Inside the ‘big deal’ battle for Georgia’s Medicaid contract

ATLANTA — An all-out battle for one of Georgia's most lucrative public contracts is underway as a group of insurers competes for the multibillion-dollar award from Gov. Brian Kemp's administration to manage health care for roughly 2 million state Medicaid patients.

The Department of Community Health earlier this month granted new contracts to four insurers who spent more than a year jostling for the business, and shut out two others — Amerigroup and Peach State Health Plan — that had long managed Medicaid care in Georgia.

The two powerful insurers are warning the management switch by DCH could spark chaos in the state's Medicaid system, with Peach State saying it would force more than 1 million needy Georgians to find different doctors and hospitals.

The successful bidders, meanwhile, say they'll implement a more streamlined system to provide health coverage to poor children and adults enrolled in the program, which also covers the disabled and elderly in nursing homes.

And others who struck out are casting doubt on the entire bidding process, pressuring state officials to start all over again. Georgia law allows unsuccessful bidders to protest the decisions to state agency heads and then lodge appeals in court.

Much is on the line. Georgia expects to spend about $4.5 billion on Medicaid and PeachCare, the program for uninsured kids, in the next year. The Medicaid program is administered jointly by federal and state governments, so the feds chip in billions of dollars more.

What's more, the state aims to transfer more than 200,000 Georgians who are elderly, blind and disabled to the managed care system. The overhaul began in mid-2026, during a midterm campaign cycle where health care could be front and center.

It's potentially the biggest shake-up of Georgia's Medicaid system since a 2006 overhaul under then-Gov. Sonny Perdue's administration moved about 600,000 Georgians into HMO plans after years of "unsustainable" double-digit increases in the program's costs.

The arrangement was designed to steer more Medicaid patients toward primary care doctors who can manage their treatments — and discourage Georgia recipients from relying on costly emergency room visits for medical services.

About a decade ago, Georgia moved its foster children to a Medicaid managed care system with the promise of improving access to services and care of high-needs kids while also saving taxpayer dollars.

The costs of all of Medicaid's programs have continued to grow, even as Georgia pushes to tighten Medicaid rolls that swelled during the pandemic. This year's state budget added hundreds of millions more in spending for the Medicaid program.

And the fight over the contracts also could echo in the ongoing political debate over Medicaid expansion, which Kemp has ruled out in 2025 as too costly and inflexible despite a growing push from some key Republicans to reevaluate his stance.

"This is absolutely a big deal. These could be the largest contracts in Georgia, and they have a huge effect on Georgia's children," said Roland Behm, an advocate and co-founder of the Georgia Mental Health Policy Partnership. "The stakes couldn't be higher."

A major overhaul

The bidding war began when the state's health agency in September 2023 sought new proposals to manage Georgia Families, which covers Georgia Medicaid and PeachCare recipients, and Georgia Families 360, which covers children, teens and young adults in foster care.

The state also served notice it plans to move about 200,000 older, blind and disabled people into managed care agreements under the new contracts.

Georgia now pays three insurance firms more than $4 billion a year to run the federal-state health programs. Peach State Health Plan manages care for roughly 45% of Georgia's Medicaid patients; Amerigroup covers 30%; and CareSource oversees about 25%.

Amerigroup also handles the smaller contract for Georgia Families 360, which covers health care for about 33,000 foster care children and young adults.

Ten companies bid for the contract in December 2023. Earlier this month, four were named successful bidders: CareSource, Humana Employers Health Plan of Georgia, Molina Health Care and United Health Care of Georgia.

United Health Care also won the foster care contract over CareSource and Molina. United would supplant Amerigroup, whose bid wasn't among the finalists.

State agencies often routinely put new contracts out to bid, but overhauls of this sort are rare. The potential upheaval led to a flood of formal protests from the losing bidders, some of whom fired off magazine-length complaints that picked apart the process and excoriated the winning bidders.

Several filed formal complaints asking the Department of Administrative Services, which oversees the process, to start over. The agency didn't immediately comment for this report, nor did the Department of Community Health.

In its 33-page filing, Aetna argued the changes are "manifestly not in the best interests of Georgia taxpayers or the Georgians who depend upon Medicaid benefits." Sentara Health Care said in its 40-page dispatch that the bidding process was "arbitrary and capricious."

Some of the most scathing pushback came from Peach State, who under parent company Centene has held a slice of the state's Medicaid contract since 2006. The insurer said in legal filings it now covers more than 700,000 Georgians.

Peach State said in a 48-page complaint this month that the state's procurement process was "mismanaged, rife with errors and reckless practices" and that ousting it from the Medicaid contract would "upend the way vulnerable Georgians receive their healthcare."

"Georgia has never experienced disruption of this magnitude," Peach State wrote in its complaint, which warned a change would force 1.17 million Georgia Medicaid recipients to change health care providers. Others could be left with gaps in their network coverage, it said.

"The Georgians who rely on these important programs for their healthcare, and the taxpayers who pay for these programs, deserve better," read the filing.

No status quo?

There is also blowback over sticking with the status quo. An Atlanta Journal-Constitution investigation found that Amerigroup denied or partially denied more than 6,500 requests for psychotherapy for children and teens covered by Medicaid between 2019 and mid-2022. Many of the requests were for kids in foster care.

And in 2022, Department of Human Services Commissioner Candice Broce urged state officials not to renew Amerigroup's foster care contract because of "generic coverage denials, coverage gaps, and lackluster data-sharing" issues.

The insurer wrote in its 42-page protest it was victim of a biased process and that Broce was "advancing a false narrative blaming Amerigroup for the agency's own failures." And in a statement, the company said it has "significant concerns" about the contracting decision.

"Transparency is critical to ensuring that the needs of Georgia's Medicaid beneficiaries are prioritized," Amerigroup said, "and our focus remains on supporting the families we serve throughout this process."

Meanwhile, a pressure campaign is mounting outside the Capitol. Renu Gupta is the office manager for one of the South Georgia's biggest psychiatric practices, with offices in Tifton and Valdosta that cover about two dozen counties.

She's among a group of health care providers who oppose the overhaul. Gupta said she has a long-standing relationship with CareSource and Peach State — and is uninterested in dealing with the unpredictability of new insurers.

"It's not easy to deal with insurance companies, and I'm worried it's going to be a terrible transition," said Gupta. "It's not fair for the doctors or their practices. And, I'm telling you, these patients are going to suffer for it."