Daily Independent (Ashland, KY)

Local News

December 28, 2012

KDMC seeks permission to join suit

ARH first filed against Coventry Health and Life Insurance in April

ASHLAND — King’s Daughters Medical Center is seeking a federal judge’s permission to join in a lawsuit against one of the state’s managed care Medicaid providers.

KDMC and its affiliates last week filed a motion in U.S. District Court in Lexington to intervene as a plaintiff in the suit, which was filed in April against Coventry Health and Life Insurance by Appalachian Regional Healthcare Inc.

The suit also names the state Cabinet for Health and Family Services and its secretary, Audrey Hayes, as defendants. According to KDMC, Appalachian Regional Healthcare — which operates a network of eight hospitals in Kentucky and two others in West Virginia — filed the suit after Coventry tried to terminate its contract to provide health care services to patients in Coventry’s Medicaid managed-care plan.

In its motion to intervene, filed by attorney Allison Brown Vermilion of Lexington, KDMC maintains it is having many of the same problems that led ARH to file the suit in the first place.

“In Kentucky’s Medicaid managed care program, history has a way of repeating itself,” the motion reads. “Just months after abruptly cutting ARH, the predominant health care provider in southeast Kentucky, from its network in an effort to force its way into lower rates, limit member claims, and purge its rolls of costly, high-risk patients, Coventry Health and Life Insurance Company is at it again. This time, Coventry has purported to cut its ties with King’s Daughters, a group of non-profit entities that provide care to thousands of patients in northeastern Kentucky.”

The move “further weakens Coventry’s illegally anemic provider network in eastern Kentucky, threatens King’s Daughters’ business and further limits access to care for some of the most economically challenged and medically needy people in the commonwealth,” Vermilion wrote.

KDMC also alleges the Cabinet “has continued to look the other way” regarding Coventry’s practices and “consistently refused to enforce its own rules or contracts or honor the assurances it made to the federal government” when Kentucky implemented Medicaid managed care in November of last year as a cost-saving measure.

Because Coventry is now treating KDMC as an out-of-network provider, the hospital alleges it, like ARH, is being harmed by a “collusive agreement” between Coventry and the Cabinet that purports to allow Coventry to pay for out-of-network services at a rate that covers only a fraction of KDMC’s costs.

In a news release, KDMC said Coventry’s process of paying the hospital’s claims has resulted in “consistent underpayment of millions of dollars for services rendered.” The hospital also said it had attempted to resolve the issues with Coventry without litigation, “but no resolution is in sight.”

Additionally, KDMC said it believed Coventry was canceling provider contacts in eastern Kentucky to pursue profits in other, more lucrative areas of the state Beginning Jan. 1, Coventry has been awarded a contract by the state to provided managed care services to Region 3, which includes Louisville and the surrounding areas.

“We are concerned, however, that Coventry’s actions in canceling provider contracts here will leave much of the Medicaid population of eastern Kentucky without adequate access to necessary health care services,” the hospital said.

In an order entered in the lawsuit June 20, Judge Karl S. Forrester said Coventry was behaving “as though it wants to cherry-pick the healthiest of patients in order to improve its bottom line and push the sickest patients to another MCO (managed care organization.)” The order blocked Coventry from canceling the ARH contract until Coventry’s members had the opportunity to transfer to another MCO during the fall open-enrollment period.

Coventry told its members in September that it canceled its contract with KDMC, causing many  to switch to different MCOs during the open enrollment that ended Oct. 20, the hospital said.

Forrester also found that without the ARH hospitals, there was an “enormous geographic hole” in Coventry’s network. According to KDMC, the hole has now doubled in size with Coventry’s cancellation of its contract with the hospital. Twenty-four of the 33 counties that comprise Regions 7 and 8 in the Medicaid plan do not have a hospital affiliated with the Coventry network where obstetric services are available.

Coventry was one of three successful bidders to become authorized MCOs for Kentucky’s Medicaid recipients. The others were Wellcare and Kentucky Spirit. However, the MCOs claim they’re losing money because the rates paid to them by the states are not adequate to cover the cost of the care needed by Medicaid patients. Kentucky Spirit has already announced it’s pulling out of the program in July.

KENNETH HART can be reached at khart@dailyindependent.com or (606) 326-2654.

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