Cook Children’s sues Texas over potential Medicaid contract loss

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Cook Children’s Health Plan has filed two lawsuits against the state to stop the Texas Health and Human Services Commission from removing them as a longstanding Medicaid contractor.

In a news conference on Wednesday, the Fort Worth-based health care system announced the lawsuits as an attempt to halt the $116 billion Medicaid procurement process that removes Cook Children’s and two other hospital-affiliated children’s health plans from Medicaid STAR and Children’s Health Insurance Program, also known as CHIP.

The proposed shake-up would remove Cook Children’s Health Plan in the state’s Tarrant service area, Texas Children’s Health Plan in the Harris region, and Driscoll Health Plan in South Texas in favor of private companies. Together, the three plans operate as managed care organizations that provide Medicaid coverage to Texans in their respective regions.

The three plans, formed two decades ago, serve more than 700,000 families, pregnant women, and children.

If the state’s health agency's decision stands, it would mean reducing the number of managed care organizations that administer STAR and CHIP, shifting toward national for-profit health companies in most areas of the state.

It will also require the nearly 1.8 million Texans who receive Medicaid coverage from six managed care organizations across the state to shift to new insurers by next year.

The lawsuits were in Travis County. One petition asks for declaratory judgment and injunctive relief against HHSC Commissioner Cecile Erwin Young in hopes of overturning the contract decision. The second lawsuit filed is a temporary restraining order against the state’s health agency to stop finalizing procurement results.

“These actions we take are strong but necessary,” said Rick W. Merrill, president and CEO of Cook Children’s Health Care System, in a news release.

Jennifer Ruffcorn, an HHSC spokesperson said the agency doesn’t speak on pending litigation but mentioned the contract situation is still pending.

“Although the (Request for Proposals) has been posted, responded to, and evaluated, it remains an open procurement until all protests and appeals submitted by respondents have been resolved and contracts have been executed,” Ruffcorn said in an email. .

Currently, the procurement process's future lies squarely at Young's discretion. She has no deadline for deciding whether to uphold the agency’s decision, cancel it and start over, or officially delay it until lawmakers can respond when they meet next year.

In a news release Wednesday, Karen Love, President of Cook Children’s Health Plan, said that removing the Medicaid contracts from the three hospital affiliates is based on a flawed process that will put Texas families at the mercy of national for-profit insurance companies.

“The State got it wrong, and we are asking the courts to make it right,” she said.

Texas Medicaid STAR and CHIP programs cover the cost of routine, acute, and emergency medical visits. STAR is primarily for pregnant women, low-income children, and their caretakers. CHIP provides health care to low-income children whose family’s income is too high for Medicaid, which has some of the lowest income limits in the country. Their members compose the vast majority of Texans on state Medicaid programs.

Medicaid managed care contracts are routinely the most expensive contracts taxpayers fund.

Texas officials earlier this month rejected attempts by several managed care organizations to cancel the proposal that would drop them from the state Medicaid program.

Representatives for Driscoll Health Plan said Thursday that their organization has appealed this decision to the state, as more than 500 jobs could be eliminated if it is finalized.

Craig Smith, Driscoll Health Plan CEO told The Texas Tribune on Thursday that his organization filed a second appeal last week and is now awaiting a ruling. He said he is also prepared to pursue legal action against the state if the appeal is denied.

Representatives for Superior HealthPlan, a managed care organization that operates similarly to the Driscoll and Cook health plans, expressed on Thursday their disappointment in the decision to deny the protests made by the three hospital plans. The organization is also exercising its right to appeal the current decision made by the state’s health agency, as they predict it will result in the largest disruption in member care in Texas Medicaid history.

If the procurement is negated, it would be Texas HHS's third failed attempt in six years to award contracts for the Medicaid programs that encompass the vast majority of state health insurance’s low-income Texas recipients.

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