Texas pauses Medicaid contracts worth $116 billion

Photo: Chris Ryan/Getty Images

The state of Texas is applying the brakes to its new Medicaid contracts, with a Travis County district judge issuing a temporary injunction that stops the Texas Health and Human Services Commission (HHSC) from carrying out new contracts for the Medicaid STAR and CHIP managed care programs.

Citing a "flawed" procurement process, the judge said the contracts, worth about $116 billion, hindered the plaintiffs – Cook Children's Health Plan, Texas Children's Health Plan, Wellpoint Insurance Company and Superior HealthPlan – from adequately providing care.

As a result, many beneficiaries may have switched their health coverage to another insurer, the judge said, and not all patient populations were considered.

According to The Dallas Morning News, the plaintiffs argued that the contracts did not favor managed care organizations that participate in the state's provider networks, and some MCOs that met all benchmarks for quality initiatives and financial targets were overlooked by the state.

WHAT'S THE IMPACT?

Texas Children's Health Plan welcomed the ruling, saying there would be no coverage disruptions.

"We are grateful to the court for agreeing with our position," said TCHP president Michael Murphy 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 TCHP for their health coverage.

"While litigation is never preferable, HHSC left us no choice," he said.

TCHP added that the ruling now allows the Texas Legislature the opportunity to intervene and address concerns and issues with the current HHSC procurement process.

Cook Children's health plan also reacted favorably, calling the decision a "major win."

"We would like to express our gratitude to the court for their careful consideration of this matter and for their decision in our favor," the health plan wrote on its website. "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.

"We believe this ruling will help ensure that our members continue to have access to the care they need, when they need it," the statement read.

THE LARGER TREND

Centene, which owns Superior HealthPlan, will exit the Medicare Advantage market in at least six states in 2025, according to an August 5 research brief.

The six states are Alabama, Massachusetts, New Hampshire, New Mexico, Rhode Island and Vermont. These states account for about 3% of Centene's Medicare Advantage membership.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.