West Virginia Medicaid program settles lawsuit over managed care contracts

A lawsuit filed against the West Virginia Department of Health and Human Resources by five West Virginia residents has been settled, meaning sweeping change for Medicaid managed care in the state, according to the Charleston Gazette-Mail.


The plaintiffs filed a petition against the DHHR last April claiming the agency violated state code by choosing to not competitively bid HMO contracts, and resulting in a "substantial burden upon West Virginia taxpayers."


The agreed settlement arrived earlier this week. It stipulates:

  • Starting in fiscal year 2017, all Medicaid managed care contracts must be submitted to the West Virginia Department of Administration, Division of Purchasing for competitive bidding.
  • Managed care contracts cannot exceed 48 months.
  • Managed care companies must spend 85 percent of Medicaid payments on services to recipients, leaving 15 percent to the companies' profits and administrative costs.
  • The DHHR will issue public performance summaries on HMOs annually.
  • The DHHR will comply with transparency laws in regard to its Medicaid program.

Officials from the West Virginia Department of Health and Human Resources said they stand by the agency's contracting practices and agreed to the terms of the settlement to save taxpayers further litigation expenses and erase the doubt the case had raised for Medicaid patients, providers and payers. "These contracts were constructed to harness the innovation and efficiencies of the private sector to improve quality for our Medicaid members and to control the spending of taxpayer dollars," said Jeremiah Samples, DHHR deputy secretary for public health and insurance, according to the report.


Because the DHHR currently pays HMOs the lowest allowable federal rates, the agency argued bidding out contracts could result in higher payment rates with no guarantee of improved care.

By opening the billion-dollar HMO contracts to competitive bidding, the plaintiffs believe the state would allow the opportunity for more satisfactory contract negotiations. "If you open it up to competitive bidding, you can have someone who comes in and is willing to take a contract...and agree to hit an even higher MLR rate," said the plaintiff's attorney, Jesse Forbes, according to the report. "We're hopeful this will allow for more money to be saved by taxpayers and to be used toward other budget shortfalls."

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