Centene sues state as its earnings plunge 87%

Earnings

Just as Centene announced its third-quarter earnings sank 87 percent, it filed a lawsuit against Kentucky, which it alleged largely caused the big losses.

The Medicaid insurer claimed it lost $63 million this past quarter because the premiums it was collecting to administer Kentucky's Medicaid program didn't match the medical costs it sustained in the state. Centene also reported a $3.8 million drop in net income, reported the Associated Press.

Meanwhile, Centene last week announced it intended to break its contact with Kentucky. On Monday, the Medicaid insurer sued the state, requesting a court order that officially allows it to end that contract and avoid paying the damages that Kentucky insurance officials have said they will pursue. Centene, which operates in the state as Kentucky Spirit, claimed its low bid to administer Kentucky's Medicaid program was based on incomplete and erroneous information from state officials, leading to a loss of more than $120 million, the Louisville Courier-Journal reported.

The lawsuit said Kentucky failed to disclose the volume and impact of members' retroactive claims, changed hospital outpatient reimbursements in a way that increased costs, misrepresented the number of neonatal intensive care unit admissions and misstated the volume of emergency room use by Medicaid clients. For example, Kentucky said there was an average of 390 emergency room visits per 1,000 Medicaid clients, but Centene found there were actually 942 visits per 1,000 members, according to the Lexington Herald-Leader.

In response to Centene's lawsuit, Kentucky's Health and Family Services Cabinet said it wasn't surprised. "In an attempt to get out of the contract, Kentucky Spirit is claiming that the cabinet did not provide enough information during negotiations of the contract to make an informed bid," Cabinet Spokeswoman Jill Midkiff said. "Yet Kentucky Spirit willingly signed a binding, three-year contract with the commonwealth."

To learn more:
- see the Lexington Herald-Leader article

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