Texas rejects insurers' Medicaid contract protests

Texas officials rejected protests from eight insurers challenging its Medicaid contract awards. 

The Texas Health and Human Services Commission rejected challenges from AmeriHealth Caritas, CareSource Bayou Health, Cook Children's Health Plan, Driscoll Health Plan, Baylor Scott & White Health Plan, Superior HealthPlan (Centene) and Wellpoint Insurance (Elevance Health), according to documents published June 7. 

Blue Cross Blue Shield of Texas, Molina Healthcare, Aetna and UnitedHealthcare were awarded the majority of the state's tentative contracts, which are collectively worth $116 billion. Texas did not award contracts to Fort Worth-based Cook Children's Health Plan, Houston-based Texas Children's Health Plan or Corpus Christi-based Driscoll Children's Health Plan. 

The tentative contract awards to manage the state's STAR and CHIP programs mean 1.8 million Medicaid recipients in Texas would need to switch to new plans if the contracts are finalized. 

Executives for Cook Children's and Driscoll Health previously told The Texas Tribune their health plans will likely shut down if they are not awarded STAR and CHIP contracts. 

In protests submitted to the state, several plans argued the state improperly disclosed copies of bids to a competitor in error.  In April, the Tribune reported the state sent documents to Aetna Health Plan of Texas in response to a public records request from the plan. 

The state later asked Aetna to destroy the records "as a courtesy." In responses to plan protests, the Health and Human Services Commission said the error did not affect the outcome of the procurement. 

Plans are expected to challenge the procurement in court, the Tribune reported June 6. 

A spokesperson for Cook Children's told the news outlet the process was "flawed from the beginning" and the plan will "pursue every legal option available" to challenge the decision. 

Cecile Young, Texas Health and Human Services' executive commissioner, will decide the next steps in the procurement, according to the Tribune. The commissioner has no deadline for deciding what action to take.

Ms. Young could rubber stamp the decision, cancel the procurement and start over, or wait for the state Legislature to take action next year, according to the Tribune. A group of state lawmakers has urged the state to delay contract awards until next year to give legislators a chance to amend the criteria Texas uses to award contracts. 

The tentative contract awards are the first the state has completed in 12 years after canceling two previous procurement processes. 

Texas has the third-largest Medicaid population in the U.S. at 4.4 million as of 2023, according to KFF. The STAR and CHIP contracts cover the majority of the state's Medicaid recipients. 

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