Health and Family Services Cabinet
Kentucky Spirit Announces its Intent to Cancel Medicaid Managed Care Contract One Year Early
State will ensure members receive quality and continuity of health care coverage
FRANKFORT, Ky. (Oct. 17, 2012) – The Cabinet for Health and Family Services today acknowledged Kentucky Spirit Health Plan’s announcement that it will abandon its obligation to the Commonwealth and the approximately 125,000 Medicaid recipients it serves in 104 Kentucky counties in July 2013, one year before the contract expires. Kentucky Spirit is one of three managed care organizations (MCOs) that signed three-year contracts with the state in 2011 to provide Medicaid managed care. The contracts expire July 5, 2014.
Kentuckians enrolled in Kentucky Spirit coverage will continue to receive health care with no interruptions, and the Cabinet will ensure a smooth transition for those patients to another managed care organization in the coming months.
“Our top priority remains the continued health care of Medicaid patients, and we will make sure those patients experience no disruption in health services,” said Governor Steve Beshear. “However, we are disappointed in Kentucky Spirit’s decision to break its contract. We have worked with the company to address its questions since Kentucky Spirit agreed on the contract terms last year. We will continue to work within the contract process to make sure members are provided healthcare services and providers get the payments they are due. We will hold this company accountable to its contractual commitments through whatever means necessary on behalf of both the members and taxpayers.”
Kentucky Spirit offered the lowest bid in response to the Requests for Proposal that were issued in early 2011, but now cites lost profits as the motivating factor in the company’s decision to leave.
Kentucky Spirit’s parent company, Centene, is a St. Louis-based, NYSE publicly traded company with an estimated $6.6 billion in gross revenues and more than 5,300 employees. Centene currently offers Medicaid managed care services in 19 states including Wisconsin, where it has offered core Medicaid and specialty services since 1984. Centene has operated similar programs in several other states dating back to the 1990s.
Kentucky Spirit serves approximately 25 percent of the more than 550,000 Kentucky citizens who are enrolled in Medicaid managed care outside of Jefferson and 15 surrounding counties that comprise Region 3. The remaining Medicaid managed care membership is now almost equally divided between Wellcare and Coventry.
“Clearly, with this level of experience with Medicaid managed care, the Commonwealth expected that Centene and its state-based subsidiary Kentucky Spirit had a sound and tested business strategy,” said CHFS Secretary Audrey Tayse Haynes. “I am deeply frustrated that this publicly traded, Fortune 500 company has chosen to put profits above people and will not honor the terms of its contract. The managed care model is working in many states and is working here in Kentucky. The recent RFP process in Region 3 demonstrated that the managed care market in Kentucky is healthy and viable.”
Secretary Haynes said the Department for Medicaid Services will work with members to ensure they experience a smooth transition with no interruption in services.
“I’d like to echo the Governor’s statement that the Commonwealth’s number one priority is to provide quality patient care to Kentucky’s Medicaid recipients,” said Secretary Haynes. “We will continue to hold Kentucky Spirit accountable and in compliance so that providers are paid and members continue to be covered.”
The Cabinet for Health and Family Services is home to most of the state's human services and health care programs, including Medicaid, the Department for Community Based Services and the Department for Public Health. CHFS is one of the largest agencies in state government, with nearly 8,000 full and part-time employees throughout the Commonwealth focused on improving the lives and health of Kentuckians.