The Republican lawsuit targets reinsurance that helps insurance companies provide universal coverage without accounting for pre-existing conditions.
The state of Kansas has signed three contracts with companies to bring a managed-care overhaul to the $2.8 billionMedicaid program in January, Gov. Sam Brownback said Wednesday.
Brownback administration officials believe handing Medicaid to Amerigroup Kansas Inc., Sunflower State Health Plan and United Healthcare of the Midwest will produce better health outcomes and save the state money.
Subsidiaries of these out-of-state companies will offer competing plans so Medicaid participants have choices. The overhauled Medicaid program for the poor, disabled and elderly is referred to as KanCare.
"These new KanCare plans will provide our most vulnerable Kansans with superior service at a more sustainable price," said Lt. Gov. Jeff Colyer.
Colyer said shifting Medicaid recipients to a fixed-rate model would allow expansion of services, including preventative dental benefits for adults, as well as heart and lung transplants. Changes are expected to enable 380,000 Medicaid clients placed in provider networks to lead "happier, healthier lives," Colyer said.
The Brownback administration is seeking federal approval of contracts, rates and a Medicaid waiver tied to implementation of KanCare.
Imposition of KanCare was the source of controversy during the 2012 Legislature. Lawmakers urged Brownback to delay the transfer, and the governor reluctantly agreed to a one-year postponement for people with developmental disabilities.
Shannon Cotsoradis, president of Kansas Action for Children, said contractors would be challenged to deliver comprehensive, quality care to more than 230,000 Kansas children relying on Medicaid and the Children's Health Insurance Program.
"While cost savings may have been at the center of the selection process, without robust benefits for pregnant women and children, it is unlikely the selected contractors will achieve the improved health outcomes that have been promised," she said.
The Brownback administration estimated rates negotiated by the state and contractors would produce savings from KanCare of $1 billion over five years. In November, the administration asserted KanCare reform would culminate in $800 million in savings from 2013 to 2018.
"The current Medicaid program is financially unsustainable and provides fragmented services to our most vulnerable Kansans who deserve far better care," said Robert Moser, secretary of the Kansas Department of Health and Environment.
KanCare will cover medical, behavioral health and long-term care services for all Medicaid consumers beginning Jan. 1, 2013. Long- term services for people with developmental disabilities will be launched Jan. 1, 2014.
Kansas is continuing work to ensure smooth transition to the new Medicaid system through education campaigns and stakeholder work groups.
Sunflower State Health Plan is a subsidiary of Centene Corp., a St. Louis-based company that operates managed care Medicaid plans in a dozen other states. Sunflower State Health Plan was established to bid on KanCare.
Virginia-based Amerigroup also specializes in managing state and federal health care programs like Medicare and Medicaid. During the bidding process questions were raised about the bond ratings of Amerigroup and Centene, but representatives from both companies said they are in strong and stable financial footing.
In 2008, Amerigroup paid $225 million to settle a Medicaid fraud lawsuit in Illinois. The health insurer systematically avoided enrolling pregnant women and other high-risk patients in the managed care program in Illinois.
United Healthcare of Minnesota is one of the nation's largest health insurers and manages private and corporate plans, as well as government-based insurance. Its Midwest branch is based in St. Louis.
The two bidding companies that didn't receive a contract were Florida-based WellCare and Maryland-based Coventry Health Care. In April, WellCare paid $137 million to settle claims the company defrauded Medicaid programs in nine states.