Court refuses to block Kentucky Spirit from ending Medicaid contract early

bmusgrave@herald-leader.comJuly 1, 2013 

FRANKFORT — Kentucky is preparing to move more than 125,000 Medicaid patients to a different Medicaid managed care provider after the Court of Appeals declined Monday to stop Kentucky Spirit from leaving the state on Friday.

State officials said late Monday that they won't appeal the Court of Appeals decision and are instead preparing for Kentucky Spirit, a subsidiary of Centene, to exit the state a year before its contract expires.

The company's early departure would breach its contract with the state, making it liable for damages, possibly in the millions of dollars, Franklin Circuit Court Judge Thomas Wingate has previously ruled. The company has appealed Wingate's ruling, but that appeal is pending.

Meanwhile, the cabinet had filed an emergency motion asking the Court of Appeals to make Kentucky Spirit continue operating through Aug. 31, but Chief Court of Appeals Judge Glenn E. Acree ruled Monday that the cabinet has had ample time to prepare for the company's departure from the Medicaid market.

A lower court had repeatedly warned the cabinet to begin to plan for Kentucky Spirit's departure on July 5 and the cabinet failed to do so, Acree said.

Kentucky Spirit told the state in October that it was going to end its contract on July 5, a year before it was set to expire. Kentucky Spirit said it was losing too much money in Kentucky.

The cabinet has said two other Medicaid managed care companies — Coventry and WellCare — will have to absorb Kentucky Spirit's 125,000 clients. Without a proper transition period, it could hurt the continuity of care for those patients and create chaos for doctors, hospitals and other health care providers, the cabinet argued.

"Our focus continues to be on facilitating as orderly a transition as possible for the approximately 125,000 members of Kentucky Spirit to either Coventry or Wellcare if Kentucky Spirit breaches its contract," cabinet spokeswoman Jill Midkiff said Monday.

Letters were sent Monday to Kentucky Spirit clients notifying them of the new managed care company they will be assigned, Midkiff said.

However, no clients will be moved unless Kentucky Spirit stops providing services and "officially defaults on its contract," Midkiff said.

In a statement released on its website, Kentucky Spirit said it was willing to stay in Kentucky until August. For that to happen, Centene's lawyers said in a letter to the state that officials would have to terminate Kentucky Spirit from the Medicaid program and then order it to stay for two months.

However, cabinet officials have said offering Kentucky Spirit a two-month extension would prohibit the state from pursuing damages for breach of contract. The amount the cabinet would forfeit could be in the millions of dollars, officials have said.

In November 2011, Kentucky moved more than 500,000 Medicaid patients to three managed care companies in an effort to curtail spiraling costs in the federal-state health care program for the poor, elderly and disabled.

Beth Musgrave: (502) 875-3793. Twitter: @BGPolitics. Blog: bluegrasspolitics.bloginky.com

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