Centene Deal with Ohio Moves Forward

Ohio to move forward on Medicaid deal with Centene

August 19, 2012 11:38 am  •  ASSOCIATED PRESS

COLUMBUS, OHIO • A judge dismissed a lawsuit Thursday that had blocked Ohio from moving forward with certain Medicaid contracts, including one with Clayton-based Centene Corp., clearing the way for the state to proceed with the tentative agreements it has with five health plans, state officials said.

Aetna Better Health of Ohio had sued the Ohio Department of Job and Family Services in a dispute over the scoring of the contract applications. But in a ruling from the bench, a Franklin County Common Pleas judge dismissed the case during a hearing on the issue, Kasich administration officials said. The judge’s office did not immediately respond to a call for comment.

The eventual contract winners will provide health care services to more than 1.6 million poor and disabled people, or roughly two-thirds of the state’s Medicaid population. The contracts provide billions in government work to the companies.

State officials had tentatively selected Aetna for a contract in April and then revoked the decision in June. Aetna claimed the state retroactively changed the definition of certain requirements in its request for contract applications, and the company wanted its contract reinstated.

An Aetna spokesman on Thursday wouldn’t address whether the company planned to appeal the court decision, but said it was disappointed.

“Aetna has a substantial presence in the state and we remain committed to doing business in Ohio,” said spokesman Scot Roskelley.

Ohio health officials praised the lawsuit’s dismissal.

“The Court’s decision confirms what we’ve believed all along: we reached the right decision and we did it the right way,” Ohio Medicaid Director John McCarthy said in a joint written statement with Greg Moody, director of the Governor’s Office of Health Transformation.

The health plans chosen were said to be the highest-scoring applicants in the state’s Medicaid contract process. But five of six companies that lost bids for the contracts filed formal protests with Ohio officials in April, claiming flawed and inaccurate scoring.

A state review of the contract applications changed how points were scored. And on June 7, state officials said Aetna Better Health of Ohio and Meridian Health Plan of Ohio would no longer get the contracts.

Instead, Molina Healthcare of Ohio Inc., a subsidiary of Molina Healthcare Inc., and Buckeye Community Health Plan, a subsidiary of Centene, were picked.

Ohio has also selected CareSource, Paramount Advantage and United Healthcare Community Plan of Ohio.

The state review found that Meridian should have been disqualified because it didn’t have a necessary health-insuring corporation license or an application pending for one at the time of its bid. And Aetna lost many points because the state said the company did not provide evidence of full liability for certain plans with other states.

The contract awards to the five plans remain preliminary. The managed care organizations must first pass an assessment, in which they must prove that they will be ready and able to provide care when enrollment begins in January.

State officials said they were still reviewing whether the timeline for enrollment could change because of the lawsuit.

Centene Wins MO Medicaid

Clayton-based Centene wins Missouri Medicaid contract

BY JIM DOYLE • jdoyle@post-dispatch.com > 314-340-8372 | Posted: Wednesday, February 22, 2012 8:49 am

Centene Corp. has won a major contract to manage health care and behavioral health services for Medicaid beneficiaries across Missouri, the Clayton-based company announced today.

The firm will share the business with two other companies, Missouri Care Inc. and Health Care USA, which is a subsidiary of Maryland-based Coventry Healthcare Inc., state officials said.

Missouri’s Medicaid program, serving 427,000 patients, spends $1.1 billion annually, said Wanda Seeney, a spokeswoman for the state Office of Administration. Centene did not release an actual contract value, and company officials could not immediately be reached for comment.

The companies will compete for Medicaid enrollees during an annual open enrollment period, Seeny said.

Centene is the nation’s fourth-largest Medicaid contractor, and among the most successful companies in the region, with about 5,300 employees nationwide, including more than 900 in the St. Louis area. With the award of the Missouri contract, those numbers are expected to grow.

The managed care company’s subsidiary, Home State Health Plan, was chosen by Missouri officials after submitting a competitive bid to provide services.

“We expect to commence operations in the third quarter of this year,” Centene said in a news release.

