Health Care

Backed by three law firms, Amerigroup files formal protest of new KanCare contracts

When  he was lieutenant governor, Jeff Colyer (left) helped lead efforts by then-Gov. Sam Brownback’s administration to create KanCare in 2013. An insurance company that missed out on a new contract to administer KanCare is formally protesting the state's decision.
When he was lieutenant governor, Jeff Colyer (left) helped lead efforts by then-Gov. Sam Brownback’s administration to create KanCare in 2013. An insurance company that missed out on a new contract to administer KanCare is formally protesting the state's decision. Wire photo

An insurance company that Kansas officials denied for a new KanCare contract is formally protesting the contract awards and trying to hold up the next generation of the $3 billion-a-year privatized Medicaid program.

Amerigroup has been one of three KanCare companies since the program started in 2013. The company's lawyers say Amerigroup should have been allowed to revise its bid on the five-year contracts for "KanCare 2.0" after the Legislature changed the requirements outlined in the Kansas Department of Administration's request for proposals.

"The Department never obtained or evaluated proposals based on the actual requirements that will apply to the contracts," Amerigroup's lawyers wrote in the formal protest, "but is instead purporting to award contracts for one program based upon bids received for another, materially different program."

Jon Hamdorf, the state's Medicaid director, said the contracting process was fair and the Kansas Department of Health and Environment plans to go forward, starting Jan. 1, with the three companies chosen: KanCare incumbents Sunflower State Health Plan (a division of Centene) and UnitedHealthcare, and Amerigroup's replacement, Aetna.

“We appreciate the work of Amerigroup to serve Medicaid consumers since 2013," Hamdorf said in a statement. "All bidders were evaluated on the same criteria. We consistently conveyed the same to all parties throughout the process, which included in-person meetings, phone calls, etc.”

Amerigroup shows no sign of going quietly, though. The company has three law firms representing it as it contests the new contracts, and one of them has filed an open records request seeking a range of documents related to how the contracts were awarded.

The company's lawyers wrote that they expect that once the state fulfills the records request, "significant additional grounds for Amerigroup to protest will be revealed."

Amerigroup has asked that the state put on hold any implementation of the new contracts until its protest is reviewed.

Under state contracting rules, the Department of Administration will review Amerigroup's protest and decide whether it has merit.

John Milburn, the department's director of legislative and public affairs, said via email that process is usually done within 30 days.

If the department rules against Amerigroup, the company would then have 30 days to challenge that decision in court.

That timeline would nearly butt up against KanCare's open enrollment period, which begins in October.

If the new contracts stand, about 127,000 Kansans who receive Medicaid services through Amerigroup would have to choose a different insurer during open enrollment. Thousands of medical providers also would have to adjust to a new Medicaid company.

An Amerigroup spokeswoman provided supportive letters from three providers, including Wyandotte County case manager Connie Wright, who said she was "deeply saddened" by news that Amerigroup hadn't been selected for one of the new contracts.

"Amerigroup is the only one of our payers that calls me to ask how they can help with our patient population," Wright wrote. "Others send me lists with a 'due by' date on it for completion but no offer of help."

Amerigroup's formal protest relies largely on the winding, detour-filled nature of the road the state took to Kancare 2.0.

Former Gov. Sam Brownback had originally planned to start new multiyear KanCare contracts at the beginning of 2018, but changed course after the unexpected election of President Donald Trump. Trump promised states more flexibility in how they run their Medicaid programs, and Brownback and his KanCare point man, then-Lt. Gov. Jeff Colyer, wanted to wait to see what options might be available.

So they asked the federal government for permission to just extend the existing contracts by one year, through 2018.

The federal government initially rejected that request, citing a host of problems it found during an audit the previous October, when Barack Obama was president. The auditors said Kansas wasn't providing enough oversight of the KanCare companies and it was putting people in the state's Medicaid program at risk.

At the time, Colyer called it a politically motivated "parting shot" by the Obama administration. But the state submitted a plan to correct the problems, and the one-year extension was approved in October, just three months before KanCare was set to expire.

That paved the way for Brownback and Colyer to bid out new contracts this year, with parameters that included work requirements for Medicaid recipients and lifetime limits on their state-sponsored health coverage.

They also proposed placing independent case managers for Kansans with disabilities under the KanCare companies. But legislators objected to that change. Under pressure, Brownback said he had decided to stop KanCare 2.0 and instead just make budget-neutral improvements to the current program.

Amerigroup included the press release from that announcement as an exhibit in its formal protest.

But Brownback never actually withdrew the state's application to do KanCare 2.0, and a week later he left Kansas for a position in the Trump administration. KanCare 2.0 continued with Colyer as governor.

During the months that followed, legislators decided they didn't want work requirements. The Trump administration was approving them for some other states, but Kansas already had tight rules for Medicaid eligibility, and almost all of the 400,000 people on the program were disabled, pregnant, children or nursing home residents. They wouldn't have been subject to the work requirements anyway, and the cost of enforcing them for the small fraction who would be was unknown.

The Legislature included language in its annual budget preventing the state from spending any money on a KanCare program "substantially different" from the current one without legislative consent. Amerigroup added a copy of the budget as an exhibit in its protest as well.

In May, a Trump administration official took out the third leg of major proposed KanCare changes, rejecting the lifetime Medicaid limits as unnecessarily destructive to the social safety net.

Amerigroup's protest said the budget bill, especially, materially changes the KanCare contracts from what it and the other companies bid on.

"The KanCare program, as revised by the 2018 budget, is referred to hereafter as 'KanCare 1.x,' as it is clearly not the program sought by the KanCare 2.0 RFP, but it is also different from KanCare 1.0," the protest says.

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