Former executive alleges misconduct by Kansas Medicaid contractor
The lawsuit filed in U.S. District Court by Overland Park resident Jacqueline Leary named as defendants Centene Corp., Centene subsidiary Sunflower State Health Plan in Kansas and two executives of the corporate entities.
Centene was among three for-profit, managed-care organizations selected in 2012 by the administration of Gov. Sam Brownback to operate a new $3 billion initiative named KanCare.
AmeriGroup Kansas, United Healthcare of the Midwest and Sunflower State Health Plan were awarded the exclusive contracts to provide Medicaid services to 400,000 of Kansas’ disabled and poor starting in January 2013.
The companies reported losses of $110 million in 2013 and $72 million in the first half of 2014, according to reports from the Kansas Department of Health and Environment.
Deanne Lane, spokeswoman for Centene in St. Louis, said she wouldn’t comment on the lawsuit.
“It is our policy not to discuss matters of litigation,” she said.
Leary, who was vice president of contracting and network development at Sunflower State Health Plan, said in the suit Centene managers responded to poor financial performance of the Kansas operation by blocking assignment of Medicare beneficiaries to medical providers that had contracted for reimbursement rates in excess of Kansas’ standard rate.
Initially, Leary was instructed to preclude new clients from being assigned primary care physicians affiliated with The University of Kansas Medical Center in Kansas City, Kan. The objective was to avoid expenses related to referrals by KUMC physicians and specialists.
The lawsuit filed Monday claims Centene executive Rob Hitchcock, one of the named defendants, was responsible for the order and quoted him as declaring, “let me be prescriptive — you will close the PCP panels to auto assignment that are employed by the academic medical center.” Hitchcock, who was Centene’s executive vice president of health plans, and others had discussed in February 2013 the weak financial performance of the Sunflower subsidiary, the suit said.
In March 2013, Leary said she complained to the second individual defendant, Jean Wilms, that proposed alteration of physician assignments “contravened Centene’s contractual obligations both to those providers and to the state of Kansas.”
Leary complied with instructions to close out KUMC and was “forced at the same time” to determine how to alter online and printed provider directories to make the change appear benign.
Subsequently, Leary alleged, Wilms ordered closure of automatic assignment avenues for all physicians working at hospitals with negotiated rates above 100 percent of standard payment. That adjustment removed from the auto-assignment process physicians at Stormont-Vail HealthCare, of Topeka, Saint Luke’s Health System and Via Christi Health and KUMC.
In July 2013, Wilms purportedly instructed the plaintiff to take the additional step of selectively shifting about 7,500 Medicaid members to physicians employed by entities paid standard rates.
Under the state’s contract with Centene, the lawsuit said, Sunflower must ensure clients “are afforded the right to select the providers of their choice without regard to variations in reimbursement.”
Leary said in the filing that she declined to follow the transfer order and “insisted that she would not lie in response to such inquiries.”
In January — days before being fired — she discussed with Sunflower’s vice president of compliance and regulatory affairs, Virginia Picotte, concerns about business decisions “contrary to both SSHP’s (Sunflower’s) contract with the state of Kansas and SSHP’s contracts with its providers.”
Paul Davis, the Kansas House minority leader and the Democratic nominee for governor, said Republican lawmakers had resisted meaningful oversight of the privatization of KanCare by the Brownback administration.
“Very, very disturbing allegations here,” Davis said. “There seems to be this increasing cloud around the KanCare program and the people that are involved in this. And I think we’re going to have to really, really dig in deep to figure out what is going on with this.”
Two Kansas lawmakers requested in September a state investigation into whether KanCare contracts were allocated properly. Rep. Jim Ward, D-Wichita, and Sen. Laura Kelly, D-Topeka, sought review of alleged “pay-to-play” corruption.
The state’s acting inspector general for Medicaid resigned in June amid controversy about his background and authority to perform oversight duties. Phil Hermanson, a former Wichita member of the Kansas House, stepped down as the Kansas Department of Health and Environment’s official responsible for detecting fraud and abuse in KanCare.
The Federal Bureau of Investigation was scrutinizing Brownback’s former chief of staff and other political figures for possible influence peddling in a case linked to KanCare contracts, sources said in April.