done by the Commonwealth to assess whether the other (companies) are ready” in the region, the letter says. “Passport, based on its long history as a Medicaid contractor in the region, is clearly ready.”
Passport also charged that the cabinet’s approach will be much more expensive than necessary.

The bidding process, the letter says, resulted in the cabinet awarding contracts that will pay the four companies the following average amount per Medicaid member they serve per month: $446 for Wellcare, $457 for Passport, and $473 for both Coventry and Humana.

But in the protest letter, Carter said Passport had told the state at the beginning of the bidding process it was willing and able to bid much lower — $423 per member per month — if it could be assured it would be assigned about 80 percent of the region’s recipients.
The state will end up spending “about $80 million more than it would have been required to spend,” had it agreed with that offer, Carter said in the letter.
Reporter Tom Loftus can be reached at (502) 875-5136.