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Originally published Thursday, December 13, 2012 at 7:18 PM

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2 health plans sue state over allocation of Medicaid patients

The plans that have contracted with the state to administer managed-care health services to Medicaid enrollees say the state's formula will penalize them by assigning too many new patients to other plans.

Seattle Times health reporter

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Two health plans that have contracted with the state to administer managed-care health services to Medicaid enrollees have sued the state, saying its allocation formula will penalize them by assigning too many new patients to other plans.

In a lawsuit filed in Thurston County Superior Court, Molina and Community Health Plan of Washington (CHPW) contend that the state has breached its contract with them, penalizing the plans that have served the state's Medicaid patients for many years.

The two plans maintain that three new plans have been given an unfair advantage by a reworked formula the state wants to use to assign patients. The three plans newly contracted with the state, selected in January after a bidding process, include Amerigroup Washington, Coordinated Care Corp., and United Healthcare Community Plan.

William Stephens, senior counsel in the Office of the Washington Attorney General, said the state disagrees that it has changed a key provision in the contract. "The plaintiffs think the state is not complying with that provision, and the state thinks it is," Stephens said.

One of the three new plans, Coordinated Care, has filed a motion to intervene in the case.

Coordinated Care notes, as does Stephens, that the multiple contracts are intended to help the state meet its "impending obligations" to enroll many more adults newly qualified for Medicaid in 2014 under the federal Affordable Care Act.

In its motion, Coordinated Care said if Molina and CHPW get their way, the number of enrollees assigned to Coordinated Care will decrease.

Stephens said part of the state's intention is to "lay the groundwork for Medicaid expansion" and ensure that an adequate number of enrollees go to the new plans so they would be financially healthy enough to take a share of the new enrollees in 2014.

The current contract covers 2013. The state predicts that beginning in 2014, as many as 500,000 people will become newly eligible for Medicaid, with about half of them expected to sign up.

Currently, about 800,000 of the 1.2 million people on Medicaid in the state, most of them children, are in managed-care plans rather than fee-for-service arrangements. State officials expect that most new enrollees will get coverage through managed-care plans.

The motion filed by Molina and CHPW for a preliminary injunction and the motion by Coordinated Care to intervene are scheduled to be heard Friday.

Carol M. Ostrom: 206-464-2249 or costrom@seattletimes.com. On Twitter @costrom.

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