Update on Controversies in Medicaid Managed Care

Since October 2012, Kentucky’s Medicaid officials have been on notice that Kentucky Spirit, the Medicaid managed care organization  (MCO) owned by Centene, was terminating its contract at the beginning of July. As we reported in June, the Circuit Court in Franklin County ruled that neither party had breached the contract yet. That meant that when Kentucky Spirit terminated, it would breach the contract, and, therefore,  would be liable to the state for liquidated, or predetermined, damages. Kentucky Spirit appealed.

As the termination date approached, state officials returned to court seeking an order to keep the MCO from leaving. On June 26, 2013, Judge Thomas Wingate denied the state’s request. For one thing, the appeal ended his jurisdiction over the matter. But, he added, the court had repeatedly cautioned the state to prepare for the termination, and its lack of preparation did not justify  the extraordinary remedy of an injunction.

State officials asked the Kentucky Court of Appeals for an emergency order to compel Kentucky Spirit to stay on the job through August. On Monday, July 1, 2013, Chief Appeals Court Judge Glenn Acree denied the request for the same reasons. The state had ample time to prepare, and it should not need another two months to transition the MCO’s 124,000 members to one of the two remaining plans. Kentucky Spirit  ceased offering services to beneficiaries at 12:01 a.m. Saturday, July 6, 2013, although about 100 employees remain to help patients and providers with the transition.

Developments in Other States

Mississippi also moved to Medicaid managed care in 2012. In June 2013, Dr. Tim Alford, president of the Mississippi Academy of Family Physicians, met with Governor Phil Bryant  and testified before a state House committee. Dr. Alford called the managed care program “wildly unpopular” and stated that it was disruptive to the physician-patient relationship.

KanCare has been operational about six months now. So far, there have been few complaints. However, owners of small pharmacies say that the MCOs’ maximum allowable cost formula for some prescription drugs doesn’t cover their costs.

Now Alabama is beginning the latest adventure in Medicaid managed care contracting.