In an unprecedented move, the Hawaii Department of Human Services is downsizing the number of Medicaid insurance company contracts it will offer.

The consolidation move is intended to relieve the burden of billing processes for many insurance plans, according to the department. But it will also limit the number of insurance plan choices Medicaid patients will have, especially on neighbor islands.

Documents from the State Procurement Office show DHS plans to enter negotiations with four insurance companies for contracts totaling $17 billion that span from this year to 2029.

The Hawaii Medical Service Association and United HealthCare Insurance Company appear to be the big winners, having received the largest contracts from DHS to continue business statewide. Contracts have yet to be finalized and depend on negotiations.

Two other providers were selected to offer Medicaid insurance plans for Oahu residents only: AlohaCare and Ohana Health Plan, also known as WellCare Health Insurance of Arizona.

Hawaii Medicaid Director Dr Judy Mohr Peterson Briefing on Homeless Solutions.

The Hawaii Med-QUEST division will work with fewer insurance plans to provide coverage starting in July. Med-QUEST Administrator Judy Mohr Peterson appeared at a recent legislative briefing.

Cory Lum/Civil Beat

Medicaid is a federal and state health insurance program that assists with health care costs for people with limited incomes and resources. Med-QUEST is the division that oversees the program in Hawaii.

DHS officials declined to be interviewed. They offered a press release that expressed some of the rationale behind the decision.

“We understand that this represents a change in how Med-QUEST has operated in recent years and we do not take it lightly,” the release states. “We have spent the last three years speaking to people on each island, and one thing we heard again and again was that having a lot of health plans was confusing to our beneficiaries and burdensome to doctors and other providers.”

AlohaCare, a Hawaii-based nonprofit health insurance company that specializes in Medicaid plans for patients on all islands, will now be restricted to working solely with Oahu patients. AlohaCare has contracted with Med-QUEST since 1994.

Kaiser Permanente used to contract with Med-QUEST but it was disqualified from bidding for a contract this round because the state’s request for proposals required that the insurer have Medicaid patients statewide. Kaiser has commercial and Medicare patients on all islands, but Medicaid patients only on Maui and Oahu.

That’s why it entered an affiliation with AlohaCare, Kaiser Spokeswoman Laura Lott said Friday. Lott said Kaiser Permanente was disappointed that AlohaCare was not selected for an all-island contract.

“AlohaCare was the submitter of the bid and we would be subcontracted for Kaiser Permanente members,” Lott said. “AlohaCare is nonprofit and mission driven just like us and really dedicated to serving the Medicaid population.

“We are currently working with AlohaCare and other community stakeholders to determine how all Kaiser Permanente QUEST members on Maui can continue to receive care from Kaiser Permanente,” she added.

AlohaCare also released a statement late Friday, saying that it plans to continue to work with Kaiser to serve all of its members.

“We are surprised and concerned that AlohaCare was not selected for an all-island contract,” AlohaCare officials said. “An important priority for both AlohaCare and Kaiser Permanente is to work with Med-QUEST to ensure there is no disruption in access to care for Kaiser Permanente’s members and our AlohaCare members on the neighbor islands.”

Ohana Health Plan will also have to restrict its insurance coverage to Oahu residents only.

DHS officials maintained that there would be no interruption to patient coverage and that they have a transition plan for individuals who are currently covered by Medicaid insurers such as Kaiser or AlohaCare. The department did not specify what the transition would look like. The department has yet to provide details on its transition plan.

“Med-QUEST has created a timeline to accommodate the member transition process,” the department said. “Additionally, every member affected by the change will have an opportunity in the future to enroll in a participating plan available on their island of residence. Over the coming months, Med-QUEST will communicate to all members confirming when the transition time will begin.”

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