Suit aims to block Hawaii's plan to shift blind, elderly, disabled on Medicaid into managed care

Physicians say the health plans that won the contracts don't have adequate networks to guarantee access to care.

By Amy Lynn Sorrel — Posted July 21, 2008

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A Hawaii physician-and-patient advocacy group has sued the state to halt its plan to put 37,000 aged, blind and disabled Medicaid patients into a managed care program -- a plan that doctors say will threaten access to care for some of the state's most vulnerable people.

Hawaii's Dept. of Human Services in February awarded two contracts totaling $1.5 billion to subsidiaries of two of the nation's largest health plans: UnitedHealthcare and WellCare Health Plans Inc.

In a lawsuit filed in June, however, the Hawaii Coalition for Health alleges that when the three-year contracts were granted, the insurers did not have adequate networks set up to ensure that these patients have uninterrupted access to quality services. The situation violates state and federal Medicaid laws, the suit states. The coalition also claims the insurers were not properly registered in the state.

"These patients have very complex health care needs and are being put in a position where there are no assurances they would find suitable physicians to take care of them, or they would be forced to change [doctors] and break continuity in their care," said pediatrician and coalition President Arleen Jouxson-Meyers, MD. For example, even under the current fee-for-service Medicaid program, it takes multiple phone calls and specialists to coordinate care for her blind and autistic patients, Dr. Jouxson-Meyers said.

Federal regulations require a minimum of two entities to administer a Medicaid managed care program. But coalition attorney Rafael G. del Castillo said that's just a floor, and the state failed to show that the two networks would suffice. Meanwhile, since 1994 the state has run a managed care program for Medicaid patients who are not elderly, blind or disabled that includes at least three different plans, he said. United and WellCare do not participate in the existing Medicaid program. Federal Medicaid laws also prohibit states from requiring children younger than 19 with special needs to enroll in a managed care entity, del Castillo said.

The coalition is asking the court to void the contracts and order the state to develop a new, comprehensive plan before administering the Medicaid managed care program for the elderly, blind and disabled population. At press time in early July, a preliminary hearing in the U.S. District Court for the District of Hawaii was scheduled for July 21.

The coalition's lawsuit follows a similar complaint filed in May by AlohaCare, the state's third-largest health plan. In addition, the nonprofit insurer alleged that it was illegally shut out of the bidding process. AlohaCare has participated in the existing state-run Medicaid managed care program for more than 10 years.

A federal judge dismissed AlohaCare's lawsuit in June, saying the health plan did not have standing to sue on behalf of patients. AlohaCare plans to appeal the decision to the 9th U.S. Circuit Court of Appeals.

Medicaid program moving forward

Hawaii Dept. of Human Services Director Lillian B. Koller said both lawsuits lacked legal merit and that the Quest Expanded Access program for the elderly, blind and disabled is expected to launch in February 2009.

"The transition ... will be seamless with absolutely no breaks in coverage," she said. Patients will receive additional services, for example, for heart disease, obesity and diabetes. Minimum physician reimbursement rates also are expected to increase in July, Koller added.

Ohana Health Plan, the WellCare subsidiary, said in a statement that it is creating a comprehensive network of health care professionals as well as a team of coordinators to help patients schedule their multi-disciplinary care. Evercare, the United affiliate, also said it was developing a broad network, and noted that the company had offered Medicare Advantage plans in Hawaii for the past three years.

But physicians and at least one congressional lawmaker worry that the United and WellCare plans will not live up to their promises to help improve patient care and that doctors will be reluctant to sign on to their networks.

"There is so much downward pressure on cost that [managed care] is sweeping difficult cases and people that need health care the most under the rug," said Scott McCaffrey, MD, a member of the Hawaii Congress of Physicians, which participates in the Hawaii Coalition for Health. "If we have an outfit come in here that creates more paperwork and more difficulties and contentiousness, doctors have no alternative but to opt out," said Dr. McCaffrey, an occupational and emergency physician.

The Hawaii Medical Assn. has not taken a position on the deal and is not involved in the coalition's lawsuit.

In a May letter to the Centers for Medicare & Medicaid Services, Rep. Neil Abercrombie (D, Hawaii) echoed some of doctors' concerns. He pointed out an investigation into United's physician reimbursement practices by New York's attorney general.

WellCare also is under investigation in Florida for Medicaid billing fraud, the letter noted. United denies any wrongdoing, and WellCare said it is cooperating with federal and state authorities.

Abercrombie also questioned the legality of Hawaii health officials' decision to give the plans rebates on the state's tax on for-profit insurers as part of the contract awards.

CMS said the tax breaks were permissible and that the Medicaid managed care process must remain open and competitive to ensure access to available health care services and adequate networks.

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Case at a glance

Do Hawaii Medicaid managed care contracts ensure continued access to care?

A federal trial court will decide.

Impact: Physicians and patient advocates say patients will have a lapse in coverage because health officials awarded the contracts to health plans that do not have established networks ready to serve the state's aged, blind and disabled patients. The state says the plan will offer expanded health care services.

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