Three firms picked for D.C. Medicaid contracts

March 27, 2013

Tens of thousands of D.C. children are enrolled in health plans managed by private firms. (Children’s National Medical Center)

City officials have chose three firms to receive some of the city’s largest contracts, to provide health care to low-income D.C. residents enrolled in Medicaid and other government health programs.

The winning firms named Wednesday — the AmeriHealth Mercy Family of Cos., MedStar Family Choice and Thrive Health Plan Inc. — are the same three that appeared in a draft news release that leaked earlier this month. Now that their selection is official, the contracts — which are worth as much as $668 million a year to each company — will go to the D.C. Council for final approval.

The city’s Health Care Finance department also said Wednesday that the current contracts, originally set to expire on April 30, will be extended two months to “allow time for a proper transition of the new health plans.”

Only one of the current contractors, MedStar, will be continuing under its current name and management. Another, a subsidiary of UnitedHealthcare, was not renewed, and the third is the embattled Chartered Health Plan, owned by businessman Jeffrey E. Thompson and currently under city receivership. (Thompson, under scrutiny for his role in recent campaign finance scandals, unsuccessfully tried to stop the new contract selection, arguing that he has been unfairly excluded from bidding after the receivership.)

Philadelphia-based AmeriHealth Mercy is poised to buy Chartered’s most valuable assets, contingent on the contract award, and its selection clears the way to complete the sale. Neither representatives from the city or AmeriHealth would say Wednesday when the sale might close.

Among the most valuable assets at stake is Chartered’s enrollment base of more than 100,000 D.C. residents, by far the largest of the current three contractors. Under their contracts with the city, the firms are paid a flat monthly fee for each resident they enroll; they then manage and pay claims. A larger enrollment base can make it more cost-effective to maintain a broad network of doctors, clinics, hospitals and other care providers.

Washington Business Journal reported Tuesday on concerns that AmeriHealth might not be entitled to keep Chartered’s patients under the new contract — something that could complicate the proposed $5 million deal. If not, that would be advantageous to the other contractors, who in that case would evenly split Chartered’s enrollees.

But Health Care Finance Director Wayne Turnage said he is confident that AmeriHealth Mercy will be able to keep all of Chartered’s patients, calling it “not an issue.” The federal overseers at the Center for Medicare and Medicaid Services, he said, have been consulted on the matter, and “they said that’s a fine way to treat it.”

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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Mike DeBonis · March 27, 2013