D.C.‘s deputy mayor for health said that MedStar, the hospital system that most often treats D.C.’s low-income patients, plans to end its contracts with two insurers that cover most of the D.C. residents enrolled in Medicaid, meaning those beneficiaries could lose access to their doctors.

D.C. officials are now scrambling to see how they can prevent more than 165,000 patients from being cut off from the MedStar medical network.

In an Aug. 20 email to several members of the D.C. Council, Deputy Mayor Wayne Turnage said MedStar plans to end its contracts with the insurers this fall. If that happens, those patients still would be able to visit the emergency room at MedStar Washington Hospital Center and Georgetown University Hospital — both of which are run by MedStar — but they would not be able to continue making appointments with the company’s large network of primary care providers and specialists. MedStar officials did not respond to inquiries from The Washington Post.

The development is the latest escalation in a long-running struggle between D.C.‘s government and MedStar, which not only runs a medical system but also operates as a health insurance company.

MedStar’s insurer, MedStar Family Choice, was one of three companies that won a massive city contract last year, totaling about $1.5 billion, to collectively manage the care of about 250,000 Medicaid beneficiaries and residents enrolled in the city’s Alliance health-care program for low-income immigrants and other patients. But months after the contract began, a judge ruled that MedStar had actually violated procurement law during the process.

The judge ordered D.C.'s Department of Health Care Finance to redo the contracts, a process that would lead to MedStar losing out on the contract. But Turnage, who heads the department, has said he feared that MedStar would not work with other insurers if its own insurance company were no longer one of the providers and that the city needed to find a way to keep MedStar in the program.

At Turnage’s behest, council member Vincent C. Gray (D-Ward 7) proposed legislation last month that would retroactively change a procurement law that MedStar violated last year. Gray’s proposal was narrowly voted down, and he declined to reintroduce it on Aug. 10 before the council went on recess.

After that, Turnage said in his letter, MedStar decided to end its contracts with the other two companies who cover D.C.’s Medicaid patients — CareFirst and AmeriHealth. A CareFirst spokeswoman declined to discuss the situation with The Post, and officials at AmeriHealth did not respond to inquiries. Turnage said MedStar would still treat CareFirst patients who have private insurance with the company.

Chairman Phil Mendelson (D) and Kenyan R. McDuffie (D-Ward 5), the council members who led the opposition to Gray’s proposal, saying that changing procurement law would be inappropriate, did not respond to inquiries from The Post.

Turnage said in an interview Monday that the city has been paying George Washington University’s health system a higher rate for Medicaid patients’ care than it has been paying to MedStar. Based on the letter he read from MedStar to AmeriHealth, he said he believes MedStar would be willing to renew its contracts with the other two insurers, but only at a higher rate.

The cost that MedStar would ask for, Turnage said, would be “ruinous” to CareFirst and AmeriHealth, and the city has not budgeted the money in its recently approved fiscal year 2022 budget to spend more on Medicaid.

“I don’t blame either party. I think MedStar and the health plans are acting in their best interest,” Turnage said.

Last year’s Medicaid-managed care contracts expire this October, meaning that MedStar could be out of the insurance program soon and the patients it covers could be moved to other plans. But a D.C. government staffer, who spoke on the condition of anonymity because the person was not authorized to speak on the subject, said Mayor Muriel E. Bowser (D) could use her emergency powers under the ongoing coronavirus emergency to extend the contracts, in hopes of working out an agreement with MedStar.

Turnage declined to speak about what course Bowser might take before she decides but said: “The mayor has said she’s determined that the poorest and sickest members of this city will not have their health care significantly altered and lose access to doctors. … I think this mayor will find a way to make sure that will not happen.”

Turnage sent council members a table showing just how central MedStar is to the treatment of D.C.'s low-income patients: In 2018, the year shown in the chart, 30 percent of medical visits by Medicaid patients whose care is directly covered by the city (as opposed to those in managed care plans) were to Washington Hospital Center, and another 6 percent were to Georgetown and 2 percent to the MedStar-run National Rehabilitation Hospital. No other hospital system came close; the next most utilized was George Washington University Hospital, accounting for 16 percent of Medicaid patients’ visits.

In his letter, he spelled out a gloomy scenario without MedStar treating a large fraction of Medicaid patients: “The remaining providers will face the unwelcomed and unplanned challenge of absorbing 30 percent of the Medicaid market share with no time to increase capacity. … Residents will almost certainly face … difficulty securing primary care visits, and lengthy 3- or 4-month delays for specialty care appointments.”