House Speaker Greg Stumbo on Thursday called for a close examination of the Medicaid insurance company that wants to terminate its contract with Appalachian Regional Healthcare, saying the insurance company's conduct "borders on Medicaid fraud."
Stumbo also criticized ARH, Eastern Kentucky's largest health care provider, for claiming that the contract termination would force it to cut 300 to 400 jobs through a combination of layoffs and reduced hours.
"From the facts that were presented, there appears to be nothing that would justify the extreme layoffs which have been threatened," Stumbo said in a statement Thursday, a day after he met with Cabinet for Health and Family Services Secretary Audrey Haynes about the dispute.
Stumbo said cabinet officials have spoken with Attorney General Jack Conway's office, which investigates Medicaid fraud and upholds the state's consumer protection laws, about the actions of Coventry Life and Health Insurance Co., which operates Coventry Cares.
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The company had planned to stop paying for most services at ARH facilities after Friday, but state officials ordered it Wednesday to continue paying for ARH services during the next 30 days.
ARH operates eight hospitals and other programs such as clinics and home-health agencies in the region. About 25,000 Medicaid recipients in Eastern and southeastern Kentucky are Coventry members.
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.
Stumbo said he was "extremely concerned" about the tactics possibly used by Coventry to attract Medicaid patients.
"I do not believe these actions were taken in good faith, and we should seek further evidence in this regard, to curtail this type of behavior," Stumbo said. "My opinion is this type of conduct borders on Medicaid fraud and could violate our consumer protection laws."
Although Stumbo did not mention Coventry by name in his statement, Brian Wilkerson, a spokesman for Stumbo, confirmed that Stumbo was referring to Coventry.
In particular, Stumbo wants an investigation to determine whether any managed-care companies offered promises of "no co-pay" to potential members, Wilkerson said.
He said Stumbo "suggests that any promises or inducements made to encourage patients to switch coverage to a particular MCO (managed-care organization) be examined in order to ensure compliance with laws regarding consumer protection and Medicaid services."
Coventry has complained about problems with its contract to manage 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.
Coventry spokesman Matthew Eyles responded to Stumbo by saying that "Coventry has the largest membership with the greatest number of health conditions and the highest use of services. We have proposed a simple fix — a fair and appropriate risk adjuster for MCOs who have taken on the sickest, most needy Medicaid members that begins at the start of the program, as called for under the contract. Since we began operating in Kentucky, there has never been the slightest hint of any inappropriate actions or behavior by Coventry. When early operational issues arose, Coventry was the most responsive and proactive of all the MCOs, and we continue to comply with all contractual, legal and regulatory requirements."
Allison Martin, a spokeswoman for Conway, confirmed that staff members from the attorney general's office had met with cabinet officials. She said further comment "would be inappropriate."
Cabinet spokeswoman Jill Midkiff referred questions to Conway's office.
ARH general counsel Rick King said company officials share Stumbo's concern "regarding potential layoffs at ARH facilities brought about by the failure of the cabinet and Coventry to settle their own contract issues over which we have no direct control."
"It is this ongoing dispute that precipitated the cancellation of ARH's provider agreement by Coventry, and the specter of layoffs due to this abrupt and unreasonable action," King said.
ARH has filed a lawsuit against Coventry, and a federal judge has ordered the insurance provider and the health care chain to negotiate. ARH spokeswoman Hollie Harris said Coventry and ARH negotiated all day Thursday.
Despite the negotiations, King said there would be a hearing Friday in U.S. District Court on ARH's motion for an injunction to stop the termination.
King said ARH officials hoped to meet with Stumbo.