A dispute involving six insurance companies over a share of Kentucky’s $15 billion a year Medicaid business moved to the state Supreme Court Thursday where justices tried to sort out a long running battle over the lucrative contracts.
Litigation has stretched on several years, largely over Anthem Kentucky’s claim it was unfairly shut out of the contract award to five other insurance companies to oversee health care for most of the 1.5 million Kentuckians enrolled in Medicaid.
In arguments before the justices, lawyers for successful bidders asked them to uphold a 2022 state Court of Appeals ruling that the state’s selection of the five companies in 2020, with Anthem excluded, was valid.
“The problem is that Anthem lost,” said lawyer Michael Abate, who represents Humana Health Plan, one of the five successful bidders. “It’s time for this case to end.”
Anthem has been allowed to retain a share of Medicaid business while the legal dispute is pending under a 2020 ruling from Franklin Circuit Court, adding it as a sixth company serving as a managed care organization, or MCO.
Wesley Duke, general counsel for the Cabinet for Health and Family Services, which administers Medicaid, agreed, saying the state had decided on a maximum of five MCOs.
“The 1.5 million members of Medicaid are best served by five MCOs,” he said. “The Court of Appeals decision should be affirmed.”
Duke said his cabinet and the Finance and Administration Cabinet, which oversees contract awards, handled the matter appropriately.
But Anthem disagreed, citing alleged irregularities in the bid evaluation process as well as its claim raised in earlier litigation that a member of Gov. Andy Beshear’s transition team for health services later became a consultant for successful bidder Molina HealthCare of Kentucky during the bidding process, creating a conflict of interest.
“This is important,” said lawyer James A. Washburn, representing Anthem. “It’s important to get it right.”
Washburn argued the justices should overturn the Appeals Court decision and send the case back to Franklin Circuit Judge Phillip Shepherd for further action.
Shepherd in 2021, citing flaws in the bidding process, ordered the Medicaid contracts thrown out and rebid. Meanwhile, he allowed Anthem to remain as a sixth contractor while the case was pending.
But before the state could rebid the contracts, Shepherd’s ruling was appealed by several companies involved in the case.
In addition to Anthem, Humana and Molina (which acquired Passport Health Plan, a previous MCO), Aetna Better Health of Kentucky, WellCare and UnitedHealthcare also serve as Medicaid MCOs.
The dispute dates to 2019, when the administration of former Gov. Matt Bevin, awarded the Medicaid contracts to five MCOs. The award came shortly before Bevin, a Republican, left office after losing to Democratic challenger Beshear.
Anthem, which was excluded, objected.
When he took office, Beshear directed his administration to review the contract award and ultimately, ordered a new round of bidding that resulted in contracts being awarded to the same five companies that won the first round.
Objections led to further litigation in the case that ended up before the Supreme Court Thursday.
Justices asked several questions, mainly focused on the mechanics of the contract awards and, also, how Medicaid managed care functions. Under managed care, most enrollees in the federal-state health plan, including about 600,000 children sign up with one of the six companies which oversee care and process claims.
The fact that six MCOs currently handle care for nearly 1.5 million Kentuckians has long irked some lawmakers, including Sen. Stephen Meredith, R-Leitchfield, a former hospital CEO who argue the number adds to complexity and cost for health providers.
Meredith’s Senate Bill 24 , which he has filed several years without success, would limit the state to contracting with no more than three outside companies to manage Medicaid.
At the end of the hour-long Supreme Court hearing, Chief Justice Laurence B. VanMeter thanked participants and said the court “will attempt to get an opinion as soon as possible.”