Kentucky Spirit still plans to leave state July 5; judge rules that state can’t require company to stay for two-month transition

In the latest development in the saga of the state Cabinet for Health and Family Services and Medicaid managed-care firm Kentucky Spirit, the company appears to be the victor, at least for now, because a Franklin circuit judge this week that the state can’t require it to keep serving Medicaid beneficiaries two months beyond its July 5 exit. Cabinet officials have appealed the decision, saying that if the company darts out of the state without a two-month transition plan, it will “jeopardize the health” of 125,000 people.

The state’s appeal aims to keep the company in Kentucky until August to grant the cabinet enough time to switch the 125,000 people covered by Kentucky Spirit to the other two managed-care firms. Cabinet officials say this transition time is vital, especially for a more vulnerable population, because transferring Medicaid recipients to Coventry Cares or WellCare will take time.

“A sudden cessation of services by Kentucky Spirit would jeopardize the health of its approximately 125,000 members, particularly those who require uninterrupted treatment or care which their new MCO would be unable to coordinate without advance notice,” said the emergency motion filed by the cabinet on Thursday, reports Ryan Alessi of cn|2’s “Pure Politics.”

Kentucky Spirit says the state has refused to work with it to ensure an “effective” transition, and it’s now the state’s responsibility to do so. Franklin Circuit Judge Thomas Wingate, who no longer has jurisdiction on the matter since Kentucky Spirit appealed, said the state has “been repeatedly cautioned by this Court to prepare for this contingency, and a lack of preparation at this junction does not warrant a grant of the extraordinary remedy of injunctive relief” requested by the state.

Regardless of what happens, Medicaid beneficiaries assigned to Kentucky Spirit shouldn’t worry because their coverage will be honored by providers, cabinet spokeswoman Jill Midkiff told Alessi. In an earlier report, Midkiff said providers may feel the blow of this disruption, but Medicaid beneficiaries won’t. “There won’t be disruption of services to members,” Midkiff told Loftus, “But there will be a disruption … confusion with providers and paperwork and who they bill.”

Kentucky Spirit, a subsidiary of St. Louis-based Centene Corp., announced in October 2012 that it was pulling out of Kentucky’s managed-care system because it was losing too much money covering the 125,000 Medicaid enrollees contracted to the company. Kentucky Spirit argues in its lawsuit that the state rushed to privatize Medicaid in 2011 and provided incorrect cost information to the bidders, causing the firm to lose about $120 million. It made the lowest bid, and on average, gets about $100 less per month for each patient than the other two managed-care companies in the state.