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Patients, Providers, Companies Await Medicaid Ruling

*5/13/12 Update*: Judge Drumm has dismissed the case. Molina is evaluating its grounds for appeal.

A main part of Missouri’s Medicaid program is at the center of a lawsuit right now. A company that’s long contracted with the state to manage Medicaid services for several thousand enrollees alleges the state inappropriately chose new contracts.  A Cole county circuit court could rule on the case any day now, with one potential outcome creating problems for the Medicaid program and its enrollment process.


Missouri’s Medicaid managed care program covers about 430,000 people in the state, with about 87,000 living in Jackson County.  Most are children and pregnant women.  Instead of paying doctors and health facilities directly for services, the state contracts with insurance companies to oversee patients’ care.

“From the state’s point of view - and this is why it [managed care] is attractive to the state - it’s very easy for them to manage their costs,” says Dr. Corrine Walentik, a neonatologist in St. Louis and head of the state’s Medicaid oversight committee.

The state pays these insurance companies a fixed member per month fee. The companies set up a network of physicians and hospitals they work with to provide that care. They also have people who specifically help enrollees.

“It becomes the managed care plan’s job to make sure they do a good job managing these patients, so that they don’t have their costs accelerated at a higher rate than they should, and run out of money. Cause then they’d go under,” says Dr. Walentik, who has also worked with the managed care program since Missouri started it in the mid-nineties.

For the first time, the state has limited the number of managed care contracts it awarded to just three, instead of granting a contract to any company that meets certain requirements.  Having a cap could save the state $16 million, according to the Office of Administration.   Walentik, who wasn’t involved in any part of the selection or review process, says for one, there are less administrative costs.

The new awards, issued in February and effective July 1, didn’t include Molina Healthcare.  The company currently manages about a fifth of enrollees in the program (including around 13,000 people in the Western region), and was one of five companies currently with a contract in Missouri.

The state instead awarded a new contract to Centene.  Though based in St. Louis, the company - which has also been a big political contributor in the state - hasn’t had a contract in Missouri for six years.  The other two companies awarded contracts – a subsidiary of Aetna and of Coventry – are already operating in the state.  

In March, Molina filed a lawsuit, challenging the state’s contract decisions.

We believe the state changed the rules after proposals had been submitted and is illegally limiting the number of health plans serving Medicaid members in the state of Missouri,” says Amy Dobberteen, an attorney with the company.

Molina wants the court to put a halt on the new contracts.  The state, meanwhile, contends it held a competitive bidding process and made the awards, totaling about $1.1 billion (with the federal government footing about $700 million of the bill), based on measures of "quality, the method of performance, organizational experience, and most importantly, access to care," according to Wanda Seeney, a spokesperson with the Office of Administration. Molina didn't score as high as the other plans.

The whole legal dispute comes at an inopportune time for beneficiaries.  The state has already sent out information on the new contracts, and people are starting to choose plans for the coming coverage period.

“I’ve had patients tell me they’re in Harmony but are switching to Health Care USA,” says Dr. Walentik. “So people are making decisions already.”

As of late last week, the state had documented nearly 52,000 people enrolled in new plans.

Ian McCaslin, the state’s Medicaid director, said in a court deposition that putting a hold on these new contracts would cause a lot of problems and confusion in an enrollment process that’s already underway. Open enrollment runs from April 19 through June 16.  McCaslin said the state could also have trouble extending its current managed care contracts.

In the Kansas City area, the locally-based nonprofit insurance company, Blue Cross Blue Shield of Kansas City, didn’t get a new contract, so the 30,000 people who’ve been with the company are starting to choose a new plan. 

“We would be happy to continue to serve this population, to continue to serve these members until things are worked out,” says Bryan Camerlinck, a financial services director for Blue Cross, who was also disappointed the company didn’t get a new contract.  Camerlinck says some of its Ob-Gyn providers may not be covered on the new plans.

Over in St. Louis, Dr. Walentik worries about what would happen if the contracts are blocked.

“It would really put things in chaos,” says Dr. Walentik. “Because I think it takes a while to get patients educated and to get providers up and running, and it would be really hard if we had to cancel everything that’s been done and start all over again."

Yesterday (May 7) marked the court’s deadline for all parties to file certain evidence and briefs, so Judge Bernhardt Drumm could now rule at any time on whether to grant an injunction to stop the enrollment process or dismiss the case. 


This story is part of a reporting partnership that includes KCUR, NPR and Kaiser Health News.


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