Humana takes Kentucky Medicaid contract fight to appeals court

A Humana Inc. subsidiary appealed a circuit judge’s order in a lawsuit that challenges whether the state inappropriately awarded its five big-dollar Medicaid contracts.

On Tuesday, Humana Health Plan Inc. sought emergency relief by taking the matter before the Kentucky Court of Appeals.

The filing challenges Franklin Circuit Court Judge Phillip Shepherd’s order, filed Oct. 23, demanding that the state give Anthem Kentucky Managed Care Plan Inc. a contract to provide Medicaid in Kentucky.

The Medicaid program pays Medicaid companies about $8 billion to cover enrollees.

The Beshear administration did not award Anthem one of the five Medicaid contracts in May following a request for proposals process, ending Anthem’s engagement in the Medicaid program. Anthem sued the state in September after exhausting administrative appeals.

Shepherd’s order would expand the number of Medicaid companies operating in the state to six, rather than the five the state was looking to contract with. In the past, Kentucky has used five Medicaid companies.

“The Franklin Circuit Court misapplied the law and exceeded its authority by ordering that a sixth [Medicaid company] participate in the Kentucky Medicaid program — essentially allowing any plan who responded to the RFP to participate in the program regardless of the state’s assessment of their ability to best serve the needs of Kentucky residents who get health care coverage under Medicaid,” Kate Marx, a spokeswoman for Humana, said in a statement.

Anthem declined to comment on the lawsuit.

Shepherd wrote that the court had to “balance the competing equities” presented in the lawsuit — ultimately finding that the most equitable outcome would be to have Anthem included as a Medicaid company when contract awards begin Jan. 1, 2021.

Shepherd’s order and Humana’s appeal come as the open-enrollment period where Medicaid recipients may select or change to another Medicaid company looms, starting Nov. 2.

Seeking prompt action

“The ruling will create substantial uncertainty, confusion and complexity for Medicaid recipients and health care providers, as well as for other [Medicaid companies],” Marx’s statement reads. “With only a few days remaining to notify potential enrollees of their choice of Medicaid options during the open enrollment period, Humana is seeking this emergency relief to vacate the Franklin Circuit Court decision.”

Humana’s filing asks the court for prompt action, citing the looming open-enrollment date and the need for the Kentucky Cabinet for Health and Family Services, or CHFS, to send out notices of Medicaid enrollees’ options for Medicaid companies.

Anthem argued in its appeals and in court that the state made mistakes in scoring the responses to the RFP and inappropriately overlooked apparent violations of the state Executive Branch Ethics Code and the state’s procurement laws by not disqualifying fellow bidder Molina Healthcare Inc. over its hiring of a former transition team official for Gov. Andy Beshear.

In the filing, Humana states that the appropriate decision would have been to send the RFP awards back to CHFS to consider eliminating Molina Healthcare from the bid process or to reevaluate the RFP responses.

Humana also argued that the court could have disqualified Long Beach, California-based Molina Healthcare and replaced Molina with Anthem or ordered the state to rebid the contracts.

“In no case, however, could CHFS have awarded six contracts under and RFP that was expressly limited to only five awards,” the filing states. “Simply put, the injunction exceeded the scope of the court’s authority, threatens to create confusion and chaos in the Medicaid program, and improperly weighed the legal and equitable considerations at play. That ruling must be set aside — immediately.”

At the beginning of his administration, Beshear ordered that the state redo an RFP process for the state’s five Medicaid contracts after outgoing Gov. Matt Bevin awarded the contracts after losing the election.

In 2019, the five Medicaid companies that currently hold contracts to provide Medicaid brought in over $7 billion in revenue, according to a review of state documents. The coronavirus has increased the number of Kentuckians who get health insurance coverage through the program to 1.58 million in October, an 18% increase compared to the same month in 2019.

The Beshear assessment team for the RFP gave Anthem and Molina fairly close scores. Anthem's administrative appeals, its lawsuit and the circuit court's order focused on Molina because of the closeness of the scores and the apparent scoring irregularities — in addition to Anthem's claims that Molina inappropriately retained Emily Parento, a former CHFS leader and former Beshear transition team leader over CHFS.

Here are the scores for the RFP responses:

Since the RFP process, Molina has purchased Passport Health Plan.