The Pennsylvania Department of Human Services awarded a massive Medicaid bid Tuesday to AmeriHealth Caritas, Centene Corp. and UPMC after delaying the decision for several months.
The contracts are for Pennsylvania's new Community HealthChoices, a Medicaid program that covers managed long-term supports and services, or MLTSS. The 420,000 people in the program are dually eligible for Medicaid and Medicare and often are among the oldest, sickest and most vulnerable people.
Health insurers participating in Community HealthChoices will receive a lump-sum payment every month for each covered patient. That per-member per-month payment is expected to be about $1,400, meaning the taxpayer-funded program will spend nearly $7.2 billion annually, according to March estimates from consulting firm Health Management Associates. All of the contracts initially run through 2022 and have two option years after that.
The huge revenue potential prompted 14 companies to bid on the contracts. AmeriHealth, Centene and UPMC will manage Community HealthChoices, which is scheduled to start next July. It was supposed to start at the beginning of 2017 but was pushed back to educate consumers, hospitals and doctors. The contracts also were supposed to be announced in June.
“We made sure we took the time with the analysis,” Pennsylvania DHS Secretary Ted Dallas told Modern Healthcare Tuesday. “Getting in through the government process took a little longer than we hoped.”
The program will start in southwest Pennsylvania, including Pittsburgh, then move to southeast Pennsylvania by the start of 2018. Community HealthChoices will be live statewide starting in 2019. The three winning bidders, state actuaries and federal officials will now work to determine final payment rates, build provider networks and ensure the program is ready to go.
Centene has racked up several Medicaid contract wins over the past year, including some in Georgia and Indiana. The publicly traded company, which specializes in Medicaid and recently acquired Health Net, also won a lucrative Tricare contract to cover military families.
AmeriHealth, a for-profit joint venture between Independence Blue Cross and Blue Cross and Blue Shield of Michigan, was one of the winners of Iowa's large Medicaid contract, which went live but has run into several problems. For UPMC, the Community HealthChoices contract shows the not-for-profit giant continues its shift into being more of an insurance company than a provider system.
Aetna, Molina Healthcare and UnitedHealthcare were among the losing bidders. Sarah James, an analyst at Wedbush Securities, said in a research note she was “surprised to see United left out of the awardee list” because the for-profit company already has a Medicaid contract with Pennsylvania's broader Medicaid program. However, the state is currently receiving revised bids for traditional Medicaid after Aetna protested.
UnitedHealthcare sent a statement that did not say whether the insurer would appeal the state's decision, but it was “reviewing the state's response and evaluating our options.” Aetna said it was “disappointed,” but because it had limited information about the basis of the state's decision, it will “reserve further comment until more is known.” Molina did not immediately respond.
Critics have raised concerns with these types of privatized Medicaid programs. Some have argued health plans have motives to deny care to retain revenue, and there is little transparency. Medicaid officials, including those in Pennsylvania, say the programs offer the chance to coordinate care among patients, hospitals, doctors, nursing homes and other facilities. Dallas said Community HealthChoices is about giving vulnerable patients the opportunity to be cared for closer to their homes.
The Obama administration cemented new Medicaid managed-care rules earlier this year to clean up the programs, but the rules leave a lot of decision-making up to states.
