The Medicaid managed health care company for the Louisville area says the state is squeezing it by reducing reimbursement rates.
LOUISVILLE, Ky. — After a second round of bids, Kentucky has awarded contracts worth nearly $8 billion a year to five outside insurance companies to manage most of its Medicaid business, which provides health coverage for about 1.4 million people.
In a blow to Louisville-based Passport Health Plan, the state again has rejected its bid. Anthem, which like Passport holds a current contract and had sought a new one, also was not chosen.
Contracts were awarded Friday 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, the Minnesota-based United Healthcare and Molina Health Care of Long Beach, California.
In announcing the awards, Gov. Andy Beshear said providing health care to as many Kentuckians as possible is a key objective of his administration, including to those covered by an expansion of Medicaid to more low-income adults under the Affordable Care Act.
“Health care is a basic human right,” Beshear said in a statement. “The expansion of Medicaid in the commonwealth has been lifesaving for many families who struggled to find and afford coverage. As we move forward, we must continue to provide equal access for every Kentuckian who needs quality care.”
Beshear said the expanded Medicaid coverage has proved crucial during the coronavirus pandemic, which has killed more 400 Kentuckians and infected nearly 9,500.
“Without expanded Medicaid, I don’t know where we’d be in fighting this virus,” Beshear said during his Friday afternoon news briefing. “I think it’s been a godsend.”
The five companies announced Friday are the same companies awarded contracts last November by the administration of former Gov. Matt Bevin that were tossed out by Beshear after he took office in December, saying they warranted further review.
But Eric Friedlander, secretary of the Cabinet for Health and Family Services, said terms have been revised to increase oversight and quality control and improve transparency.
“We have strengthened the contracts to make sure that these companies are responsive to the needs of all Kentuckians,” Friedlander said.
Passport said Friday it is disappointed by the outcome and will file a protest, saying disruption could jeopardize the health of those who depend on Medicaid for health care.
“This is a concerning decision for all Kentuckians who care about the health status of our most vulnerable residents as well as the economic benefits associated with locally owned and operated businesses,” said Passport Chief Executive Officer Scott Bowers.
Beshear said he appreciated the good work Passport has done during its more than 20 years in Kentucky but said it scored seventh out of seven bidders.
“It’s provided great service,” he said. “It’s been an important community member.”
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And he said at least one of the successful bidders, Molina, has said it will locate its Kentucky headquarters in western Louisville and bring as many as 1,100 jobs to the area.
Passport had planned to move its headquarters to west Louisville, a move that drew widespread support from community leaders. It still owns a site at 18th and Broadway for the new offices.
The new, five-year contracts take effect in January.
The award also includes designating one company, Aetna, to oversee all health services for children in foster care or in the juvenile justice system in an effort to streamline care and improve access for them.
Aetna is “thrilled” to be able to continue its work in Kentucky and “honored to have been selected as the sole health plan to manage and coordinate care for children and youth,” said Aetna’s Kentucky CEO, Jonathan Copley.
Humana also said it was pleased to win a new contract to continue Medicaid work in Kentucky.
“The decision by the Commonwealth of Kentucky means a great deal to all of us at Humana. As a company with deep roots in the Commonwealth and a team of 12,000 employees in Kentucky, our commitment to serve our members and improve health across Kentucky is unyielding,” Jeb Duke, Humana’s Kentucky-based Medicaid leader, said in a statement.
The current companies will continue their work through the end of the year.
WellCare is the largest of the companies currently handling state Medicaid business, with about 447,000 enrollees. Passport is the second largest, with about 320,000 members, followed by Aetna, Anthem and Humana.
The awards follow a contentious battle for the high-stakes business of overseeing health care for most of Kentucky’s enrollees in Medicaid, a federal-state health plan for low-income individuals and those with disabilities.
Bevin’s awards last year sparked controversy after the losing companies, Passport and Anthem, protested, alleging numerous flaws in the bidding evaluations under Bevin. The governor had been highly critical of Passport.
Passport, the state’s oldest Medicaid managed care company, accused the Bevin administration of “a public smear campaign.”
Passport’s rejection also sparked protests by leaders in western Louisville, where Passport had already begun construction of its new headquarters as part of a proposed health and wellness campus expected to bring jobs and economic growth to the area.
Passport suspended work on its new headquarters last year, citing financial problems it attributed to rate cuts by the Bevin administration. Passport was later acquired by Evolent Health, a Virginia-based health company.
He noted that Bevin’s administration awarded the contracts when the former governor only had 11 days left in his term.
Beshear also cited a legislative committee’s unanimous rejection of those contracts as a key concern, and he said past comments Bevin made about Passport created “a perception that there was not a fair and level playing field.”
“When we have $8 billion on the line, I want to make sure that the process is fair,” he said.
In December, the General Assembly’s Government Contract Review Committee, which has only advisory power, voted unanimously to reject the contracts after finding the Bevin administration failed to give them the contracts in advance.
They were angered over the seeming haste to award the contracts, as well as the administration’s attempt to bypass a legislative committee that’s supposed to review them.
It’s not clear what the loss of the contract means for Passport, which derives virtually all of its income from Medicaid.
Passport and Evolent employ about 600 people in Louisville.
Passport was founded in 1997 as a pilot project to help the state control Medicaid costs in the Louisville region at the request of state officials.
Later, Kentucky expanded managed care statewide to try to contain growing Medicaid costs and awarded contracts to other, commercial insurance companies.
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