West Virginia officials plan to enter into nearly $600 million worth of no-bid contracts with three health insurance companies, but critics warn the arrangement could cost the state millions of dollars.
Currently, West Virginia has agreements worth roughly $290 million a year with three health insurance companies--The Health Plan, Unicare, and Carelink--to provide care to more than 160,000 Medicaid recipients. Beginning next year, West Virginia plans to send 55,000 more Medicaid recipients to the three insurers, a deal worth about $270 million total, according to the Charleston Daily Mail.
By entering into agreements with these companies, the state controls its costs by paying the companies a lump sum each year, thereby shielding the state from unexpected expenses by forcing the companies to assume responsibility for controlling costs.
However, the decision is under fire because now that the population of customers is expanding to more than 200,000, the state may be more attractive for other out-of-state companies, which could provide cheaper services. Even if the expanded pool of customers doesn't interest new companies, critics say the bidding process itself would force the three existing insurers to give the state a better deal, the Charleston Gazette reports.
The contracts were not required to be bid out by the federal government, noted Nancy Atkins, commissioner for the state Bureau for Medical Services. "All managed care providers that sign an agreement with Medicaid are paid an actuarially sound rate approved by the federal government, so there is little competition in the area of rates paid to providers," she told the Daily Mail. Atkins also emphasized that West Virginia is not spending any additional money on the new program, only shifting responsibility for the 55,000 Medicaid recipients to the insurance companies that provide managed care.