KanCare contractors lose $52 million ; UnitedHealthcare, Sunflower, Amerigroup provide coverage to Kansas’ Medicaid system

The companies providing coverage to Kansas'Medicaid system lost millions last year, financial information shows, but cut down on their losses from the year before.

Records indicate Amerigroup, Sunflower Health Plan and UnitedHealthcare lost a combined $52 million in 2014 after losing about $116 million in 2013. A document with profits and losses for the three managed care organizations that operate under KanCare was provided to lawmakers and obtained by The Topeka Capital-Journal.

UnitedHealthcare, which brought in about $818 million in total revenues under KanCare, fared the best of the three companies, losing only $1.5 million last year. By comparison, Sunflower, with $1.03 billion in revenue, lost about $35 million.

Amerigroup, which had $900 million in revenue, lost $16 million.

The Legislative KanCare Oversight Committee received the figures Tuesday. Although the spreadsheet wasn't provided to audience members, Kansas Department of Health and Environment Division of Health Care Finance director Mike Randol summarized the information for lawmakers during a presentation.

Randol indicated the figures show the managed care organizations' losses in 2014 were only 46 percent of their losses in 2013. He said the information is taken from filings the companies are required to make with the Kansas Insurance Department.

Randol didn't offer much commentary on the figures, but under questioning from Rep. Jim Ward, D-Wichita, he said the total loss experienced by the managed care organizations in the past two years was about $170 million.

"So we're looking at almost $170 million in losses?" Ward asked.

"Correct," Randol responded.

Representatives of the managed care organizations did address lawmakers, but didn't raise the issue of their revenues, nor did legislators question them about it. Approached after the meeting, Tim Spilker, CEO of UnitedHealthcare Community Plan of Kansas, declined to predict whether the company would turn a profit in 2015.

"It's early, right, in 2015. It's kind of like your own personal budget -- you never plan to lose money. So we actually feel really good about the progress we're making in terms of clinical programs and member engagement," Spilker said.

Spilker indicated community health workers and other initiatives will be key to the company's profitability.

When the state created KanCare, it hired three companies with three-year contracts. Each company also has the option of two one- year extensions, for a total of five years.

KanCare's implementation was disruptive, Ward said, and represented a large shift in how services were delivered. A company pulling out of KanCare could turn a patient's life upside down, he said.

Ward said the losses mean the companies are subsidizing healthcare in Kansas to the tune of $170 million over the past two years.

"They're not altruistic. They're in this to make money. So at some point in time, do they make different business decisions?" Ward said.

Rep. Willie Dove, R-Bonner Springs, said it takes time for managed care companies to turn a profit. Dove said the companies anticipated losing money for the first three years.

"This is not unusual for managed care. In order to make things work, there is an expected loss of revenue because you're taking in individuals who in many cases have not had proper healthcare coverage, so there's an expected loss," Dove said.

But last year, officials from the managed care companies had suggested they might turn a profit by the end of 2014.

"We're a for-profit company," Michael McKinney, chief executive officer at Sunflower, said in May. "We're designed to make a profit. It just hasn't turned out that way. I told people before, it takes 18 months, normally, if you get started right."

He went on to say at that time mistakes by Sunflower could delay profitability by a few months.