Covering Frankfort

Oct 17, 2012 12:52 PM

Medicaid Provider To Terminate Contract With State

FRANKFORT (AP) - A Medicaid managed care provider will terminate its contract with the Kentucky Cabinet for Health and Family Services after only a year, a move that would cut some 200 jobs in Lexington.

Kentucky Spirit Health Plan, a subsidiary of St. Louis-based Centene Corp., announced Wednesday that it is exercising its right to end the contract effective July 5, 2013.

Kentucky Spirit said in a statement that it is committed to helping the 140,000 clients it serves transfer to one of Kentucky's three other Medicaid contractors. Gov. Steve Beshear said all of those clients would continue to receive medical services without interruptions.

Centene Chief Administrative Officer Carol Goldman said the company regrets the loss of the Kentucky jobs, which represent over $12 million a year in wages and benefits. The company will seek to transfer some employees to other locations.

"The company is working closely with its employees to provide them with the appropriate levels of support and resources during this transition," Goldman said.

Kentucky Spirit began operations in Kentucky last November. Since that time, "there have been concerns about the sustainability of the commonwealth's Medicaid managed care program," the company said in a statement Wednesday.

"The decision to terminate the contract comes after months of effort by Kentucky Spirit and the cabinet to resolve these concerns and only after it has become clear that there is not a viable path to a sustainable Medicaid managed care program in Kentucky," according to the statement.

Kentucky Spirit President Jean Rush said the organization has achieved a 17 percent decrease in medical and surgery costs to the Medicaid program and a 30 percent reduction in pharmacy costs over the past year.

Rush also said Kentucky Spirit cut Medicaid spending by 94 percent for people illegally going from doctor to doctor seeking narcotics.

"We are proud of the outcomes we have achieved in the short time under the contract," Rush said.

Rush also said Kentucky Spirit has increased wellness checkups for children by 30 percent and diabetes testing by 53 percent.

The Cabinet for Health and Family Services clearly wasn't happy with Kentucky Spirit's decision, charging that it will "abandon its obligation" to Medicaid recipients who are generally poor, disabled or elderly.

Beshear said in a statement that all clients will continue to receive health care with no disruption by being served by other Medicaid managed care providers.

"However, we are disappointed in Kentucky Spirit's decision to break its contract," Beshear said. "We will continue to work within the contract process to make sure members are provided health care services and providers get the payments they are due. We will hold this company accountable to its contractual commitments through whatever means necessary on behalf of both the members and taxpayers."

Kentucky Spirit offered the lowest bid for the Medicaid contract, but now cites lost profits as the motivating factor in the company's decision to leave.

Centene is a publicly traded company with an estimated $6.6 billion in gross revenues and more than 5,300 employees. It offers Medicaid managed care services in 19 states. Kentucky Spirit serves 25 percent of the state's 550,000 Medicaid recipients.

"Clearly, with this level of experience with Medicaid managed care, the commonwealth expected that Centene and its state-based subsidiary Kentucky Spirit had a sound and tested business strategy," said Health and Family Services Secretary Audrey Tayse Haynes. "I am deeply frustrated that this publicly traded, Fortune 500 company has chosen to put profits above people and will not honor the terms of its contract."

(Copyright 2012 The Associated Press. All rights reserved.)

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