An insurance provider must continue to pay for members to be treated at Eastern Kentucky's largest health care network for 30 days, a state official said Wednesday, and a federal judge ordered negotiations between the two sides.
Coventry Life and Health Insurance Co., which operates Coventry Cares, had said it would stop paying for most services for members at Appalachian Regional Healthcare facilities after Friday. That would have made access to care more difficult for many people and caused layoffs at ARH, a large employer in the region, according to the hospital chain and local officials.
The termination would affect about 25,000 Medicaid recipients in Eastern and southeastern Kentucky who are Coventry members.
Neville Wise, acting commissioner of the state Department for Medicaid Services, notified Coventry by letter that it had to give members 30 days' notice that ARH no longer would be a health care provider for them.
During that time, Wise said, Coventry should continue to honor the contract with ARH.
"It is a requirement for Coventry to continue to cover those patients for 30 days," said Jill Midkiff, spokeswoman for the Cabinet for Health and Family Services. "They cannot discontinue coverage for them as of May 4."
Charity Kelly of Harlan County said the extension was wonderful news.
Kelly's 12-year-old daughter, Shealyn, takes three kinds of therapy weekly at the ARH hospital in Harlan to treat a genetic disorder, and Coventry pays part of the cost.
Kelly said she understood that if Coventry stopped paying for services at ARH, she would have to take Shealyn to Rockcastle County, a drive of more than two hours.
"It would be a huge burden on our family," she said.
There had been much consternation about Coventry dropping ARH as a provider because of the potential for people to have to go elsewhere for medical care and the likelihood that ARH would lay off hundreds of workers due to the resulting drop in revenue.
ARH operates eight hospitals and other programs such as clinics and home-health agencies in the region.
Coventry is one of three companies that provide managed-care services to poor, disabled and elderly people throughout most of the state under Medicaid. The state adopted that system last year in an attempt to save money.
The company has complained about problems with its contract to provide Medicaid services, including that it ended up with more higher-risk, costlier patients because the state didn't hold another managed-care provider to the same standards as Coventry.
The state recently decided to put an "artificial cap" on the adjustment for companies covering sicker members, Coventry spokesman Matthew Eyles said.
The company is continuing to meet its contractual obligations, he said.
Midkiff, the cabinet spokeswoman, said Coventry and other providers made informed decisions about rates during the competitive bidding process to provide Medicaid managed-care services in Kentucky.
Also Wednesday, a spokesman confirmed that Coventry planned to stop paying for services to members at King's Daughters Medical Center in Ashland after May 26. King's Daughters spokesman Tom Dearing said the hospital was reviewing how to respond.
"Coventry's obvious lack of commitment to the people of Eastern Kentucky, putting profits ahead of lives, will potentially leave thousands of Medicaid recipients without adequate health care options," Dearing said.
There were 29,000 visits at King's Daughters from Nov. 1 to March 31 by people covered by Coventry, Dearing said.
On another front in the dispute, a federal judge on Wednesday ordered ARH and Coventry to try to settle their differences.
U.S. Senior Judge Karl S. Forester directed ARH and Coventry to confer by noon Wednesday to begin settlement negotiations.
Forester also scheduled a hearing at 9:30 a.m. Friday on a request by ARH for an injunction to make Coventry keep paying for its members to be treated at ARH facilities.
ARH has argued that Coventry is using the hospital chain as a hostage in its fight to squeeze more Medicaid reimbursement money out of the state.
Coventry opposes an injunction, Eyles said.
In his order Wednesday, Forester also directed that copies of the documents filed in his court in the dispute be forwarded to Gov. Steve Beshear's office.
"I certainly think that the judge wants to be sure that the governor is aware of the situation," said Rick King, chief legal counsel for ARH.
Local officials and some state lawmakers have called on the governor to resolve the dispute.
Bill Estep: (606) 678-4655. Twitter: @billestep1. Valarie Honeycutt-Spears: (859) 231-3409. Twitter: @vhspears.