Two of the nation's largest health insurance companies, UnitedHealthcare and Aetna, have lost bids to manage Medicaid benefits in Pennsylvania under contracts worth a total of $12 billion over three years.
The contracts, which cover physical health under Pennsylvania's HealthChoices program, were first awarded in April, but had to go through a second procurement process after Aetna, which last year won only one of the state's five zones, was granted a preliminary injunction blocking the Pennsylvania Department of Human Services from implementing its choices.
The big winners in the selections announced Thursday were Gateway Health, a joint venture of Highmark Inc. and Trinity, and UPMC for You, part of the giant University of Pittsburgh Medical Center. Gateway will cover the entire state. UPMC for You will be in four zones, up from two now.
There were significant changes in the selections from April to now, which Department of Human Services Secretary Ted Dallas attributed to an objective scoring system. "Certain folks scored higher than others. That's all it was a reflection of," Dallas said.
United Healthcare of Pennsylvania Inc. was in all five zones in April. Now it's out completely. Aetna lost the one zone it was left with in April. Gateway went from two zones to five. Health Partners Plans, a big provider in Philadelphia, added the Lehigh/Capital Region.
AmeriHealth Caritas, majority owned by Independence Blue Cross, was statewide in April, but is now down to three zones, including Southeastern Pennsylvania, where it is the biggest Medicaid manager, but now faces new competition from Gateway, UPMC for You, and publicly traded Centene Corp., of St. Louis, a national giant in Medicaid managed care.
AmeriHealth Caritas, which operates as Keystone First in the Philadelphia region, did not respond to a request for comment.
Dallas said that providers with better scores for customer service, member satisfaction, and disadvantaged-business participation rose to the top.
"The result is going to be much higher quality of service for the Medicaid recipients we have in Philadelphia and across the state," Dallas said.
The program covers 2.2 million people.
Aetna, UnitedHealthcare, and AmeriHealth Caritas have filed protests, state officials said.
"We look forward to meeting with state officials to learn more about the scoring and decision process. Today we serve over 210,000 Medicaid members in all five zones in the commonwealth," Aetna spokeswoman Susan Millerick said. Millerick said Aetna employs more than 7,000 people in Pennsylvania across all lines of business, more than in any other state.
UnitedHealthcare has a slightly larger market share, with 221,913 enrolled in its Medicaid plans in November, state data show.
"We strongly disagree with the state’s decision, have filed a formal protest with the Pennsylvania Department of Health Services, and are aggressively pursuing all options and remedies at our disposal," UnitedHealthcare spokeswoman Jocelyn D. Parker said.
The new contracts are scheduled to start in June, but Dallas said it could take months to work through the bid protests. "We're anxious to move forward," he said.