(Updated to reflect KDHE comment; length of new contracts)
An insurance company that lost its bid for a KanCare contract is going to court to stop the state from moving ahead with its privatized Medicaid program under a new set of contracts.
Amerigroup late Thursday filed a lawsuit against the state in Shawnee County District Court. The company argues that it bid on the framework of a KanCare plan that was changed without the company getting to revise its proposal.
Amerigroup had been one of the three managed-care companies that provided services since 2013 under KanCare, the state’s $3 billion privatized Medicaid program. 
Last month, the state awarded three new contracts to Sunflower State Health Plan, United Healthcare, Midwest Inc. and Aetna Better Health of Kansas, Inc.
Amerigroup, which served 127,000 people, didn’t make the cut and contested the state’s decision. Those Medicaid beneficiaries will get to choose from a new plan in October.
Jon Hamdorf, state Medicaid director, said the agency hadn’t been served yet with the lawsuit.
“We appreciate the work of Amerigroup to serve Medicaid consumers since 2013,” Hamdorf said in a statement.
“All bidders were evaluated on the same criteria. We consistently conveyed the same to all parties throughout the process, which included in-person meetings, phone calls, etc.”
In its filing, Amerigroup argues that it wasn’t given a chance to respond to legislative changes in the requirements for “KanCare 2.0” as detailed in the state’s request for proposals.
The original “KanCare 2.0” program, included a work requirement, a lifetime cap on benefits, increased care coordination and case management, increased staffing requirements and elevated oversight standards.
Under political pressure, then-Gov. Sam Brownback announced that he was backing off “KanCare 2.0,” but the administration moved ahead to continue with the current program to include the work requirement.
The Legislature balked, adding a proviso to the budget that barred the state from spending any money on a KanCare program that was “substantially different” from the current program without legislative authorization.
Amerigroup argues that the state budget requires Republican Gov. Jeff Colyer’s administration to rewrite the terms of the “KanCare 2.0” requests for proposal to negotiate with the would-be vendors.
The company argues that the governor’s administration failed to take steps to change the requests for proposal although it knew for weeks that the Legislature would block “KanCare 2.0” from proceeding.
In an e-mail that Amerigroup obtained under the state’s open records law, the Kansas Medicaid director acknowledged that the request for proposal would need to be amended if the Legislature adopted its budget proviso.
Amerigroup argues that awarding a contract for services materially different from what was sought “is erroneous and contrary to competition.”
When presenting its bid, the company said it was asked if it could implement the care coordination part of “KanCare 2.0” and its representatives said they could comply but noted there were cost concerns.
However, Amerigroup said the scoring document inaccurately reflected that the company was unyielding and would not implement the care coordination part of “KanCare 2.0.”
The new contracts are scheduled to start Jan. 1. They are good for three years with options for two one-year renewals.
