An insurance provider will continue to pay for members to be treated at Appalachian Regional Healthcare hospitals through June 30 while the two parties continue to negotiate for long-term coverage.
The agreement between ARH and Coventry Cares was reached Friday after an almost two-hour hearing in U.S. District Court in Lexington.
"The important thing is that ARH patients are going to be taken care of and people have access to care," Steve Price, an attorney for ARH, said after the hearing.
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 effort to save money, but there have been complaints all around.
Coventry officials said the state allowed another managed-care provider not to include ARH in its network, which meant a lot of higher-risk, higher-cost patients ended up covered by Coventry.
Blaming the state, Coventry had notified ARH that it was going to terminate its contract Friday. About 25,000 Medicaid recipients in the ARH service area would have been affected.
In April, ARH filed a lawsuit in U.S. District Court against Coventry. When ARH asked for an injunction to stop the termination, a federal judge ordered them to negotiate.
After Friday's hearing, representatives of the managed care company, ARH and the state Cabinet for Health and Family Services all said the goal was for patients to continue receiving care through Appalachian Regional Healthcare's hospitals in Eastern Kentucky on a long-term basis.
"Our preference is long-term participation," Stephen G. Amato, an attorney representing Coventry, said after the hearing.
Said Eric Friedlander, deputy secretary of the Cabinet for Health and Family Services: "Our first goal is to make sure that folks have access (to services), and we encourage as broad of a provider network as possible, and that includes ARH."
If the health care chain and Coventry reach an impasse, cabinet officials said procedures could be expedited with Coventry's cooperation. That would allow Coventry members to switch to another insurance provider and continue receiving services at ARH, considered the largest health care chain in Eastern Kentucky. ARH operates eight hospitals and other programs such as clinics and home-health agencies in the region.
Friday's hearing was held before Senior U.S. Judge Karl S. Forester.
Forester said he hoped ARH and Coventry could reach agreement. However, if they could not, he said patients in Eastern Kentucky covered by Coventry should be assured of having ample time to switch to other insurance providers without their health care being interrupted.
The hearing originally was scheduled to hear a request by ARH for an injunction to require Coventry to keep paying for its members to be treated at ARH facilities. In light of Friday's agreement, Forester postponed the hearing on the injunction so negotiations could continue.
In court Friday, Lisa English Hinkle, an attorney for Coventry, said the disagreement was about money.
She said Coventry's costs of providing services to patients in Eastern Kentucky are running much higher than projected. The company pays out $1.20 for every dollar it receives under its contract with the state, Hinkle said, asserting that the situation was "not sustainable."
She said there are two main reasons for the problem: Many Eastern Kentucky patients are "high risk," and therefore require more expensive care. Also a data book provided by the state, which Coventry relied on in signing its contract, contained numbers that were inaccurate, she argued.
But Christina Heavrin, general counsel for the Cabinet for Health and Family Services, countered that state actuaries had certified the information in the data book.
The exchange prompted an observation from Forester, who said Coventry ultimately might have to go to Gov. Steve Beshear or the state legislature for resolution because the cabinet appeared to be saying the company would have to live with the contract it signed.
Coventry officials have said the state failed to implement a method to assess risks that would adequately compensate managed-care organizations who have more high-risk patients. Cabinet representatives said Friday they were willing to discuss that issue with Coventry.
Health care providers have complained about long delays for payments from the managed-care companies and cumbersome preapproval processes for treatments
ARH also has sued another managed-care organization, Kentucky Spirit, in Franklin Circuit Court. It contends the company and Coventry together owed more than $18 million for services ARH had provided to their Medicaid members.
Valarie Honeycutt Spears (859) 231-3409. Twitter: @vhspears. Jim Warren: (859) 231-3255