Evolent Health loses pivotal Kentucky Medicaid managed care contract

Evolent Health has lost a major Medicaid managed care contract in Kentucky starting next year, potentially costing the insurer tens of millions of dollars.

Evolent’s leadership said that the insurer will appeal the state’s decision to not renew the contract for its Passport Health managed care plan. The plan has been in operation for 23 years and serves more than 300,000 Medicaid members out of more than 1 million beneficiaries in the state.

The company feels strongly that the state “didn’t place value on Passport’s experience operating for two decades in Kentucky,” CEO Frank Williams said during an investor call Monday.

Williams emphasized that the decision — which goes into effect on Jan. 1, 2021 — won’t affect the insurer’s 2020 financial guidance. Evolent still expects to generate total revenue of $935 to $985 million and adjusted earnings of $24 to $32 million for 2020.

“Our business continues to be very well positioned in the market,” he said.

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However, if the decision is not overturned on appeal it could cost Evolent in 2021.

Williams anticipated that the insurer could see total 2021 revenue be around $900 million.

“Both of these estimates assume business maintains its current revenue levels,” he added.

Evolent has 14 days to appeal the decision. The insurer will also ask the state for information on the evaluation criteria and the scoring.

“We are not looking for a long, drawn-out process,” Williams said on the call. “We just want to make sure it is a fair process.”

If that appeal is struck down, then Evolent could face some costs winding down Passport Health, which employs around 600 people and has existing provider relationships. This is the second time that Kentucky has jilted Passport Health.

Kentucky awarded managed care contracts last Thursday to five companies: Aetna, Humana, Molina Healthcare, UnitedHealthcare and WellCare, which is now owned by Centene Corporation. The contracts will run through 2024. However, the five companies that were awarded contracts last week were the same that got contracts by the outgoing former Gov. Matt Bevin in early December 2019.

Gov. Andy Beshear, a Democrat, canceled the contracts that were awarded by Bevin after he assumed the governorship in late 2019.

“The initial contract award created public outcry from both lawmakers and health policy experts, who raised concerns about the review process and bias regarding certain companies,” according to a statement from Beshear’s office.