Court ruling clears Ohio to pen Medicaid contracts

Ohio is prepared to move forward with certain Medicaid contracts after a court ruled in the state's favor in a dispute over how the contracts were awarded.

Amerigroup, a company that claimed it was improperly denied a contract under what it said was a flawed process, had sued the state's Department of Job and Family Services alleging abuse of discretion in how the state scored applications.

The companies awarded contracts will provide health care services to more than 1.6 million poor and disabled people, more than two-thirds of Ohio's Medicaid population. The remaining Medicaid beneficiaries receive careunder a fee-for-service model, in which doctors are reimbursed for each service through provider agreements with Ohio Medicaid.

Virginia Beach, Va.-based Amerigroup was not among the top five scorers that were preliminarily awarded the state contracts in June. The insurer currently has a contract in Ohio's Medicaid managed-care program and has been providing services to the state's beneficiaries since 2005. It's expected to lose business with the state's switch to new plans.

In a 2-1 ruling, the Franklin County Court of Appeals on Friday affirmed a lower court's decision, saying Amerigroup failed to prove the state abused its discretion in awarding the contracts.

"Differences of interpretation, or even simple mistakes by ODJFS are not an abuse of discretion," the appellate court said.

The dissenting judge was Judith French, who was recently appointed to the Ohio Supreme Court.

An Amerigroup spokeswoman said Wednesday the insurer was disappointed with the decision and exploring its legal options. The company could still appeal the ruling to the state's highest court.

"Amerigroup will continue to coordinate the care needs for and provide quality services and support to our 61,000 members in Ohio," said Maureen McDonnell, the company's vice president of public affairs and communications.

Amerigroup's challenge had blocked state officials from signing agreements with the five health plans that were the highest scorers. Those insurers are: CareSource; Paramount Advantage; United HealthcareCommunity Plan of Ohio; Molina Healthcare of Ohio Inc.; and Buckeye Community Health Plan.

The contract awards to the five plans remain preliminary. The managed care organizations must first pass an assessment, in which they must prove to the state that they will be ready and able to provide services when enrollment begins in July.

The plans' reviews will start later this month, Ohio Medicaid Director John McCarthy said Wednesday. He said he expects the contracts to be signed at the end of March. Beneficiaries would start receiving notifications about the new plans in April.

McCarthy has said Friday's ruling made clear that Ohio's selection process was "fair, transparent, and objective throughout."