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Centene to pull out of Kentucky managed care contract

Missouri-based Centene said Wednesday it is initiating the termination of one of its subsidiary's Medicaid managed care contract in Kentucky.

Centene said it has informed the Kentucky Cabinet of Health and Family Services of its intent to terminate its Kentucky Spirit Health Plan's contract with the state, and also seek "damages incurred under the contract" through a formal dispute it has filed.

The company didn't cite any specific reasons for the termination in its announcement and didn't offer further comment. In a media statement, Jesse Hunter, Centene's executive vice president of operations, said: "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." 

The Kentucky Cabinet of Health and Family Services said in a press release that Kentucky Spirit Health Plan had offered the lowest bids for the contract "but now cites lost profits as the motivating factor in the company's decision to leave."

The agency's secretary, Audrey Tayse Haynes, said: "I am deeply frustrated that this publicly traded, Fortune 500 company has chosen to put profits above people and will not honor the terms of its contract. The managed care model is working in many states and is working here in Kentucky."

[See also: Feds to approve Kansas managed care plan, Arkansas mulls expansion]

Kentucky Spirit Health Plan's contract covers about 125,000 Medicaid beneficiaries. The rest of the state's Medicaid members in managed care are split between WellCare Health Plans and Conventry Health Care, which is set to be acquired by Aetna. Centene said Kentucky Spirit Health Plan will continue the contract until July 2013, one year short of the three year contract's original expiration.

Kentucky began a Medicaid managed care demonstration in 1995, started a program in 1998, and, like Kansas and other states, is moving to a statewide managed care system amid high healthcare costs and government budget woes.

After the announcement Wednesday, Centene's stock price jumped 11 percent to $38.81. The company currently offers Medicaid managed care services in 19 states and was considered to be among several candidates for acquisition before WellPoint's and Aetna's deals to buy managed care firms.  

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