In the final hours of Gov. Matt Bevin’s administration, one of his top officials overrode a legislative committee’s rejection of five Medicaid contracts worth about $8 billion a year.
William Landrum III, Bevin’s finance secretary, notified the committee Monday that “all five contracts shall remain in effect as originally approved,” according to a copy of his Dec. 9 letter.
That throws the controversy over the contracts to the administration of Gov. Andy Beshear, who took office Tuesday and who has pledged to review the contract decisions that excluded Louisville’s Passport Health Plan and Anthem.
Beshear spokeswoman Crystal Staley said the new administration’s position has not changed.
The Bevin administration awarded the contracts, among the largest in state government, to Aetna Better Health of Kentucky, Humana Health Plan and Wellcare Health Insurance of Kentucky, all of which hold existing contracts with the state, as well as two newcomers, United Healthcare and Molina Health Care.
Both Anthem and Passport filed formal protests on Wednesday, the deadline for any appeal of the decision. Passport serves about 300,000 Medicaid members and Anthem about 130,000 under contracts that run through June 30.
Earlier: Lawmakers rip last-minute Medicaid contract awarded by Bevin
The new contracts involve managed health care for more than 1 million Kentuckians covered by Medicaid. They take effect July 1.
On Monday, controversy over the contracts took a new twist when the state Government Contract Review Committee, which has only advisory authority, unanimously rejected the five contract awards, complaining that the Bevin administration had tried to bypass it and had hastily awarded them.
Sen. Steve Meredith, co-chairman of the committee, said members should have seen the contracts in advance, not after they were awarded.
“It’s like we’re being strong-armed into doing something,” said Meredith, a Leitchfield Republican, in explaining the committee’s unusual decision to reject the contracts.
The committee members also were unhappy that the state stuck with five companies, instead of cutting the number to no more than three as requested by lawmakers. Meredith and others have complained that for health providers, dealing with five different managed care companies is overly complicated and costly for doctors, hospitals and other health providers seeking payment.
In a letter to Landrum, the committee said that it puts a “disproportionate and prejudicial burden” on rural health care providers.
But Landrum had the power to override the committee’s decision and did so in his final hours on the job, citing a request from the Cabinet for Health and Family Services, which administers Medicaid.
Related: Lawmaker wants Beshear to review Medicaid contracts Bevin awarded
The contract awards also have prompted protests from some officials over the exclusion of Passport, a nonprofit founded in 1997 as a pilot project in the Louisville region to help the state control Medicaid costs.
The state eventually expanded Medicaid managed care statewide, adding contracts with other health insurance companies.
On Saturday, state Rep. Jason Nemes, a Louisville Republican, questioned the timing of the decision and why two existing companies, Passport and Anthem, lost contracts.
“It concerns me that 8 billion dollars in contracts were awarded in the last days of the current administration,” Nemes wrote in a Facebook post he said was in response to questions from constituents. “Of more concern to me is that two incumbents with a proven track record in Kentucky were ousted.”
Passport’s loss of the contract also renews questions about the future of a new headquarters and health campus it had planned to build in western Louisville. Local leaders had hailed the project as an economic boon.
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Reach Deborah Yetter at dyetter@courier-journal.com or 502-582-4228. Find her on Twitter at @d_yetter. Support strong local journalism by subscribing today: www.courier-journal.com/subscribe.
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