Centene and the other companies will provide coordinated healthcare and behavioral health services to Medicaid patients including those receiving benefits under categories of aid for parents and caretakers, children, newborns, pregnant women and refugees. It will also provide services for children in the care and custody of the state pending adoption, and the Children’s Health Insurance Program.

“We are honored to be awarded a Medicaid managed care contract to begin serving managed care members here in Missouri,” said Jesse Hunter in the release. Hunter earlier this week was named Centene’s executive vice president of operations of Centene. “We believe our strategic provider partnerships in Missouri will help us deliver improved health outcomes for our members at a lower cost for the state.”

“For more than 15 years, we have called Missouri home to our corporate headquarters. We have added hundreds of jobs and made significant investments into the region,” said Michael Neidorff, Chairman and Chief Executive Officer of Centene, in the release. “We embrace the opportunity to bring our award-winning quality programs and healthcare services to our most vulnerable neighbors across the state.”

Centene lobbied hard for the Missouri Medicaid contract. It has fielded a dozen registered lobbyists, including attorney Chuck Hatfield, one of Democratic Gov. Jay Nixon’s closest advisers, according to Missouri Ethics Commission records. Since January 2006, Centene and its executives have given more than $400,000 in campaign contributions to dozens of Missouri politicians.

A growing number of states have privatized their Medicaid programs, paying fixed per-patient rates and letting contractors assume the risk of rising health care costs.

Centene’s network of providers tries to reduce costly use of emergency rooms by encouraging patients to see primary care physicians, take the medications, and pursue healthy lifestyles.

But Centene came under scrutiny last year because one of its affiliated businesses, the embattled Missouri contractor SynCare LLC, was ousted as a state contractor after high-profile failures in delivering eligibility assessments of homebound Medicaid patients. Centene provided nearly $2 million in business loans to SynCare and its owner.

Seven companies submitted contract bids to participate in Missouri’s Medicaid managed care program known as MO HealthNet Managed Care, said Jim Miluski, a purchasing director with the state’s Office of Administration.

Three of the bidders were awarded contracts on Feb. 17, he said, and all three firms will be able to operate in the state’s central, west, and east managed care regions.

Health Care USA has participated in the Missouri Medicaid market for about 16 years.

“This award extends that relationship and represents another major step forward for Coventry as we continue to expand our Medicaid presence,” Allen Wise, chairman and chief executive of Coventry, said in a news release.

Centene previously held a Missouri Medicaid contract, but left the state’s market in 2006.

For the latest contract award, Miluski said, the state’s evaluation panel considered factors including the bidders’ organizational experience, method of performance, quality, and access to care. He also said that bidders could win extra points if affiliated with a certified business owned by a minority group or women.

The successful bidders including Centene were awarded one-year contracts and the potential of two additional one-year renewals.

The new contracts are scheduled to begin on July 1.

Insider Louisville Medicaid story

February 8, 2012

Insiders are telling Insider Louisville Gov. Steve Beshear’s big plan to switch to managed care from fee for services – announced last spring during the gubenitorial race as a way to to close Kentucky’s $1 billion Medicaid budget gap – is looking like it will add to the pain on every possible level from personal to financial.

Those insiders are telling Insider Louisville Kentucky’s managed care system is in chaos after a rushed implementation, a situation that may take years to fix.

“If you’ve ever been in the military … you’ll know the term ‘FUBAR’ (fouled up beyond all repair). That comes as close to describing this as anything,” said one source who represents health care providers and pharmacies.

The Lexington Herald-Leader has reported on problems Medicaid members are having getting care, as well as on the problems providers are having getting paid by the managed-care insurers.

Insiders are telling us the story from the other side – the insurer side – and it’s not pretty, with one company shedding customers after its executives low-balled a bid under a state request for proposal last April.

A huge number of Medicaid-covered patients have dumped low-ball bidder, St. Louis-based Centene Corp. after they figured out the cut-rate provider network means their doctors aren’t included in their coverage.

