Bexar County Health Insurance Plan Sues State After Exclusion From Medicaid Contract

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University Hospital at the Medical Center.

Scott Ball / Rivard Report

Community First Health Plans Inc., a nonprofit health plan provided by University Health System, has been excluded from receiving state funding.

A University Health System insurance plan has joined a lawsuit alleging that Texas officials violated state law when they said they would award a multibillion-dollar series of health insurance contracts to for-profit providers, leaving out nonprofit health plans.

The Texas Health and Human Services Commission (HHS) announced in October that nonprofit provider Community First Health Plans Inc., operated by UHS, would not receive any of the roughly $10 billion awarded to health plans that insure Medicaid patients who are blind, disabled, or older than 65.

Houston’s Community Health Choice, owned and operated by the local hospital district, also was excluded in the contract announcement and filed suit last week against the commission, alleging it improperly failed to award it and Community First Health Plans contracts.

The nonprofit providers contend that a “mandatory contracts” provision of the state law, which addresses nonprofit health plans affiliated with public hospitals, guarantees them funding for the Medicaid STAR+PLUS program for adults with disabilities and the elderly.

The provision has been in place since 1995, and has always been honored without question by HHS until this latest procurement, said Kay Ghahremani, chief executive of the Texas Association of Community Health Plans, an industry group for nonprofit insurers. “The purpose of the law is to help offset costs incurred by local hospital districts that care for low-income and uninsured patients.

“The provision says that if they can meet obligations for participation, which Community First has been doing with Medicaid managed care services for over 20 years, they are supposed to be given contract awards.”

In a statement to the Rivard Report, UHS said it has been serving Medicaid STAR and Children’s Health Insurance Program (CHIP) recipients since the inception of managed Medicaid in 1995, and STAR Kids since the inception in 1996.

Currently, more than 150,000 Bexar County residents have Community First health plans. Those with Medicaid STAR+PLUS plans will have to sign up for insurance through one of the three providers awarded contracts in Bexar County. 

Instead of awarding the contract to Community First, HHS handed the business to Aetna, which previously did not have a contract in Texas, Ghahremani said.

“They are known for being a big commercial health plan, but they don’t have any experience with this,” she said. “I can’t even imagine where [HHS] is coming from. That company does not have the experience or the resources to work with this more complex set of members.”

Kay Ghahremani, chief executive of the Texas Association of Community Health Plans

Amerigroup and Superior were the other two managed-care providers promised funding by HHS to operate Medicaid STAR+PLUS programs in Bexar County.

UHS said its STAR+PLUS program provides high-quality services at competitive costs.

“Community First is a mission-driven program. They are in the community not to make money, but to serve people who are low-income. It takes a different approach and it takes passion,” Ghahremani, noting the procurement process for STAR+PLUS contracts has been “flawed” from the start.

In a recent interview with the Texas Tribune, Catherine Mitchell, the interim chief executive of Houston’s Community Health Choice, raised issues with the health commission’s ranking of bids, saying there were “numerous flaws and bias in the procurement process.”

Ghahremani said in addition to the financial blow Community First Health Plans suffered from being excluded from the three-year Medicaid STAR+PLUS contracts, there is concern about funding awards that will be announced in January for Medicaid’s State of Texas Access Reform Program (STAR) for low-income children and pregnant women, the Children’s Health Insurance Program (CHIP) for children of low-income parents.

“If they don’t get a contract, nonprofit providers including Community First cannot stay in business,” she said. “The whole purpose of these companies is to serve these Medicaid recipients, and they have become experts at providing quality care.”

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