West Virginia Medicaid Program Agrees to Settlement That Plaintiffs Say Could Save $100 Million a Year

Nov 20, 2015, 10:42 ET from Jesse Forbes

CHARLESTON, W.Va., Nov. 20, 2015 /PRNewswire/ -- Several state agencies have agreed to the settlement of a lawsuit filed by five citizens who say it could save West Virginia's Medicaid program $100 million a year. The citizens sued the Department of Health and Human Resources (DHHR) and other agencies because the Medicaid program was not seeking bids for contracts with managed care companies.

"Because Medicaid was not bidding out these contracts, we were losing up to $100 million a year," one of the plaintiffs, Patricia Rucker of Harpers Ferry, said. "With this settlement, I think, taxpayers are going to be gaining because we're going to be saving money, it's going to be a more transparent system, and we're going to be a lot more efficient."

Under the settlement, DHHR has agreed to submit all Medicaid managed care contracts beginning with the fiscal year that will start next July to the state Division of Purchasing to be bid competitively.

"This is a clear victory for the citizens and taxpayers of West Virginia, and it will cause the state to engage in competitive bidding of these billion-dollar contracts and stop the hand-selecting of a few companies," plaintiffs' attorney Jesse Forbes said. "The legislature spoke very clearly in making these contracts subject to bidding requirements. This case was always about making DHHR follow the law, and this agreement does just that."

The settlement requires Medicaid managed care contracts not to exceed 48 months and have a medical loss ratio of at least 85 percent. That means the managed care companies must spend at least 85 percent of their Medicaid payments on services to recipients, leaving no more than 15 percent for the companies' profits and administrative costs. According to the settlement, any managed care company that fails to meet the 85 percent level would have to rebate the difference.

"It will help stop the wasteful spending that we've seen by requiring medical loss ratios that are higher than what the state had been getting on these no-bid, illegal contracts," Forbes said.

Analyses of the no-bid managed care Medicaid contracts for recent years have indicated that the companies awarded those contracts generally fell well short of the 85 percent level and tended to have some of the lowest medical loss ratios in the nation. Terms of the settlement require DHHR to issue a public summary each year comparing the past year's performance by each managed care company contracted with Medicaid. That summary must be issued no later than 90 days prior to entering new contracts.

In addition to DHHR, the state agencies involved in the settlement include DHHR's Bureau for Medical Services (which runs the Medicaid program), the Department of Administration and that department's Purchasing Division. In addition to Rucker, the plaintiffs include Terry Courtwright, John Lindberg, Michael Ashley and Gregory Mullins. Kanawha County Circuit Judge James Stucky accepted the settlement agreement.

Currently, West Virginia's Medicaid program has managed care contracts with four companies:

  • The Health Plan of the Upper Ohio Valley, which is based in St. Clairsville, Ohio:
  • Unicare, which is affiliated with Anthem Blue Cross-Blue Shield, based in Indiana;
  • CoventryCares, a subsidiary of Aetna, which is based in California; and
  • The Family Health Plan, a relatively new provider-sponsored plan affiliated with Highmark of West Virginia.

(The case is Civil Action No. 15-C-1192 in Kanawha County Circuit Court.)

SOURCE Jesse Forbes