Insider Louisville’s sources say about 40,000 Medicaid members in Kentucky who’d been assigned to Centene have bolted because they noticed their local docs or pharmacies AREN’T part of their plan.

One stock analyst who covers Centene said Centene officials confirmed during a Tuesday earnings conference call that the insurer’s managed care membership in Kentucky dropped by 40,000 – to 140,000 from 180,000 members – during a two-month open period in November and December, “and they didn’t give a good reason.

“They said it was a ‘benefit design adjustment,’ which makes no sense at all.”

A well-placed insider said Centene executives approached top Health & Family Services Cabinet officials last month, essentially asking for an adjustment on their contract.

“They were asking for more money,” the source said. “(The request) was not well received.”

The reason it’s not well received is in the grade-school math: Those 40,000 Medicaid Members who were going to cost the state $12 million per month at Centene’s $330 per member, per month bid now could cost as much as $17.2 million per month if they all went to Coventry, which is getting 40 percent more per member, per month.

Times 12 months, times the three year life of the contracts.


But the request for an adjustment also raises the specter of Centene walking away from its managed-care contract, willing to take a chance that a legal fight would be less expensive than sticking out the contract.

A report this morning by investment services giant Morgan Stanley raises questions about how the contract implementation in Kentucky will affect Centene.

But as Centene bleeds Kentucky Medicaid membership, it’s Bethesda, Md.-based Coventry Health Care that’s getting the negative publicity for not paying providers.

Sources confirm officials from Kentucky’s Director of Medicaid Services – part of Kentucky’s Department of Health and Family Services – descended on Coventry Health Care’s offices in Louisville yesterday in an unannounced visit related to Coventry’s failure to reimburse health care providers treating Medicaid patients.

State officials did not return Insider Louisville’s calls, which came just as Health & Family Services Cabinet Secretary Janie Miller resigned yesterday.

The Herald-Leader and other state newspapers– though not so much the Courier-Journal – have documented the big flaw in Beshear’s plan: Health care providers, pharmacies and others report they aren’t getting paid by Coventry and other health insurers that won billions worth of state contracts.

Those who are getting paid are having to negotiate long waits to get procedures approved, or to get denials of care reversed, according to media reports.

All of which are threatening to put providers out of business is a state that already is woefully short of docs and health care professionals.

Now, sources tell us CJ reporter Deborah Yetter is playing catch-up with a series of articles:

Her focus will be on the impact of the changes on providers and patients, but will miss an important point … whether the approach will generate the savings the Governor and Secretary of Health and Family Services Cabinet Janie Miller have touted.

Our sources say the answer is, “No.”

Here’s why:

So, the much-touted plan cut Medicaid costs by $375 million is on track to lose an additional $43. 2 million.

(Editor’s note: Miller resigned yesterday, though it’s not clear if her departure is related to the medicaid changes, or to the controversy growing out of the state’s refusal to release information related to the deaths of abused children.)

Back in April, Centene, Tampa-based WellCare and Coventry were among a number of health insurers bidding on about $6 billion in annual Medicaid managed care contracts for about 800,000 Medicaid members as Kentucky switched to managed care from a fees-for-services system.

Beshear’s plan was, critics say, grandstanding – a way to claim to be closing the state’s Medicaid funding gap during a campaign against Sen. David Williams, who called Beshear’s budget schemes “smoke and mirrors.”

Centene, WellCare and Coventry are 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 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 Beshear was touting.

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, for example, could actually get each member to spend less than $330 per month, they’d make a profit. But crucial to getting costs that low would mean lowering reimbursements to health care providers such as doctors and pharmacies, which meant losing some.

Sources in the meeting or with direct knowledge of events confirm state officials were congratulating themselves on implementation until a January meeting between Kentucky Hospital Association members and Miller.

Instead, “agitated” KHA members told Miller the implementation was a disaster, with providers from doctors groups to pharmacies not getting paid, said a source.

“What you’re seeing is, they slammed this thing through, and now it’s coming home to roost,” said an insider. “Any complex business transaction … when you rush it, you’re going to have a bunch of stuff happen that you didn’t anticipate.”

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, 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.