Texas is halting the state’s new Medicaid contracts, a district judge declared Oct. 4.
The judge issued a temporary injunction, stopping the Texas Health and Human Services Commission (HHSC) from implementing new contracts for its Medicaid STAR and CHIP managed care programs.
A recent $116 billion Medicaid proposal negatively impacted four plaintiffs—Cook Children’s Health Plan, Texas Children’s Health Plan, Superior HealthPlan and WellPoint Insurance Company—from administering care, potentially forcing 1.8 million Texans to switch health coverage to Aetna, Blue Cross and Blue Shield, Molina Healthcare and UnitedHealthcare. The judge said the contracts were awarded based off of a flawed procurement process.
“We are grateful to the court for agreeing with our position,” said Michael Murphy, president of Texas Children’s Health Plan, in a statement. “It is unfortunate that it had to come to this point. HHSC’s flawed process would disrupt and jeopardize the care of 425,000 of the state’s most vulnerable children and pregnant women, who rely on Texas Children’s Health Plan for their health coverage.”
Plaintiffs successfully argued the awards did not give preference to managed care organizations (MCOs) that participate in the state’s provider networks. The state also overlooked MCOs with successfully implemented quality initiatives and MCOs that meet certain financial benchmarks. Additionally, past performance was not considered, and the contract awards do not address the needs of all types of populations, the court said.
HHSC also revealed Medicaid proposals from health plans on two separate occasions. In August 2023, the disclosure was sent to Aetna’s legal counsel, a competing bidder.
“We would like to express our gratitude to the court for their careful consideration of this matter and for their decision in our favor,” said a Cook Children’s Health Plan spokesperson in a statement shared with Fierce Healthcare. “Cook Children’s will continue to monitor the situation closely and work with all stakeholders to ensure that our Members continue to receive the best possible care.”
Losing managed care contracts may threaten Cook Children’s ability to exist and cause the company to lay off 375 employees, the court detailed. It would also need to pay more for pharmaceutical drugs because it can’t negotiate a new pharmacy benefits contract with Texas-based Medicaid plans.
As for Texas Children’s Health Plan, 425,000 total members would be impacted, along with 650 employees. Similar concerns face WellPoint, and its 1,200 employee workforce dedicated to Texas Medicaid, and Superior HealthPlan. Texas Children’s is represented by law firm Norton Rose Fulbright.
Centene CEO Sarah London told investors in April the organization would protest the state’s decision on behalf of its subsidiary, Superior HealthPlan.
"Superior HealthPlan will continue to work to ensure that reliable provider networks, quality care and member choice remain central to the state’s Medicaid system," the company said in a statement.
Plaintiffs told the court they are already beginning to lose members, even though the new contract awards don’t go into effect until September 2025.
The Texas Medicaid program’s approach to redeterminations proved flawed. The state removed more than 2 million people from its Medicaid rolls after the public health emergency ended, including many that were wrongly removed. Others were not approved coverage due to paperwork errors. There are now more than 200,000 applicants waiting to obtain coverage, ProPublica reported.
Fierce Healthcare has reached out to all other health plans affected by the court’s decision as well as HHSC.