Centene subsidiary initiates termination of Medicaid contract with Kentucky

Centene Corporation announced today that its subsidiary, Kentucky Spirit Health Plan (Kentucky Spirit), has notified the Cabinet for Health and Family Services that it is exercising a contractual right that it believes allows Kentucky Spirit to terminate its Medicaid managed care contract with the Commonwealth of Kentucky effective July 5, 2013. In addition, Kentucky Spirit has filed a formal dispute with the Cabinet for damages incurred under the contract.

“Since the inception of the contract, we have been in discussions with the Cabinet about our concerns with the Medicaid managed care program but have been unable to resolve our differences. Consequently, we do not believe there is a viable path to a sustainable managed care program in Kentucky,” said Jesse Hunter, Executive Vice President of Operations for Centene. “As a result, we are in the unfortunate position of having to take steps to terminate the contract and exit the market.”

“Kentucky Spirit remains committed to a smooth transition for the members that we currently serve, and we will continue our tradition of quality healthcare during this period,” said Jean Rush, Chief Executive Officer and Plan President.

Consistent with the steps taken as mentioned above to terminate the Kentucky contract effective July 5, 2013, Centene anticipates recording a pre-tax premium deficiency reserve ranging from $60 to $70 million related to the Kentucky operations in the quarter ended September 30, 2012.Third quarter results will be released on October 23, 2012 and operating results, excluding the premium deficiency reserve related to Kentucky, are expected to be in line with the forecast incorporated into the Company’s previously communicated annual guidance. As a reminder, the Company is currently in its “quiet” period until the release of the third quarter results.

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Ben Keeton

Publisher at Medical News
Ben is the publisher of Medical News and focuses on the business of healthcare in Kentucky.
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