AlohaCare Medicaid suit rejected
The health provider says it will appeal
A federal judge dismissed yesterday a lawsuit seeking to overturn a $1.5 billion Medicaid contract award to two for-profit mainland health plans.
AlohaCare Inc., which filed in May the complaint against the state Department of Human Services, which administers the Medicaid program for 37,000 aged, blind and disabled Hawaii recipients, said it will appeal U.S. District Judge Susan Mollway's decision on the case, which also names DHS Director Lillian Koller.
"Today's decision has nothing to do with the substance of our allegations, which were never considered and are still being pursued by other parties in the remaining case against the state," said Ed Kemper, AlohaCare's attorney.
AlohaCare sued the state last month after it was not selected for a new contract to provide care for the state's Medicaid recipients, claiming that the contracts were illegally awarded to managed-care plans that did not have existing provider networks and proper state licensing at the time the contracts were signed on Feb. 1. The local nonprofit health plan also claims the state created an illegal rebate of a 4.265 percent premium tax that for-profit health plans are required to pay under state law.
Hawaii Coalition for Health, a patients' rights group, filed last week a similar lawsuit in federal court to void the three-year contract awarded earlier this year to an affiliate of UnitedHealth Group Inc. of Minneapolis and Tampa, Fla.-based WellCare Health Plans Inc., both publicly-traded companies that do not have significant operations in the islands. U.S. District Judge J. Michael Seabright will hear arguments for a preliminary injunction next month.
The coalition's main concern is 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 jeopardizing continuity of care.
"There's no way we would be pursuing this if it didn't mean improved care for these vulnerable clients," Koller said.
State officials said that both companies are licensed to operate in Hawaii and that there is no requirement that a bidder have an established provider network prior to winning a government contract. In addition, both firms are required to pay state taxes, she said.
DHS has requested approval this week from the federal government to delay the start of the new managed-care program until Feb. 1 so that the mainland firms can establish an adequate provider network and seamless transition from the fee-for-service program. The new contracts were originally intended to take effect on Nov. 1.
