The CEO of Kentucky’s largest private Medicaid operator says massive financial losses and bad data are to blame for the problems with managed cared in Kentucky. For weeks, CoventryCares has sought to terminate or revise its contracts with more than a dozen healthcare providers so the company would pay lower reimbursement rates when doctors treat Medicaid patients. And in a meeting before the interim joint Health and Welfare Committee today, CEO Michael Murphy said his company's actions were motivated by losses.
“In the first quarter of this year it was approximately $50 million," he said. "There aren’t a lot of companies who can absorb a $200 million annual loss, in this state let alone any state."
He added that Coventry can't continue to take such losses for the duration of its three-year contract with the state. That means the company must either get more money from the state—which is very unlikely—or pay less to healthcare providers.
Murphy blamed the company's losses on state government, which he said gave Medicaid operators bad information before the system was privatized.
“The utilization that we’ve seen in the program in reality versus what was handed to us when our bids were originally submitted to us are dramatically, dramatically different. Which gets back to the basic data book that was given to us to bid on,” he said.
Coincidentally, Cabinet Secretary Audrey Haynes says the state has saved $50 million since Medicaid was privatized.
At the same time Murphy was testifying, a federal judge ruled against Coventry in its legal battle against the hospital chain Appalachian Regional Healthcare. The ruling says Coventry must continue to honor its contract with ARH until November 1.