Cook Children’s Challenges Texas Over Potential Medicaid Contract Loss

TL/DR –

Cook Children’s Health Plan has filed two lawsuits against the Texas Health and Human Services Commission to prevent their removal as a Medicaid contractor. The lawsuits aim to halt a $116 billion Medicaid procurement process that would remove Cook Children’s and two other hospital-affiliated children’s health plans from Medicaid STAR and Children’s Health Insurance Program (CHIP) in favor of private companies. If the state’s decision is upheld, this would require nearly 1.8 million Texans who receive Medicaid coverage from six managed care organizations to switch to new insurers by next year.

Cook Children’s Health Plan Sues Texas State Over Medicaid Contract Removal

The longstanding Medicaid contractor, Cook Children’s Health Plan, has taken legal action against the state, filing two lawsuits to prevent the Texas Health and Human Services Commission from terminating their contract.

The Fort Worth-based healthcare system revealed the lawsuits on Wednesday, aiming to halt the $116 billion Medicaid procurement process. This process aims to remove Cook Children’s and two other hospital-affiliated children’s health plans from Medicaid STAR and the Children’s Health Insurance Program (CHIP).

The proposed overhaul would replace Cook Children’s Health Plan within the state’s Tarrant service area, Texas Children’s Health Plan in the Harris region, and Driscoll Health Plan in South Texas with private companies. Collectively, these three plans operate as managed care organizations supplying Medicaid coverage to Texans in their respective regions.

These plans, established two decades ago, cater to more than 700,000 families, pregnant women, and children.

Should the state’s health agency’s decision be upheld, this would result in fewer managed care organizations overseeing STAR and CHIP, paving the way for national for-profit health companies in most of the state’s areas. This could necessitate almost 1.8 million Texans who currently receive Medicaid coverage from six managed care organizations across the state to switch to new insurers by next year.

The lawsuits were filed in Travis County, with one petition seeking declaratory judgment and injunctive relief against HHSC Commissioner Cecile Erwin Young with the goal of reversing the contract decision. The second lawsuit seeks a temporary restraining order against the state’s health agency to prevent the finalization of procurement results.

An HHSC spokesperson, Jennifer Ruffcorn, declined to comment on the pending litigation, but noted that the contract situation remains unresolved.

The future of the procurement process currently rests squarely on Young’s discretion, who has no deadline for deciding whether to uphold the agency’s decision, repeal it and start over, or officially delay it until lawmakers can respond when they meet next year.

Karen Love, President of Cook Children’s Health Plan, stated that the removal of the Medicaid contracts from the three hospital affiliates is predicated on a flawed process that leaves Texas families at the mercy of national for-profit insurance companies.

Medicaid managed care contracts are typically the most costly contracts funded by taxpayers. Earlier this month, Texas officials rejected attempts by several managed care organizations to rescind the proposal that would remove them from the state Medicaid program.

Representatives for Driscoll Health Plan have appealed this decision to the state. Driscoll Health Plan CEO, Craig Smith, told The Texas Tribune that his organization filed a second appeal last week and is now awaiting a ruling. He also said he is prepared to take legal action against the state if the appeal is denied.

Similarly, representatives for Superior HealthPlan, another managed care organization, expressed disappointment over the decision to deny the protests made by the three hospital plans. They are also appealing the current decision made by the state’s health agency, predicting it will result in the largest disruption in member care in Texas Medicaid history.

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

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