The threat by one of Kentucky's new Medicaid managed care organizations to drop Appalachian Regional Healthcare from its provider network sounds like more than a routine hitch in rolling out a new system.
Gov. Steve Beshear must make sure the wheels are not coming off the new system and, in the process, shredding the safety net for some of Kentucky's poorest and sickest people.
Beshear has a big stake in making this work. His administration rushed the Medicaid managed care contracts into place to stop the upward spiral in Medicaid costs.
He built his budget on assumed savings of $375 million over three years from moving 565,000 Medicaid recipients from the traditional state-run fee-for-service plan into plans managed by three private companies.
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One of the companies, Coventry Health Care, has said it plans to terminate its contract with ARH on May 4.
That means 25,000 Medicaid patients would have to change doctors, hospitals or home-health care in a region where there is an acute shortage of all kinds of health care.
Or they could seek permission to move to the one remaining managed care company that would have a contract with ARH.
ARH is the backbone of health care in Southeastern Kentucky, so it's hard to see how two of the three managed care companies could exclude ARH from their provider networks, but that would be the case if Coventry follows through on its plan to terminate ARH.
ARH has sued Coventry and Kentucky Spirit, another managed care company, in federal court over a variety of issues.
Coventry claims it is losing money because so many high-risk and very sick patients in Southeastern Kentucky have migrated to its plan. Coventry says the state is contractually obligated to pay it for taking on a disproportionate share of high-risk patients.
Coventry is a Maryland-based company that's traded on the New York Stock Exchange and operates various kinds of insurance plans all over the country. Coventry had access to all the data on Kentucky Medicaid when it bid for the business and signed a contract.
Beshear's new secretary of the Health and Family Services Cabinet, Audrey Tayse Haynes, who is responsible for overseeing Medicaid, will have been on the job for eight days Tuesday, too soon to expect her to have solved a knot of complex problems.
Rather than issuing ultimatums, Coventry should keep working with Haynes and ARH on solutions.
And Beshear, a former corporate lawyer, should bring the weight of the governor's office to bear and get busy making his Medicaid managed care contracts work.