Court refuses to block Kentucky Spirit from ending Medicaid contract on Friday

July 01, 2013 | | Comments 0

By Beth Musgrave

FRANKFORT — The state is preparing to move more than 124,000 Medicaid patients to a different managed care provider after the Court of Appeals ruled Monday that it won’t stop Kentucky Spirit from leaving Kentucky on Friday.

State officials said late Monday that they won’t appeal the Court of Appeals decision to the state Supreme Court and are instead preparing for the Centene subsidiary to exit the state and possibly face millions of dollars in damages.

Chief Court of Appeals Judge Glenn E. Acree ruled Monday that the Cabinet for Health and Family Services had ample time to prepare for Kentucky Spirit’s departure from the Medicaid market and should not need an additional two months to transition Kentucky Spirit’s members to two other Medicaid managed care companies.

Acree wrote that the cabinet also could try to extend Kentucky Spirit’s contract if it wanted the company to remain in Kentucky through Aug. 31. A lower court had repeatedly warned the cabinet to begin to plan for Kentucky Spirit’s departure on July 5 and the cabinet failed to do so, Acree said.

Kentucky Spirit told the state in October that it was going to end its contract on July 5, a year before it was set to expire. Kentucky Spirit said it was losing too much money in Kentucky.

In May, Franklin Circuit Court Judge Thomas Wingate ruled that if Kentucky Spirit pulls out of the state on Friday it would be in breach of contract and liable for damages, possibly in the millions of dollars.
Kentucky Spirit appealed Wingate’s decision, but that appeal is still pending.

The cabinet, which oversees Medicaid, filed an emergency motion asking the court to order Kentucky Spirit to remain in Kentucky until at least Aug. 31.

The cabinet argued that Kentucky Spirit did not communicate its intentions to leave despite Wingate’s May 31 ruling until the cabinet took Kentucky Spirit back to court in the middle of June.

The cabinet has argued that the two other Medicaid managed care companies — Coventry and WellCare — would have to absorb Kentucky Spirit’s 124,000 clients. Without a proper transition period, it could hurt the continuity of care for those patients and create chaos for doctors, hospitals and other health care providers, the cabinet argued.

Regardless, the cabinet is preparing for the transfer of Medicaid patients from one managed care company to another, cabinet officials said Monday.

“At this time, the cabinet has no plans to appeal the ruling to the Supreme Court,” said Jill Midkiff, a spokeswoman for the cabinet. “Our focus continues to be on facilitating as orderly a transition as possible for the approximately 125,000 members of Kentucky Spirit to either Coventry or Wellcare if Kentucky Spirit breaches its contract.”

Letters were sent on Monday to Kentucky Spirit members to notify them of the new managed care company they are assigned to, Midkiff said. “The cabinet cannot move members from Kentucky Spirit to one of the other two (managed care companies) unless or until Kentucky Spirit officially defaults on its contract.”

Officials with Kentucky Spirit or its parent company Centene were not immediately available for comment. But in a statement it released on its Web site, Kentucky Spirit said it was willing to stay in Kentucky until August. In a letter to the state, Centene’s lawyers said under the contract the state would have to officially terminate Kentucky Spirit from the program and then order it to stay for two months.

However, cabinet officials have said that if the state terminates Kentucky Spirit and offers it a two-month extension, the state will not be able to go after Centene/Kentucky Spirit for breach of contract. The amount the cabinet would forfeit could be in the millions of dollars.

The letter from Kentucky Spirit also threatened that if the cabinet moves patients from Kentucky Spirit to another managed care company, it will be viewed as a termination of Kentucky Spirit’s contract. Lawyers from the cabinet later on Monday countered that the cabinet will not transfer any patients until Kentucky Spirit stops rendering services.

In November 2011, Kentucky moved more than 500,000 Medicaid patients to three managed care companies in an effort to curtail spiraling costs in the federal-state health care program for the poor, elderly and disabled.

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