MM Curator summary
Humana is arguing that Passport did not have the right to sell future enrollment to Molina, as that enrollment is part of plans win when they bid successfully.
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Humana filed a lawsuit against the state over the Medicaid program.
Humana Health Plan Inc., a subsidiary of Humana Inc. that operates its Kentucky Medicaid program, has filed another lawsuit in the dispute over the state’s five Medicaid contracts.
In the suit filed Dec. 23, Humana alleges that the state violated the new Medicaid contracts when it allowed Long Beach, California-based Molina Healthcare Inc. to acquire Passport Health Plan Inc.’s membership in 2020 and allowed it keep Passport members going into the new 2021 contracts, which started on Jan. 1.
Molina’s deal to acquire Passport closed in September. Passport was not awarded a contract by the Beshear administration when it announced the awards in May.
At issue in the suit is how members within the Medicaid program are assigned to companies for coverage and whether or not Molina’s takeover of Passport allows it to acquire Passport’s membership for a new contract period.
Humana maintains that Passport doesn’t have the rights to sell off its membership and had no claim to its membership at all beyond its contract, which ended at the end of 2020.
“The [Medicaid] contracts did not contemplate that [Medicaid companies] who failed to win new contracts could auction off their members to the highest bidder,” the lawsuit reads. “Thus, Passport had no membership rights to ‘sell’ Molina.
“Similarly, as a ‘new [Medicaid company],’ Molina had no right under the [contract] to obtain Passport’s membership except under the reallocation formula set forth in” a specific section of the contract.
Humana maintains that allowing Molina to acquire Passport’s membership deprives Humana and the other winning Medicaid companies from enjoying the benefit of winning the contracts, which includes, in part, having the members from failing Medicaid companies reassigned to the winners.
The company maintains that Passport’s membership should be reassigned to the winning companies based on a process and formula articulated in the 2021 Medicaid contracts.
Humana appealed Molina’s takeover of Passport’s membership twice — to the Kentucky Finance and Administration Cabinet and the Kentucky Health and Family Services Cabinet. Both appeals were denied, the lawsuit states.
Issues of membership
For Molina’s part, the company’s executives told investors and analysts on a public call that it hoped that it simply would get all of Passport’s roughly 315,000 members, rather than the 140,000 members that it expected to get through the assignment process, the lawsuit states. In a transcript of the call, Molina’s CEO Joseph Zubretsky said: “If we obtained all 315,000 members, that would represent a little over $1 billion of upside… to the estimate we’ve given you.”