Medicaid awards managed care contracts after two-year stalemate

Three companies will begin new contracts to manage the care of Mississippi Medicaid beneficiaries in July of 2025, barring further legal holdups. 

For-profit, incumbent companies Magnolia Health and Molina Healthcare and new, nonprofit TrueCare were each awarded four-year, $3.8 billion contracts beginning Aug. 12. 

The contracts were stalled for two years – since August 2022 – after two companies that weren’t chosen filed protests with the state alleging that the blind bidding process was unfair and reviewers were not properly blinded to the identities of applicants. The issue is still being litigated in court.

Enrollment in new plans should begin in May 2025, said Mississippi Medicaid spokesperson Matt Westerfield. 

The contracts were awarded after Mississippi Medicaid issued one-year emergency contracts last month to Magnolia Health, Molina Healthcare and UnitedHealthcare – the companies currently contracting with the state for managed care services – for the second year in a row, giving new contractors time to implement services. 

The state’s managed care program, MississippiCAN, seeks to lower health care costs and improve access to medical services for the state’s most vulnerable citizens, including children, people with disabilities and pregnant women. Beneficiaries of the Children’s Health Insurance Program, which provides low-cost health coverage to children in families that exceed Medicaid’s income ceiling, also receive coordinated care services. 

Managed care companies receive per-member payments to maintain a provider network and implement programs intended to improve health outcomes for enrollees.

Nearly three-fourths of the state’s 653,916 Medicaid recipients were enrolled in MississippiCAN services in July 2024. 

The effectiveness of managed care programs has been widely debated. Some people argue that managed care companies are incentivized to offer effective preventative care services to members in order to avoid high-cost medical services, while critics argue that their profits are made by denying or limiting services to patients. 

Mississippi is one of 40 states that has adopted the managed care organization model for coordinating benefits, according to the National Conference of State Legislatures. The state began its program in 2011.

Mississippi Medicaid has awarded $37.8 billion in state and federally-funded contracts to four managed care companies since 2017. 

They represent the largest contracts awarded in the state in at least the last 10 years, according to the state’s contract database. 

Magnolia Health, owned by St. Louis-based Centene, has provided managed care services to the state since 2011. In 2021, Centene operated managed care programs in 29 states, according to data from KFF.

Magnolia Health has netted $14.9 billion in contracts from the state since 2017, more than any other managed care company. 

California-based Molina Healthcare has provided managed care services to the state since 2017, receiving $8.6 billion in contracts. In 2021, it operated managed care programs in 16 states.

They are some of the most profitable companies in the nation. In 2023, Centene and Molina Healthcare reported nationwide profits of $2.7 billion and $1.1 billion, respectively.

TrueCare is a not-for-profit company established by Mississippi hospitals and the state hospital association to provide an alternative to traditional managed care companies. The company vied for a managed care contract in 2017, but was not selected during the review process. 

Richard Roberson, CEO of TrueCare and incoming president and CEO of the Mississippi Hospital Association, said the goal of the nonprofit is to improve health outcomes for patients and lower care costs. 

Because the company is governed by providers, it will be less likely to deny claims and more motivated to use preventative care to avoid costly care, Roberson said. 

“I think there is a place for managed care if we’re truly managing care, and not just managing claims,” he said. 

Contract controversy

Centene, the company that owns Magnolia Health, settled with the state for $55 million in 2021 amidst an investigation by Attorney General Lynn Fitch and State Auditor Shad White into whether the company inflated prescription drug bills to the Division of Medicaid. 

“I do not care how large or powerful the company is, Mississippi taxpayers deserve to get what they paid for when the state spends money on prescription drugs,” said White in a statement at the time. 

The company did not admit fault or wrongdoing under the agreement.

The Legislature in 2022 rejected a proposal by Rep. Becky Currie, R-Brookhaven, to prohibit the Division of Medicaid from hiring managed care companies that have settled with the state over allegations of fraud. 

“I am for doing away with doing business with a company who took $55 million dollars of our money that was supposed to be spent on the poor, the sick, the elderly, the mentally ill, the disabled,” she said during discussion on the House of Representatives floor. 

Magnolia officials at the time said the settlement amount of $55 million did not represent the alleged amount of fees the state was overcharged.

State Medicaid Director Drew Snyder argued the bill could cause a lapse in care for Medicaid beneficiaries and lead to a legal quagmire. 

Centene was one of the largest contributors to Gov. Tate Reeves’ gubernatorial campaign in 2023. The company and its political action committee (PAC) have donated $370,000 to Reeves since 2010. It has also donated to many state legislators’ campaigns, according to public documents on the Secretary of State’s website.

A standoff

The contract selection process itself also attracted scrutiny.

Mississippi Medicaid began seeking new contracts for managed care in December 2021, with plans to begin the contracts in July 2023. The division’s “request for qualifications” yielded five responses.

The agency announced its selection of Magnolia Health, Molina Healthcare and TrueCare in August 2022. 

A protracted legal battle began one week later when the two companies that weren’t chosen – Amerigroup and UnitedHealthcare – cried foul, arguing that the selection process was unfair.

The review process used a blind bidding process to evaluate applications while keeping the identities of the companies hidden. 

The companies argued the state failed to properly “blind” contract evaluators to the identities of applicants by allowing companies to include identifying information in their application.

“Protests in state Medicaid managed care procurements are a near certainty,” Medicaid spokesperson Matt Westerfield told Mississippi Today in an email. “… It’s just become part of doing business for the companies that don’t win.” 

The Division of Medicaid denied the protests in June 2023. The Public Procurement Review Board, the body responsible for reviewing contract acquisition processes, denied a subsequent appeal in April 2024. 

The Public Procurement Review Board ruled that the Division of Medicaid properly carried out blind scoring procedures. 

Amerigroup and UnitedHealthcare turned to the courts in April and May, respectively, when they sued the Division of Medicaid and the Public Procurement Review Board, aiming to halt the contracts from being awarded. 

Westerfield acknowledged that the court’s adjudication process could alter the state’s plan to begin the new contracts in July 2025, but said the division did not expect any delays. 

Minnesota-based UnitedHealth Group, which owns UnitedHealthcare, currently provides managed care services to Mississippi Medicaid beneficiaries. It generates more money than any other U.S. health care company, according to Becker’s Hospital Review.  In 2023, the company reported $23.1 billion in net earnings. It provided managed care services to 26 states in 2021.

In the state’s 2023 external audit of managed care organizations, UnitedHealthcare met 98% of standards for MississippiCAN. Magnolia met 97% and Molina met 92%.

Amerigroup has not held a contract for managed care service in Mississippi. It is owned by Minneapolis-based Elevance Health.

Magnolia Health, Molina Healthcare and UnitedHealthcare did not respond to requests for comment for this story.