By Dave Ranney
KHI News Service
Monday, Nov. 20, 2006
TOPEKA The recent certification of
UniCare Health Plan of Kansas Inc.
to do business in the state has reduced concerns that thousands of poor children and pregnant women will be left without health care. But a legal battle over UniCare”s contracts is far from over.
A lawsuit filed by
FirstGuard Health Plan of Kansas
which recently lost its contracts to operate managed care programs for the state
continues to make some state policymakers nervous.
“I don’t want us, come Jan. 1, to find ourselves with another Medicare Part D on our hands,” said Senate President Steve Morris, R-Hugoton. “By that, I mean a situation where there’s a lot of confusion and answers are pretty hard to come by.”
FirstGuard officials have vowed to push forward with their appeal of a Division of Purchases decision to award the state”s HealthWave management contracts to UniCare and
Children”s Mercy Family Health Partners
.
The contracts, which take effect Jan. 1, are worth more than $250 million.
Until the appeal is resolved, state officials have no way to know whether the new contracts will be overturned.
“If there needs to be a Plan B, we have a number of contingency plans for the board to consider,” said Marci Nielsen, executive director of the
Kansas Health Policy Authority
, which has among its responsibilities the administration of the Medicaid and HealthWave programs. “But we remain very optimistic there will be no need to implement anything other than what”s in the contracts.”
FirstGuard”s announcement that it would continue its legal challenge came on the heels of a Shawnee County District Court judge”s dismissal of the company”s lawsuit against the Kansas Health Policy Authority. In that suit, FirstGuard sought to keep the new contracts from taking effect.
“While we are disappointed by the District Court action, this was only one of two pending petitions,” Michael F. Neidorff, chairman and chief executive officer at Centene Corp., said in a press release. “We are continuing to move forward with the second petition.”
FirstGuard is owned by Centene, a St. Louis-based company with health plan operations in Kansas, Missouri, Georgia, Indiana, New Jersey, Ohio, Texas and Wisconsin.
In its “second petition,” filed in Shawnee County District Court, FirstGuard is accusing the Division of Purchases of skewing deliberations in favor of its competitors.
“We”re not walking away,” said Joy Wheeler, senior vice president for health plan development at Centene.
FirstGuard
began administering the State Children’s Health Insurance program in 1999. That program later was merged into the HealthWave programs, which also draw on Medicaid funding to underwrite health care for 160,000 pregant women and children
living in low- and modest-income households.
In Kansas, most children and pregnant women living in households at or below 150 percent of the federal poverty guideline are eligible for Medicaid. Those between 151 percent and 200 percent of the poverty guideline may sign up for the State Children”s Health Insurance Program (SCHIP).
Combined, SCHIP and Medicaid services for children are known as HealthWave.
In its appeal, FirstGuard is asking the court to reopen the bid-letting process.
Shawnee District Court Judge David Bruns has scheduled oral arguments for the case at 9:30 a.m., Dec. 4.
The Division of Purchases has denied any wrongdoing. UniCare Health Plan of Kansas Inc. and Children”s Mercy Family Health Partners, say they won the contracts fair and square.
Building provider networks
Over the next few weeks, UniCare and Children”s Mercy will compete for roughly 145,000 HealthWave patients in the
eastern two-thirds of the state
.
UniCare will be the sole managed-care contractor for 15,000 patients in 31 counties in western Kansas.
At the time the contracts were approved, Children”s Mercy already was licensed to do business in Kansas but UniCare wasn”t. Initially, Insurance Commissioner Sandy Praeger warned that she wasn”t going to be rushed into licensing UniCare. But a few weeks later she issued a license.
“My agency has been diligent in overseeing the network development and is now satisfied that UniCare”s efforts in this regard can adequately service Kansas beneficiaries,” Praeger said, though declining to disclose how many doctors and hospitals had signed with the company.
“I”m afraid that”s proprietary information,” said Chad J. Westover, a vice president for UniCare”s parent company, Wellpoint.
Seizing on the lack of transparency, FirstGuard”s Wheeler questioned Praeger”s decision.
“They may have a network,” Wheeler said of UniCare. “Whether it”s adequate remains to be seen.”
UniCare and FirstGuard are for-profit companies, Children”s Mercy is a nonprofit subsidiary of Children”s Mercy Hospitals and Clinics.
Bid factor in contract decision
Though FirstGuard has objected to how the contracting process was handled, records show the company”s bid topped UniCare”s by $15.6 million annually.
Wheeler defended FirstGuard”s bid, saying it was based on true, historical costs. And she openly questioned whether UniCare and Children”s Mercy would be able to run HealthWave at the rates they have bid.
“I expect they”ll come back at some point and say “We need more funding,”” she predicted. “The state”s gain is going to be very short term, which should be a major budget concern.”
Wheeler also said Children”s Mercy and UniCare are likely to offset their low bids by cutting rates paid to doctors and hospitals.
“That”s where carriers usually look for relief,” she said.
UniCare and Children”s Mercy executives rebutted Wheeler”s assertions.
“We received the historical data as well,” said UniCare”s Westover. “We put it through our actuarial review, and we are comfortable there are efficiencies we can gain.”
The company, he said, has no intention to cut rates paid to providers. “We are going to pay market rates and what we know is a fair price for providers,” Westover said. “We are not going to save our money on physician rates. We’re going to save our money on appropriately shifting care into preventive settings.”
Children”s Mercy spokeswoman Taira Green defended the nonprofit corporation”s bid.
“We did not bid on this as a “loss leader,”” Green said. “We can”t do that, we”re a nonprofit. As for shifting costs onto providers, all I can say is in the past 10 years we”ve never been accused of undercutting providers or of being anything but provider friendly.”
She added, “We think our bid was fair.”
FirstGuard performance questioned
Records also show the Kansas Health Policy Authority and its predecessor, the Division of Health Policy and Finance, had questioned FirstGuard”s performance.
In an
Aug. 22 letter
to the Division of Finance, KHPA Deputy Director Andrew Allison cited a 2005
performance review
in which FirstGuard was cited for “. . . problems with ID cards, claims payment, Federally Qualified Health Center reporting issues, network updates, encounter data, Quality Reports, and Advanced Directives in Medical Records as well as other, occasionally recurring problems.”
The performance review also cited FirstGuard for not sharing its “annual quality evaluation” with the Division of Health Policy and Finance, making it difficult to identify and resolve inefficiencies within the system.
The Division of Health Policy and Finance, too, was cited for not insisting that FirstGuard share the evaluation data.
Wheeler attributed the shortcomings to FirstGuard”s switching computer systems after its 2005 sale to Centene.
“Our systems conversion did cause some problems
as does any systems conversion,” she said.
Wheeler said the problems had been corrected and were no longer an issue.
But in his letter, Allison wrote, “In their proposal, Centene/FirstGuard indicated they have been providing services, almost problem free, under the current contract. Recently, the State noticed some improvement, however, this improvement has not been sustained.”
Allison noted that FirstGuard, had been operating under a Corrective Action Plan for “approximately a year.”
Many of the issues addressed in the action plan remained unresolved, he wrote.
Wheeler disagreed, insisting the issues had, in fact, been addressed.
“They”ve put us on a watch list, which is what they do after corrections have been made,” she said.
Contact Dave Ranney at
dranney@khi.org
or (785) 233-5443.
Photo credit: Getty Images