Medicaid contract seen as jeopardizing care

The two firms that got the new deal do not currently have a major presence here

STORY SUMMARY »

The transfer of a $1.5 billion Medicaid contract to two for-profit mainland firms has riled a physician and patients' rights group, which yesterday rallied against the state and demanded it overturn the contract for 37,000 aged, blind and disabled Hawaii residents.

This comes on the heels of a federal lawsuit filed last week by the Hawaii Coalition for Health against the state for awarding a three-year contract earlier this year to an affiliate of UnitedHealth Group Inc. of Minneapolis, Minn., and Tampa, Fla.-based WellCare Health Plans Inc.

Both are publicly traded companies that do not have significant operations in the islands. The new contract goes into effect on Nov. 1.

---

FULL STORY »

A physician and patients rights coalition lashed out yesterday against the state for transferring a $1.5 billion Medicaid contract to two for-profit mainland firms, a move it fears could jeopardize the welfare of 37,000 aged, blind and disabled Hawaii recipients.

This comes on the heals of a federal lawsuit filed last week by the Hawaii Coalition for Health against the state to overturn a three-year contract awarded earlier this year to an affiliate of UnitedHealth Group Inc. of Minneapolis, Minn., and Tampa, Fla.-based WellCare Health Plans Inc., both publicly traded companies that do not have significant operations in the islands. The new contract goes into effect on Nov. 1.

The coalition fears that change of the current fee-for-service program to managed care would result in patients having to switch doctors and potentially lose services deemed unnecessary by the new health plan, thereby disrupting continuity of care.

"This gathering is the result of a perfect storm brewing," said Arleen Jouxson-Meyers, coalition president, at a press conference yesterday. She said few physicians, particularly specialists, would choose to participate in the Medicaid program if it takes a managed-care approach, which typically adds bureaucracy to the medical process by requiring pre-authorization from plan officials for referrals to specialists. In contrast, in fee-for-service programs doctors directly refer patients to specialists.

Waianae resident Lafonda Diamond, whose 2-year-old son Ethan has had three open-heart surgeries due to a severe heart condition, is concerned that a managed-care program could delay care from his half-dozen specialists.

"His heart is not going to wait for an approval," she said. "My concern is if I can't find another team like this fast enough what's going to happen to my son?"

Separately, AlohaCare Inc., a local nonprofit health plan that lost its bid for the contract, filed a suit in May against the state Department of Human Services, which administers the Medicaid program, and DHS Director Lillian Koller, claiming that the contract was illegally awarded to the managed-care plans because they did not have existing provider networks and proper state licensing at the time the contract was signed on Feb. 1.

Both complaints are seeking injunctive relief to prevent the state from transferring the contract to the managed-care companies.

DHS, which since 1994 has worked to design a new system to better treat patients, claims that both lawsuits are without merit.

"Our clients will receive treatment for the first time through a comprehensive and coordinated system that will improve their health outcomes," Koller said. "This is key to improving the well-being of our kupuna and disabled citizens."

About 2,800 doctors participate in the current fee-for-service program, according to the state Med-QUEST division, which has approximately 6,000 providers in its network, which includes doctors, hospitals, nursing homes, and home and community-based service providers.

Summerlin Life and Health Insurance Co. also bid on the Medicaid contract. Its chairman, Jim Dyer, declined to comment on the legal situation.

The coalition also is concerned about the recent legal troubles of both WellCare and UnitedHealth Group, both multibillion-dollar companies that in recent months have come under investigation. WellCare was raided by the FBI over issues related to alleged billing fraud, while affiliates of UnitedHealth Group were investigated by California state officials for improper claims and payment calculations.

"The coalition is interested in greater competition of health care in this state; our concern is we're turning over our most fragile population we have to entities not proven in our state," said Rafael Del Castillo, coalition attorney.