Court OKs lawsuit against Hawaii Medicaid managed care

A Hawaii federal trial court in recent rulings gave the go-ahead to a lawsuit filed by a group of physicians and patients seeking to reverse the state's transfer of Medicaid patients who are elderly, blind or disabled into a managed care plan -- a move doctors say has undermined access to care.

Hawaii's Dept. of Human Services in February 2008 awarded three-year contracts worth $1.5 billion to subsidiaries of two of the nation's largest health plans, UnitedHealthcare and WellCare Health Plans. But the lawsuit contends that insurers in the Quest Expanded Access program do not have sufficient networks to guarantee uninterrupted access to care, as required by federal Medicaid laws.

"The program is totally flawed, and patients cannot find doctors," said pediatrician Arleen Jouxson-Meyers, MD, a plaintiff in the case. "When you go through the [network] lists, you find all these inaccuracies." For example, United's Evercare and WellCare's Ohana Health Plan continue to list doctors who have retired or opted out of the networks. Dr. Jouxson-Meyers, who chose not to participate in the new managed care program, said she has had difficulty finding participating physicians to whom she can refer her patients who are blind or disabled. Some of her patients are also plaintiffs in the case.

Dr. Jouxson-Meyers added that the state has allowed Evercare and Ohana Health to underpay physicians. "Even if doctors agree to participate, if you get a slew of patients, it would put you out of business."

Before a state can mandate transfer into a Medicaid managed care program, federal law requires authorities to ensure that patients receive the same level of benefits as those not in managed care, said Rafael G. del Castillo, the plaintiffs' attorney. "We are in this fight to make sure if they take away the freedom of choice of provider, that what they put in its place is better."

The U.S. District Court for the District of Hawaii in a series of rulings in May and July ruled that the patient and physician plaintiffs have the right to sue, and it rejected the state's request to dismiss the case. A preliminary hearing is scheduled for Oct. 19.

Meanwhile, a panel of the 9th U.S. Circuit Court of Appeals went the other way in a separate case when it turned down a bid by a nonprofit health plan to overturn the Medicaid contracts. AlohaCare alleged that it was illegally shut out of the bidding process, and it also contended that Evercare and Ohana Health did not have adequate networks in place. But the 9th Circuit panel on July 14 ruled that AlohaCare did not have standing to sue. AlohaCare attorney Ed Kemper said the insurer does not have plans to appeal and will await the outcome of the physician-patient case.

The 9th Circuit also will decide a third, similar case brought last June by the Hawaii Coalition for Health, a physician-patient advocacy organization. A federal trial court in September 2008 found that the coalition's lawsuit was premature.

The Hawaii Medical Assn., while not involved in any of the lawsuits, has expressed some concerns to the state about the network shortages. "This just exacerbated existing problems of access, and the increasing administrative burdens, coupled with recent [Medicaid] rate reductions, is going to be a problem for physicians to take on new Medicaid patients," HMA spokesman April Troutman said.

The managed care program for the elderly, blind and disabled has experienced delays. The state pushed the original Nov. 1, 2008, launch date to Feb. 1, 2009, and extended the transition period through July 31.

But Patricia M. Bazin, Dept. of Human Services health care services branch administrator, said the state made the adjustments because the change was so comprehensive. She rejected any notion that the extensions were sparked by the litigation.

Bazin said the insurer networks passed a rigorous evaluation during the bidding process. The state also put in place a number of safeguards to ensure continuity of care. For example, patients can keep their current doctor until they find one contracted in the new managed care program. Patients with a limited choice in certain areas may go out of network.

Washington, D.C., attorney Charles A. Miller, who represents the state, pointed to an Aug. 20 district court ruling denying the plaintiffs' request for an emergency order to halt the program. The court found no immediate threat to patients' access to care.

Evercare spokesman Jon Stone said the insurer continues to expand its network and implement efforts to make sure patients get appropriate and timely care. The health plan joined the lawsuit as a defendant.

Ohana Health also joined the case. The insurer did not respond to repeated requests for comment. In prior statements announcing its Medicaid launch, the company said it was developing a broad network and a team of patient scheduling coordinators.