Wayne Turnage, director of the District’s Department of Health Care Finance, told a D.C. Council committee that as long as Chartered Health Plan remains in Thompson’s hands, it should not expect to continue managing the health care of low-income city residents after its current contract expires in May 2013.
“If a sale does not happen, it is unlikely we would allow Chartered to keep its current contract for a number of reasons,” Turnage said. He did not elaborate on the reasons, though the panel’s chairman, David A. Catania (I-At Large) referred to “a certain cloud ” being over the company.
Turnage discussed a pending proposal from Chartered’s chief executive, Maynard G. McAlpin, to buy the company from Thompson. The firm confirmed McAlpin’s intentions to The Washington Post on Monday but offered no further details.
McAlpin, according to Turnage, expects to consummate a sale in 60 to 90 days — in time for it to respond to a solicitation for the new health-care contract, expected to be issued in the coming weeks. Turnage said McAlpin indicated he was pursuing a partnership with two investors, including “one of the largest [health-care] plans in country.”
Chartered handles the health care of more than 110,000 District residents; its D.C. government contract, which generated $355 million in revenue last year, is its sole source of business. In recent annual filings, both Chartered and the city’s other contractor, Unison Health Plan, reported significant operating losses. But Catania questioned whether those figures reflected actual financial hardship.
“There’s losses and then there’s losses,” he said. “It’s not real money, it’s not cash money they’re losing. ... You can manipulate the books any way they want.”
The discussion of Chartered came after Catania questioned the wisdom of continuing with the current managed-care contracting model, where for-profit companies like Chartered are engaged to handle provider networks and billings for the Medicaid and D.C. HealthCare Alliance programs.
Instead, Catania suggested returning to a “fee-for-service” model for those public health-care programs, where providers would be paid directly by the city — a sea change for a program responsible for a half-billion dollars worth of city spending every year.