Medicaid contracts rejected by legislative committee; members of another panel see secrecy and rush to award $8 billion in deals

On Gov. Matt Bevin’s last day in office, Kentucky lawmakers in one committee voted unanimously to reject his administration’s recent approval of $8 billion in Medicaid managed-care contracts covering 1 million Kentuckians. Later in the day, legislators on another committee asked the outgoing health secretary why the contracts were approved so quickly, and without legislative oversight.

On Dec. 9, the Government Contract Review Committee voted unanimously to reject the contract, saying the Bevin administration failed to give them the contracts in advance for review, Deborah Yetter reports for the Louisville Courier Journal.

The committee has only advisory power, but its vote could add weight to the promised appeals of Anthem Inc. and Passport Health Plan, which the Bevin administration dropped as managed-care organizations (MCOs) for Medicaid.

Sen. Stephen Meredith

Sen. Stephen Meredith, a member of the committee, told Yetter that the Bevin administration claimed the contracts were exempt from review by the committee, but the committee determined that they were not. The administration ended up sending the contracts to the committee for approval, but only after it had already awarded them to five MCOs.

“It’s like we’re being strong-armed into doing something,” said Meredith, a Republican from Leitchfield, later adding, “We should have seen these contracts before they were awarded. If we’re not seeing these contracts, I’m truly wondering about what else we’re not seeing.”

At a meeting of the Medicaid Oversight and Advisory Committee, which Meredith co-chairs, “Lawmakers demanded to know why the contracts were awarded in apparent haste and why lawmakers were not consulted about details that affect their communities,” Yetter reports.

“This looks like, from my perspective, this was a very rushed procedure with the intention of trying to limit any legislative input,” Meredith told Adam Meier, secretary of the Cabinet for Health and Family Services, which runs Medicaid.

“I’ve got some great concerns with the process,” said Senate Minority Leader Morgan McGarvey, D-Louisville. He asked Meier, “Why has there been such secrecy around this process, and why was there an $8 billion contract award issued after the election?”

Health Secretary Adam Meier at the Medicaid Oversight and Advisory Committee meeting

Meier defended the contract process, saying, “They’re not secret, they’re confidential.”

He said the contract bids were independently evaluated by a five-member committee that scored them for how well it met state specifications, adding that they have been working for months on the awards. “The idea that this was rushed is absurd,” Meier said.

The lawmakers also wanted to know why the administration chose contract with five companies (including two new ones) when federal regulations only require two.

Legislators have repeatedly said five companies are too many because they create administrative burdens for health-care providers that are not necessary or sustainable. They have suggested no more than three companies, and Meredith has filed bills calling for this change.

“This body has made it clear, abundantly clear, that we expect three,” said Sen. Danny Carroll, R-Paducah. “Why do we have five? Is there something I’m missing?”

Meier said the state chose five MCOs to create more competition. “I don’t see us trying to limit competition,” he said.

The administration announced the contract awards Nov. 27 to Aetna Better Health of Kentucky, Humana Health Plan and Wellcare Health Insurance of Kentucky, all of which hold existing contracts with the state, and two newcomers, United Healthcare and Molina Health Care. The contracts take effect on July 1.

Gov. Andy Beshear, who took office the next day, has promised to review the contracts. Meredith said he wouldn’t be surprised if the dispute ends up in court.