Mo. senators vote to stay out of Medicaid dispute

JEFFERSON CITY, Mo. -- Missouri senators on Wednesday rebuffed a legislative attempt to intervene in a dispute over Missouri's $1.1 billion Medicaid managed care program after some lawmakers contended it would be inappropriate for them to meddle in state contracting decisions.

Under an administrative policy change, the state decided to limit the number of insurers getting Medicaid managed care contracts this year to three companies. In the past, the state had allowed any firm that met the bidding criteria to compete to cover a portion of the roughly 430,000 Medicaid recipients included in the managed care pool.

One of the losing bidders, Molina Healthcare Inc., sued the state seeking to invalidate the contracts. It took particular issue with the new limit on participating insurers and argued that 80,000 Medicaid recipients it currently covers would be harmed if they had to pick a new insurer and, potentially, new physicians.

Earlier this month, Senate Appropriations Committee Chairman Kurt Schaefer inserted wording in Missouri's proposed budget for the fiscal year starting July 1 that would have benefited Molina by requiring the state to contract with all managed care companies that met the state's bidding criteria.

But after a contentious debate early Wednesday, senators voted 21-11 to remove that wording from the budget bill that funds the Medicaid program in the Department of Social Services. Sen. Jason Crowell, who sponsored the amendment striking the wording, said it essentially amounted to the legislature awarding a contract -- something that is the duty of the executive branch.

"This is directing business in the appropriation process," said Crowell, R-Cape Girardeau.

Schaefer countered that lawmakers routinely use wording in budget bills to direct state agencies how to spend money. He said capping the number of insurers that can participate in the managed care program was a poor decision that needed to be reversed.

"It's bad for patients, and it's bad for providers" of health care, said Schaefer, R-Columbia.

The Department of Social Services has touted the new contracts as a money-saving move in a tight budget. The state expects to save $40 million from better rates in the first year of the new contracts and an additional $16 million over two years from reduced administrative costs by capping participation to three insurers, according to the department.

If Schaefer's wording had remained in the budget, Crowell contended that it would have negated some of those expected savings.