'Extremely disappointed': Driscoll considers legal action over state insurance contracts

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As the state doubles down on its plans to award Medicaid and Medicare contracts to a for-profit insurance provider in Texas, so too are legislators and local insurers in their efforts to stymie that progress and advocate for a plan they feel has better served low-income families in the Rio Grande Valley.

Driscoll Health Plan (DHP), which for some time has handled CHIP and STAR coverage for pregnant women, families and children in South Texas may be replaced by Aetna, a for-profit provider, raising concern with Valley legislators including state Sen. Juan "Chuy" Hinojosa.

Hinojosa and his fellow legislators — state Sens. Judith Zaffirini, Roland Gutierrez and Morgan La Mantia, as well as state Reps. Todd Hunter, Abel Herrero, Genie W. Morrison, Ryan Guillen, Oscar Longoria, Sergio Munoz Jr., Janie Lopez, Erin Gamez, Armando "Mando" Martinez, Terry Canales, R.D. "Bobby" Guerra, Richard Pena Raymond, J.M. Lozano, Eddie Morales and Tracy King — have written to Gov. Greg Abbott and the Texas Health and Human Services Commission (HHSC) asking to halt the state from finalizing the contracts.

Legislators are asking Gov. Abbott to advocate for the DHP which has served South Texas counties for about 26 years. But the state instead rejected an appeal to reconsider.

Now, if Aetna is awarded the contracts, it could jeopardize about 500 jobs with Driscoll and may cause the DHP to shut down entirely. Officials have also said there are 1.8 million people statewide, which make up 56% of STAR and CHIP recipients, who would be forced to change health plans.

Driscoll insures 180,000 children and expecting mothers in the South Texas area, including the Valley, and it has also been recognized by the state in the past for its care.

Aetna's network currently has more than 130 primary care providers, over 650 specialists, two hospitals and three urgent care centers in Cameron and Willacy counties.

But Matt Wolthoff — president of the newly opened Driscoll Children's Hospital Rio Grande Valley in Edinburg, a $105 million facility with eight floors — does not agree with the HHSC's decision to award the contracts to Aetna.

"We are extremely disappointed in Texas HHSC's decision to deny the appeal of the recent procurement process for Medicaid STAR and Children's Health Insurance Plans for 2025," Wolthoff said via text message Friday. "The State's total disregard for historical performance, community ties, and preference of members and providers in favor of large for-profit managed care organizations with little-to-no connections to our communities is alarming."

Hinojosa agrees and previously told The Monitor that replacing Driscoll with Aetna "would have a very damaging impact on South Texas." And in a recent visit at Driscoll in Edinburg, U.S. Sen. John Cornyn, R-Texas, told The Monitor he hoped the matter would be resolved so Driscoll could be considered for the contracts.

Wolthoff specified as many as tens of thousands of South Texas children could be impacted as well as hundreds of local jobs should the decision stand.

But it's not over yet, he stressed.

"We will continue to appeal this process, merely asking for the opportunity for Driscoll Health Plan to continue to provide South Texas Medicaid members with the service and access to care they have been accustomed to for many years," he added.

According to a Driscoll news release, similar sentiments were shared during a news conference at its hospital in Corpus Christi on Wednesday, where Craig Smith, chief executive officer for DHP, assured the public that the state's rejection does not mean an end to their efforts to save the health plan.

"I'm here to assure you, our friends and families at Driscoll, that we will fight until the very end to continue serving our members and our communities, because South Texas is our home," Smith said.

Should the state reject what is now Driscoll's second appeal attempt, they are "prepared to pursue legal action against the state," the release said.

The HHSC has faced criticism for giving Aetna an early look at all the bids last year, which although state officials have said isn't against the law, it is against state policy.

Insurers have since expressed concern that this offered an unfair advantage to Aetna, which saw the bids months in advance of contracts being awarded.

Dr. Mary Dale Peterson, executive vice president and chief operating officer of Driscoll Health System, further argued that the HHSC did not take the DHP's track record into account.

"The basis of our appeal is to illustrate that the procurement process conducted by the state was fundamentally flawed and we believe actually violated state statues … It did not take into consideration past performance, any historical results, didn't look at the 150 quality measures that we report on every year … it basically ignored two decades of investment," Dr. Peterson said.

"Perhaps the most disappointing aspect of this decision is the fact that members and physicians and other providers were never consulted."

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