Centene can't break Medicaid contract, court rules

hospital

Centene's subsidiary Kentucky Spirit can't leave the Kentucky Medicaid market early as it has threatened because it would be in breach of contract and subject to fines, a state court ruled Friday.

Kentucky Spirit said it would exit the state's Medicaid market in July, more than a year before the expiration of its three-year contract, which it alleged in court can be terminated early if it provides six months' notice, reported the Lexington Herald-Leader.

But Judge Thomas Wingate decided in his ruling the six-month notice only applies to the end of the three-year contract. If Kentucky Spirit was allowed to provide six months notice to terminate the contract, he argued, the state wouldn't have enough time to ensure the company's members received adequate coverage from another Medicaid manager care provider.

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"Judge Wingate's ruling reinforces that this was a clear-cut case," Gov. Steve Beshear said in a statement. "Kentucky Spirit cannot arbitrarily break its contract with the state and leave the health care of thousands of Kentuckians in a lurch."

And although the decision doesn't specify how much Kentucky could fine the insurer, Kentucky Cabinet for Health and Family Services Secretary Audrey Tayse Haynes said damages would be significant because Kentucky Spirit is paid less than the other Medicaid managed care insurers, reported the Louisville Courier-Journal.

Kentucky contracted with three managed care companies, including Coventry Cares and WellCare, in 2011. Kentucky Spirit made the lowest bid, so it receives about $100 less per month for each patient than the other two companies, on average.

But Kentucky Spirit alleged last fall that it based its contract proposal on incomplete and erroneous information provided by the state, which has led to significant losses of more than $120 million for the company, according to the Associated Press.

In response to the court ruling, Kentucky Spirit said it was analyzing the decision and evaluating its legal alternatives.

To learn more:
- read the Lexington Herald-Leader article
- see the Louisville Courier-Journal article
- check out the Associated Press article

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