Louisiana yanks a Medicaid contract, pushing 330,000 people to other plans

Louisiana has halted a contract with United Healthcare to provide Medicaid coverage for roughly 333,000 people in Louisiana, less than a month before next year's agreement was set to take effect.

People on the United Healthcare plan will be redistributed to other plans, the Louisiana Department of Health said.

"LDH will begin the transition process of moving your Medicaid members to other contracted Medicaid Managed Care Plans for a January 1, 2026 effective date," Medicaid Director Seth Gold wrote to United in a letter dated Dec. 2. "We expect United to continue to abide by all of the terms of its current contract with LDH through the expiration date. We also expect your full cooperation with transitioning your members to their new Medicaid Managed Care Plans."

Some state leaders said they were concerned the abrupt change could cause confusion or disruptions for the thousands of people who rely on that Medicaid health plan, like requiring them to find new doctors.

"The immediate impact is the chaos and confusion," said Sen. Gerald Boudreaux, D-Lafayette, a longtime member of the Senate health committee. He also sits on the budget oversight committee that approves the contracts.

The letter from the health department did not provide a reason for the decision, but Attorney General Liz Murrill said that it was a result of an ongoing legal battle with United Healthcare over a separate issue related to its management of pharmacy benefits for the state.

"This is very simple—I expect a company that makes millions of dollars off the state to comply with our laws to remain eligible for that contract," Murrill said Tuesday.

A United Healthcare spokesperson disputed Murrill's claims, but acknowledged it was losing the contract.

"We remain committed to working with the Louisiana Department of Health through this transition," the company's statement said. "We value the longstanding relationship with the State of Louisiana that has allowed us to provide access to high quality care and coverage to more than 300,000 Medicaid members."

Six companies provide health insurance to about 1.4 million people as part of Louisiana's Medicaid program.

The United Healthcare contract is the second largest. The plan served 333,246 plan members as of Nov. 1, and the contract for the upcoming 2026 calendar year was projected to be worth about $4.2 billion, according to the health department.

Three-year contracts for all six companies end on Dec. 31. A few weeks ago on Nov. 20, state health department officials asked lawmakers to approve a one-year extension for 2026 — including for United Healthcare.

"This is the fourth year of an expected five-year contract," Health Secretary Bruce Greenstein said during a hearing on the request.

Greenstein at the time told lawmakers that state health officials felt "very good" and had undergone a kind of reset with "our plans and their leadership to have a true partnership."

There was no mention that any of the contracts would not be extended, and Tuesday's news surprised many lawmakers.

"We had no idea there was any problems with renewals," said Boudreaux.

The contract change was first reported by the Louisiana Illuminator.

The health department earlier this month was also prepared to end its Medicaid contract with Aetna, which is owned by health giant CVS. In a nearly identical Dec. 2 letter, Gold informed the company it would not be renewing its Medicaid contract expiring at the end of the year and would transition members to other health plans.

The Aetna plan covers 157,730 people, and its one-year agreement is worth about $1.9 billion, according to the health department.

But in a statement Tuesday, health officials announced they now plan to renew the agreement with Aetna.

Why did this happen?

On Dec. 2, Murrill sent a letter to the health department saying United Healthcare had failed to cooperate with the state's "pharmacy benefit management oversight." Pharmacy benefit managers negotiate drug prices between drugmakers and large institutions.

She said the state had asked United Healthcare to provide copies of its subcontracts with its pharmacy benefit manager, OptumRx. The company in 2022 only provided "partial and largely redacted materials," Murrill said, which prompted a lawsuit that year, which is ongoing.

"Because United has been out of contractual compliance since at least fall 2021, has failed to provide complete, unredacted access to necessary documents and data, and has not submitted a credible plan to cure these systemic deficiencies, it is the opinion of the Attorney General that United is not eligible for an extension or renewal," Murrill wrote to the Health Department earlier this month.

United Healthcare in a statement said it "has always maintained compliance with Louisiana law and our Medicaid contract and have been consistently responsive to the State's request for data records and documentation."

"We will continue to demonstrate our compliance with the state," the company said.

Murrill raised similar concerns with Aetna, which is part of the CVS family of companies that include a pharmacy benefits manager. The state has multiple active lawsuits against CVS over allegations that it distorted the drug market and drove up prescription drug costs.

But the attorney general said Monday that CVS was engaged in settlement talks with Louisiana.

In a statement Tuesday, CVS said, "We are operating business as usual in support of our members and provider relationships. We thank LDH for their collaboration."

How will this impact Medicaid participants?

Louisiana health officials on Tuesday did not respond to questions about how the impending end to United Healthcare's Medicaid contract will impact members who have health insurance through that plan.

However, state legislators raised that question.

"The timing of it couldn't be at a more inconvenient time," said Boudreaux, noting that the decision came with just weeks left in December. "Health care is complicated and people don't understand it, and when we have more variables to it, that further complicates it."

Boudreaux said there's a risk that someone who switches insurers will no longer be covered by the doctors and health care providers they are already seeing.

"That's reality — that there are gonna be some where they're not covered," he said.

State leaders need to make sure that Medicaid patients who have been on the United Healthcare plan will still be able to be seen by their doctors, he said.

Senate health committee chair state Sen. Patrick McMath, R-Covington, said he and insurance committee chairman state Sen. Kirk Talbot, R-River Ridge, are considering holding a joint hearing about "the termination of these contracts and the potential impacts."

"Politics aside, as a legislator and as chairman of the Senate Health and Welfare Committee, my foremost responsibility is protecting the health and safety of all Louisiana residents," McMath said.

"I want to assure those who may be affected, the legislature will work within its limited authority to prevent disruptions in access to health care services, and that ensuring continuity of care will remain our top priority," he said.

This story has been update to include more up-to-date figures for the number of people covered by the health care plans.