MCOs- Health care company Amerigroup is at center of D.C. Medicaid saga

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[MM Curator Summary]: The dumpster fire that is D.C. Medicaid has moved to the one-throat-to-choke/find-a-vendor-to-scapegoat stage. But to be honest, that 30% profit is looking pretty bad.


Meet Amerigroup. It’s a Fortune 500 company that manages state-run health plans for low-income people. Its subsidiaries also have a history of fines and allegations over the handling of patients in multiple states. Amerigroup is now set to get back part of the District’s $1.5 billion Medicaid contract.

Welcome to D.C.’s Medicaid saga.

Why it matters: There has been a painfully long battle royale over management of the city’s Medicaid services. Since 2017, four companies, including Amerigroup, have engaged in finger-pointing and contract appeals as they compete for the three open contract slots.

  • One in three D.C. residents, including the poorest and most vulnerable patients, receive health insurance through Medicaid. They are caught in the middle of being shuffled between different health care providers over recent years.

Driving the news: The District selects three contractors to run its Medicaid program through a competitive bidding process, and the D.C. Council is now set to act on the contract for Amerigroup and the other awardees, MedStar and AmeriHealth.

  • Amerigroup is at the center of this conflict.
  • Since losing out on the contract, CareFirst, which is one of the current Medicaid contractors, is publicly lobbying to push the D.C. Council to intervene.

State of play: Council member Vincent Gray, who chairs the Health Committee, and other critics are pointing out that Amerigroup and its subsidiaries have a history of paying out fines and facing allegations of bad patient care across the nation.

  • Gray wrote to colleagues last Monday that he was considering disapproving the new contractors, known as managed care organizations (MCO).
  • “We are poised to bring back an MCO with a checkered history in the District and a well-known reputation for denying care to vulnerable Medicaid members,” Gray wrote in the letter, acquired by Axios.

Zoom in: An Amerigroup subsidiary previously served the District over two separate periods, most recently from 2017 to 2020. In their final year, the deputy mayor for health, Wayne Turnage, told a D.C. Council committee that patients left Amerigroup in droves to seek coverage from other providers.

  • At that July 2020 hearing, Turnage was flabbergasted by Amerigroup’s 30% profit margin, compared to 4% for its competitor.
  • “I have never seen a public funded health plan have a margin of 30%,” Turnage testified. “In Virginia, when we had plans make more than 6%, they came back and voluntarily cut us checks.”

Turnage declined to comment to Axios last Friday on the contracts, citing the ongoing process. He referred to his public comments from 2020 about Amerigroup.

The other side: In response, Amerigroup says that patients left its services for other companies because MedStar, the D.C. region health giant, refused to offer its services for Amerigroup patients. (D.C. later began requiring that all Medicaid providers offer their services to each other.)

Amerigroup D.C. president Adrian Jordan wrote his own letter to lawmakers. He dismissed Gray’s criticisms as “the product of a broader campaign of disinformation that is being waged by an unsuccessful offeror,” referring to CareFirst’s lobbying efforts. He echoed similar sentiments in a statement to Axios, adding “Amerigroup D.C. is committed to providing no or low-cost access to healthcare for D.C. residents enrolled in Medicaid.”

One black eye for Amerigroup is a $225 million fine in 2008 to settle accusations of federal and state Medicaid fraud claims. A central allegation was that the company systematically denied pregnancy care in Illinois.

  • More recently, in Texas, Amerigroup told state lawmakers in 2018 that it paid $20 million in fines after allegations of denying medical care to disabled patients. In Iowa, a 2021 audit faulted Amerigroup for denying some patients care.

What’s next: Several council members on Tuesday told me they were still waiting for the contracts to be formally transmitted by Mayor Muriel Bowser, who had promised they would be out last week.

  • The waiting game is fueling last-minute jitters in a bureaucratic process that feels like a comedy of errors, with serious consequences.

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