Welcome to the October 22 top secret, always confidential Monday Business Briefing.
These are biz tips Insider Louisville staff and contributors have collected during the past few days, a few of which are NOT double-verified like Insider Louisville’s daily reporting.
But as always, this is information from insider sources with direct knowledge of events.
The big story this week is, doctors and health care providers are heading for the bomb shelters as the Medicaid Meltdown starts to glow.
• Coventry Health Care has been lambasted by federal judges and excoriated in the media. But to the Beshear Administration, the insurer can do no wrong. Coventry, based in Bethesda, Md., is one of three health insurers awarded hundreds of millions in Medicaid managed care contracts last August by Kentucky’s Cabinet for Health and Family Services as the Beshear Administration shifted to managed care from fees for services. The pitch was, the move would save $375 million. It hasn’t. What it has done is wreak total chaos. The MCO that’s attracted the most criticism in the ensuing Medicaid Meltdown has been Coventry. Coventry earned a federal judge’s wrath earlier this year after he found the insurer had tried to dump its most expensive Medicaid members by terminating the contract with the largest hospital system in Eastern Kentucky. Yet, Coventry has emerged unscathed, and the Beshear Administration is giving it free reign to let it keep workin’ that Medicaid Magic. Earlier this month, Coventry executives sent a letter to the Kentucky Primary Care Association, telling the group it was cutting reimbursements. (You can read the letter at the top of the page.)
Joseph Smith is executive director of KPCA, an association of medical safety net (primary care) clinics, physicians and nurse practioners throughout Kentucky. These are family and geriatric practice physicians and internists practicing family medicine. They are on call pretty much 24/7 and probably earn on average $125,000 annually, which sounds like a lot until you consider the education commitment and the fact a cardiologist makes $500,000.
So, while Coventry cuts payments to these providers (unilaterally), and blames the cabinet in writing, the cabinet rewards Coventry with an expansion of business at an inflated price in the name of … you got it … saving taxpayers’ dollars! Coventry is one of three for-profits winning the richest Medicaid lottery in state, Region 3, which includes 170,000 Medicaid members in Louisville and the surrounding counties. The move took away the business from Passport Health Plan, even though everyone from Beshear to federal regulators praised Passport as an efficient provider of top-notch services. What did Coventry bid? About $475 per person, per month, according to documents submitted to Insider Louisville. Ditto for Humana. And Passport’s bid? $457 per member per month.
How is this saving money? Well, it’s not. The Beasher Administration tried to cram through a new Medicaid system in a few months in order to show bogus savings during Beshear’s race against Republican State Senate President David Williams. The scheme was flawed from the beginning, with charges of side deals and manipulations. That led to doctors and hospital systems not getting paid, Medicaid members being told their doctors were no longer in the system, suits and countersuits. Finally, Centene Corp. executives announced their exit last week as one of four MCOs, stating the St. Louis-based insurer is bleeding money in Kentucky. So, what’s the quick fix? Helping Coventry, which is also bleeding money, get well by jacking up Region 3 prices. We worry that ultimately you’re going to see Medicaid reimbursements to docs shrivel. Health care providers will start turning away Medicaid patients or going broke. The insurers will lose so much money, they’ll cut and run. And the whole system will collapse in a state where about 800,000 citizens depend on it for their very lives.
• This is notable because it opens up a unique events space to the right clients. The 200-year-old Bullitt Estate at Oxmoor Farm, next to Oxmoor Center, once home to Louisville’s oldest Blue Blood family, is now the city’s most opulent events space. Our sources who’ve attended events there say the mansion is essentially just as the last Bullitt heir, Thomas Marshall Bullitt, left it when he died in 1991. Those sources say at events, guests are allowed to use much of the main house including the opulent library. Thomas Marshall Bullitt, who was Solicitor General of the United States and argued countless cases before the Supreme Court, was renowned for his collection of rare and important books on mathematics, according to Wikipedia. Our secret sources say Stock Yards Bank officials will entertain 46 of their top clients at the estate. Louisville-based law firm Wyatt Tarrant Combs also has used the mansion. Which is fitting since Thomas Marshall Bullitt became one of Louisville’s most successful attorneys at Bullitt, Dawson and Tarrant, the original version of what is now Wyatt. Apparently the Bullitt Family Trust, which also owns Oxmoor Center, owns the property. The Filson Club has the right to use the 79-acre property in perpetuity as an historic preservation site. So, while the Filson Club doesn’t charge a fee per se, it asks for a donation. We’re guessing it would be substantial since the non-profit historic group has to keep up 79 acres and about a dozen buildings including the main house, slave quarters, spring house, hemp/manager’s house, ice house, smokehouse, kitchen, farm manager’s house, barn, and garage. This is the second major mansion available to the right parties. A celebrated home and grounds in Anchorage also is available, but so exclusive, we’re not cleared to reveal more.
• We found out in the course of digging for details on a possible Fourth Street retail revival about big plans at the 320-room Seelbach Hilton Hotel at Fourth and Muhammad Ali. Our insiders say there are $2 million worth of plans to open the lobby and first floor more to the street after Arlington, Va.-based Interstate Hotels & Resorts bought out Investcorp, a global investment firm based in New York.
• Remember when your grandfather told you to go with a big company that would pay you well, then send you off to your Golden Years with a big pension? Great advice in 1950. Not so great in 2012. Yum! Brands is one of several corporate giants, including GM and Ford, offering employees or former employees lump sum payouts on pensions. The offer to “certain former employees” is part of Yum’s “effort to reduce our ongoing volatility and administration expense,” according to an 8k filing last week with the Securities and Exchange Commission. It puts former employees in the position of choosing between a sure thing and assuming the burden of finding an investment plan that yields gains, or riding it out with Yum. Company execs estimate payouts will cost between $25 million and $75 million for 2012, depending on how many people take them.
• We saved the best (or at least the most upbeat) for last. Multiple real estate insiders tell us My Morning Jacket frontman Jim James is shopping for buildings in Louisville. And you heard us right … “buildings,” plural. We hear one of James’ projects will be a recording studio, which we’re thinking may lure other global acts to our fair city. Various sources say he’s looked at buildings in NuLu, downtown, on Fourth Street near Theater Square, Portland and in Old Louisville. That’s a lot of looking! There was a Jim James spotting at Please and Thank You in NuLu by Insider Louisville staff. Did you know Jim James isn’t his real name, and that he grew up in Hikes Point!? We didn’t ….