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From left, State Medicaid Director Jen Steele and LDH Secretary Rebekah Gee talk about the state's new high-tech enrollment system at the Medicaid enrollment headquarters Wednesday Nov. 28, 2018, in Baton Rouge, La.

A new round of multi-billion-dollar contracts for managing Louisiana’s Medicaid program is drawing scrutiny from some lawmakers and a planned appeal by the losing bidder.

Gov. John Bel Edwards’ administration, however, is defending the move, saying the new contracts will provide better care to enrollees and that jobs lost with the losing bidder can be filled by the winning bidders.

The Louisiana Department of Health said earlier this week it intends to award the managed care contracts – some of the largest contracts in state government – to three existing managed care organizations, called MCOs, as well as Humana, a newcomer to Louisiana’s system. Bids by Louisiana Healthcare Connections, the largest MCO currently offering plans in the state, and Aetna, were rejected.

U.S. Rep. Cedric Richmond, D-New Orleans, penned a letter Friday to Edwards raising concerns about the decision to drop Louisiana Healthcare Connections from the state’s managed care system. He warned of lost jobs in his district and said 84,000 of his constituents receive health care through LHC’s network, raising the possibility of patients losing access to their providers with the change.

“Further, in light of the Department of Health’s reoccurring technology issues, it seems likely that migrating all patients from the largest MCO to other MCOs will result in at least some of these patients falling through the cracks for a time,” Richmond said.

He also posed several specific questions about the new round of contracts to the governor. Both Richmond and Edwards are Democrats.

Louisiana Healthcare Connections, a subsidiary of the insurance giant Centene Corporation, is currently the largest MCO in Louisiana in terms of enrollment, with 443,331 enrollees as of the end of July, according to LDH. Aetna has 114,518, meaning 557,849 people will need to change plans during a three-month open enrollment period that begins in October, assuming the picks by LDH aren’t overturned.

Chris Broussard, a spokesman for Louisiana Healthcare Connections, said the firm will file a formal appeal of the decision in the coming days. He called the procurement process “fundamentally flawed.” He also said the firm employs 670 in Louisiana.

Christina Stephens, a spokeswoman for the governor, said the “vast majority” of Medicaid providers in Louisiana participate in multiple MCO plans and will be able to join the new plan.

“The governor is sensitive to concerns of the employees of the managed care plans that were not selected in Medicaid’s recent procurement,” Stephens said. “ We know there will likely be job opportunities with the successful bidders, including one that is new to the program.”

Several employees of Louisiana Healthcare Connections, wearing orange shirts, were on hand earlier this week at the Secretary of State’s office when Edwards qualified for reelection. It was the day after the health department announced LHC would not have its contract renewed. LHC took in $2.1 billion in premium revenue in 2017, according to financial statements.

Rebekah Gee, secretary of the Louisiana Department of Health, said she is not concerned that the new list of managed care organizations will have problems transitioning more than half a million enrollees to new plans in the coming months, saying the insurers are “well-versed” in enrolling patients.

She also described the change – moving from five plans to four and dropping two existing MCOs from the list – as evidence the state contracting process is working.

“It's good to have change because it allows us to keep them on their toes and make sure that we have the best health plans, the ones that are most competitive with the best ideas,” Gee said Thursday in an meeting with The Advocate editorial board. “And it might even be that things go better."

The contracts for the five companies currently managing care for Louisiana’s Medicaid population expire at the end of the year. The new plans, which will begin in January, will manage care for an estimated 1.7 million Medicaid enrollees.

Republican Metairie Rep. Cameron Henry, chairman of the House Appropriations Committee and now a candidate for the state senate seat being vacated by state Sen. Conrad Appel, R-Metairie, said the Joint Legislative Committee on the Budget will meet in September or October to review LDH’s decision. Meanwhile, the appeal will play out to further scrutinize the procurement process, he noted.

“The greater concern is you’ll have roughly 400,000 to 500,000 people who may have to find a new doctor, assuming their current physician is not in one of those MCO plans,” Henry said. “That’s going to be the scariest part for all these individuals.”

Henry said he expects lawmakers will want an explanation from the health department about the decision.

Former Gov. Bobby Jindal’s administration moved the state to a managed care system in 2012, effectively privatizing the state’s Medicaid program. Instead of directly reimbursing doctors and hospitals, as was previously done, the state now pays the MCOs a monthly fee based on the number of enrollees.

Medicaid paid $7.6 billion to those firms in the 2018 fiscal year. The health department forecast it would spend more than $8 billion in the fiscal year that ended June 30, including $4.7 billion for regular Medicaid patients and $3 billion for patients in Medicaid expansion. Gov. John Bel Edwards expanded Medicaid in 2016, offering health coverage to about half a million low-income adults.

Email Sam Karlin at skarlin@theadvocate.com