Paramount to appeal state’s denial of Medicaid business

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Paramount (ProMedica) is protesting the loss of its Medicaid contract in Ohio.


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ProMedica’s insurance subsidiary, Paramount, said Friday it will appeal a decision by the Ohio Department of Medicaid that it says could cost the Toledo area hundreds of professional jobs and disrupt services for a quarter of a million Medicaid recipients.

For reasons that ProMedica says are “baffling,” the state has rejected Paramount’s application to be one the state’s six Medicaid providers.

“We were shocked and baffled by the announcement because it did not reflect what our performance had been,” Paramount President Lori A. Johnston said in an interview with The Blade.


“This decision will really not only have a devastating impact on our company, but more importantly it will disrupt the care coordination and support for nearly quarter million adults and kids who are enrolled in our network,” she said.

Medicaid is a federally funded, state-administered insurance program for people with poverty-level incomes.

Paramount administers Medicaid for about 240,000 clients in northern Ohio and Cincinnati. The premiums account for 75 percent of Paramount’s revenues and more than 20 percent of the total revenues of ProMedica Health System, according to Steve Cavanaugh, chief financial officer of ProMedica.

At stake are the jobs of more than 600 Paramount employees and hundreds more employed by vendors, many of which are in higher-paying positions like actuaries, nurses, and managers.


“Those jobs are all at risk now. It easily could be approaching 1,000 lost jobs in this area and so that just is devastating to the economy, and those are good-paying jobs,” Mr. Cavanaugh said.

“They’ve gone through this selection process and clearly they have a strong bias to go with for these national, profit, out-of-state companies. You’re taking Ohio taxpayer dollars away from an Ohio-based, not-for-profit company and giving it to an out-of-state, for-profit company that are headquartered in other parts of the country,” Mr. Cavanaugh said.

“Some of these companies, we’ve been competing with them for years and doing better than them for years,” Mr. Cavanaugh said.

According to ProMedica, Paramount’s Medicaid program is a not-for-profit enterprise. Its non-Medicaid branch is a for-profit corporation.

The deadline to appeal the state’s April 9 decision was 3 p.m. Friday.

On April 9, the state Department of Medicaid announced the completion of a six-month competitive process to be one of six Medicaid providers in Ohio. The winners were UnitedHealthcare Community Plan of Ohio, Inc., Humana Health Plan of Ohio, Inc., Molina Healthcare of Ohio, Inc., AmeriHealth Caritas Ohio, Inc., Anthem Blue Cross and Blue Shield, and CareSource Ohio, Inc. The changeover to the new insurance administrators will take place in 2022.

“The Ohio Department of Medicaid is confident in its rigorous evaluation process that was designed to select the best managed-care organizations for the state’s dramatically redesigned Medicaid program,” the Ohio Department of Medicaid said in a statement Friday afternoon. “The procurement was highly competitive, broadly communicated, and structured to ensure partners were selected for their ability, expertise, and willingness to assist the state in meeting new, far-reaching goals for the redesigned Medicaid program.”

The applicants were ranked on a scale with a total possible score of 1100. In the two Ohio regions for which Paramount submitted proposals, it scored 358 in the West region — covering roughly the western third of Ohio including Toledo, Dayton, and Cincinnati — and 342 in the Northeast region. The six selected companies scored between 696 and 905. Paramount did not bid for the third region, named the Central region.

“The Ohio Department of Medicaid clearly outlined the goals of the redesigned program beginning in early 2020. Potential bidders had many opportunities to help shape the goals and requirements of the redesigned program, as well as the opportunity to object to any of the evaluation requirements and criteria. ProMedica did not object to any of the evaluation requirements or criteria,” the state agency’s statement added. 

Mr. Cavanaugh and Ms. Johnston said Paramount has consistently ranked first in the state for 28 years in the care of its clients who, they said, require a lot of hands-on assistance.

In its April 9 statement, the state Medicaid department said its bid awards will affect more than 3 million Medicaid members in Ohio and thousands of providers, at a cost of about $20 billion.

It said its process was based on “intensive stakeholder engagement” and that its guiding principles were to improve care, emphasize personalized care, improve care for children and adults with complex needs, reduce administrative burdens, and increase program transparency and accountability.

Paramount officials were critical of the process that they said was not transparent, and which gave them only 10 days to build a case for appeal. They said they requested public records necessary for the appeal, and were provided some of those.

In early 2020, Paramount withdrew from serving approximately 30,000 Medicaid customers in central and southeast Ohio after complaining that the state was basing the premium’s cost on the experience of average Medicaid clients whereas Paramount was handling Medicaid’s most challenging and costly patients. The company experienced a $103 million loss in 2019 because of the problem. The dispute with Paramount forced the state Department of Medicaid to correct its billing.

Mr. Cavanaugh did not rule out that Paramount may be experiencing payback because of its pushback on the issue in 2020.

“You would hope folks wouldn’t let that get in the way of trying to make very important public policy decisions for millions of Ohioans. But people are people sometimes, and consciously or unconsciously they may carry their biases from past interaction with folks into a process,” Mr. Cavanaugh said. “I have to sit here and wonder if that’s come into play. The folks that we had some very challenging interactions with are probably the same ones doing the scoring of our bid.”

According to Ohio Medicaid’s report card for 2020, Paramount performed as well or better than three other companies that won the state’s Medicaid bid. Paramount received 16 stars overall, while Molina Healthcare received 15 and United Healthcare Community Plan received 14 stars. CareSource received 16 stars.

Robin Reese, the head of Lucas County Children Services attacked the state’s decision in a letter Friday to Maureen Corcoran, director of the state Medicaid department.

“The Ohio Department of Medicaid’s decision to exclude Paramount will disempower parents,” Ms. Reese wrote on the Children Services Board’s behalf. “This move will interrupt the continuity of care, and is indifferent to the needs of our community.”

She said nearly two-thirds of children in LCCS custody are enrolled in Paramount’s managed-care plan — more than twice as many as Paramount’s closest competitor, Buckeye Health Plan.

“Several of the selected HMOs have no footprint at all in northwest Ohio,” she said.

She credited Paramount with having championed the “social determinants of health” since 2009, before it was “fashionable.”

First Published April 23, 2021, 9:59am


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