Clayton-based Centene wins Missouri Medicaid contract

2012-02-22T08:49:00Z 2012-03-29T17:49:27Z Clayton-based Centene wins Missouri Medicaid contractBY JIM DOYLE • jdoyle@post-dispatch.com > 314-340-8372 and VIRGINIA YOUNG • vyoung@post-dispatch.com > 573-635-6178 stltoday.com
February 22, 2012 8:49 am  • 

Centene Corp. has won a major contract to manage health care for Medicaid beneficiaries across Missouri, the Clayton-based company announced Wednesday.

The firm will share the business with two other companies, Missouri Care Inc., a subsidiary of Aetna Inc., and Health Care USA, a subsidiary of Maryland-based Coventry Healthcare Inc., state officials said.

Missouri's managed care program, serving 427,000 Medicaid patients, spends $1.1 billion annually, said Wanda Seeney, a spokeswoman for the state Office of Administration. The companies will compete for Medicaid patients during an annual open enrollment period, she said.

Centene is the nation's fourth-largest Medicaid contractor and employs about 5,300 nationwide, including more than 900 in the St. Louis area. With the award of the Missouri contract, those numbers likely will grow. The company did not release an actual contract value, and company officials did not respond to phone calls seeking interviews.

Centene's subsidiary, Home State Health Plan Inc., was chosen by Missouri officials after submitting a competitive bid. The company effectively replaces a subsidiary of Molina Healthcare, which had been part of a group of five companies contracting with Missouri Medicaid. Molina, which operated an office in Creve Coeur, bid on the new contract but was rejected after getting only mid-range marks for quality from state officials scoring the bids.

The other two winning bidders already held Medicaid contracts and were rehired.

Centene, Missouri Care and Health Care USA will provide coordinated healthcare and behavioral health services to Medicaid patients, including those receiving benefits under categories of aid for parents and caretakers, children, newborns, pregnant women and refugees. It will also provide services for children in the care and custody of the state pending adoption, and the Children's Health Insurance Program.

All told, the state’s Medicaid program serves about 900,000 patients and costs about $8.3 billion. But elderly and disabled Medicaid patients, as well as those who live in some rural areas, are not in the state's managed care program, which the three companies will oversee.

That program, with about $1.1 billion in annual spending, covers children, the largest proportion of the state's managed care program for the poor, said Seth Bundy, a spokesman for the state Department of Social Services. Pregnant women and some poor parents are also served in these managed care arrangements, he said.

"For more than 15 years, we have called Missouri home to our corporate headquarters,” Centene Chairman and Chief Executive Michael Neidorff said in a company news release. “We have added hundreds of jobs and made significant investments into the region. We embrace the opportunity to bring our award-winning quality programs and healthcare services to our most vulnerable neighbors across the state."

Centene lobbied hard for the Missouri Medicaid contract. It has fielded a dozen registered lobbyists, including attorney Chuck Hatfield, one of Democratic Gov. Jay Nixon's closest advisers, according to Missouri Ethics Commission records. Since January 2006, Centene and its executives have given more than $400,000 in campaign contributions to dozens of Missouri politicians.

A growing number of states have privatized their Medicaid programs, paying fixed per-patient rates and letting contractors assume the risk of rising health care costs.

Centene's network of providers tries to reduce costly use of emergency rooms by encouraging patients to see primary care physicians, take their medications, keep their follow-up appointments and pursue healthy lifestyles.

But Centene came under scrutiny last year because one of its affiliated businesses, the embattled Missouri contractor SynCare LLC, was ousted as a state contractor after high-profile failures in delivering eligibility assessments of homebound Medicaid patients. Centene provided nearly $2 million in business loans to SynCare and its owner, a former Centene executive.

Seven companies submitted contract bids to participate in Missouri's Medicaid managed care program, known as MO HealthNet Managed Care, said Jim Miluski, the purchasing director for the state's Office of Administration.

Three of the bidders were awarded contracts on Feb. 17, he said, and two of the three firms -- Centene's subsidiary and Health Care USA -- will be able to operate in all three of the state's managed care regions, central, west, and east. Missouri Care, Aetna’s subsidiary, will no longer be able to operate in the central region.

Health Care USA has participated in the Missouri Medicaid market for about 16 years and has about 1,200 employees in the state, said Matt Eyles, a Coventry spokesman.

"This award extends that relationship and represents another major step forward for Coventry as we continue to expand our Medicaid presence," Allen Wise, chairman and chief executive of Coventry, said in a news release.

A different Centene subsidiary previously held a Missouri Medicaid contract, but left the state's market in 2006.

For the latest contract award, Miluski said, the state's evaluation panel considered factors including the bidders' organizational experience, method of performance, quality, and access to care -- including primary care, dental care, specialty care, and behavioral health services. He also said that bidders could win extra points if affiliated with certified minority- or women-owned businesses.

For instance, Centene proposed to subcontract portions of its contract to 10 minority- and/or women-owned firms that will provide a variety of services, from medical and surgical supplies to the temporary and permanent staffing of nurses. The bid evaluators’ scoring sheets revealed that Centene was given extra credit because, with the contract award, it is expected to employ additional Missouri residents.

To pay for health services for the 427,000 in the state's managed care program, the average cost is about $2,575 a year per patient - with the federal government bearing nearly two thirds of that cost.

The successful bidders were awarded one-year contracts and the potential of two additional one-year renewals. The new contracts are scheduled to begin on July 1.

Read more from Jim Doyle, who covers the business of health care for the Post-Dispatch. On Twitter, follow the Business section @postdispatchbiz.   

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