By: Julie O’Donoghue | Louisiana Illuminator
Just a week after Gov. Jeff Landry’s administration confirmed the sudden end of a $4.2 billion Medicaid contract that provides health insurance to more than 330,000 people, state officials backed off their original plan and said they would seek an extension of the arrangement through March instead.
The state will continue to work with UnitedHealthcare of Louisiana to provide Medicaid coverage if the company agrees to a short-term supplemental contract. The arrangement would be worth approximately $561 million for 90 days in 2026, Health Secretary Bruce Greenstein said.
UnitedHealthcare has not said whether it will accept those terms. Company spokeswoman Christina Witz did not answer question in an email Tuesday asking about whether it was willing to agree to the proposed short-term arrangement.
“We will continue to demonstrate our compliance with the State and remain committed to working with the Louisiana Department of Health to help provide a smooth transition for our members,” Witz wrote.
If accepted, the contract extension would keep 330,000 people with UnitedHealthcare Medicaid plans from being quickly moved to another insurance provider before the end of the year.
The Landry administration eased up on initial plans to abruptly cancel the UnitedHealthcare contract in response to pressure from state senators during a hastily called legislative hearing Tuesday. Senators questioned whether the health department would be able to shift hundreds of thousands of people from one Medicaid plan to another over the next two weeks without massive disruptions.
They worried that Medicaid enrollees — as well as hospitals, doctors and other medical providers — were not prepared for such a massive overhaul during the holiday season.
“There’s going to be confusion and chaos,” Senate Health and Welfare Committee chairman Patrick McMath, R-Covington, said of the original plan.
Dispute over pharmacy benefits managers
The Louisiana Department of Health partners with six private companies to provide Medicaid insurance plans to 1.4 million people across the state. The other businesses offering plans include Aetna Better Health of Louisiana, AmeriHealth Caritas, Healthy Blue, Humana Healthy Horizons and Louisiana Healthcare Connections.
Tuesday’s shift in the UnitedHealthcare arrangement is the second time this month Landry’s health department has reversed the cancellation of a Medicaid contract with one of these companies.
On Dec. 2, the health department sent notices to UnitedHealthcare and Aetna announcing their contracts would be abruptly terminated at the end of the year. The health department then reinstated a one-year $1.8 billion extension with Aetna on Dec. 9, a few hours after a news story about the ending of the contracts was published.
Attorney General Liz Murrill was behind the push for the state to terminate its relationships with UnitedHealthcare and, initially, Aetna. Her office is suing the companies and their affiliated pharmacy benefits managers for allegedly unfair business practices, and Murrill directed the health department to end their contracts as a result.
Those lawsuits are part of a broader national campaign against corporate pharmacy benefits managers in which Landry and Murrill are deeply invested.
Pharmacy benefit managers are middlemen who negotiate drug prices between pharmaceutical industry and health insurance companies. Landry and Murrill believe the entities, which are often owned by large corporations that also run retail pharmacy chains and health insurance companies, drive up prescription drug prices.
In 2022, Landry, as attorney general, filed a lawsuit against UnitedHealthcare and its affiliated pharmacy benefits manager, Optum Rx, alleging the companies had overcharged Louisiana’s Medicaid program for prescription drugs. Murrill took over that litigation last year when she became attorney general.
This summer, Murrill launched three lawsuits against Aetna’s parent company, CVS Health, and its affiliated pharmacy benefits manager, CVS Caremark, alleging the company was engaging in unfair business practices that hurt locally-owned pharmacies.
One lawsuit also accused CVS Health of inappropriately using customer data to push out text messages to Louisiana residents about state legislation the company opposed.
On Tuesday, Murrill said she was finalizing a settlement agreement with CVS Health worth approximately $50 million that would end all three of those lawsuits. As a result, the attorney general had signed off on Aetna’s Medicaid contract extension for 2026 last week.
But Murrill is still at an impasse with UnitedHealthcare, whose potential lawsuit liability is much higher, between $388 million and $768 million, she said. There’s a chance UnitedHealthcare would owe the state as much as $1 billion, according to Murrill, if it was forced to pay all the financial penalties at stake.
More time to negotiate
The health department’s 90-day extension of the UnitedHealthcare contract would give Murrill’s office three more months to negotiate with the company. If the two sides reach a settlement, the company’s Medicaid insurance plan could stay in place through the end of next year, Greenstein said.
To what extent UnitedHealthcare is required to hand over documents about its business practices to the attorney general is a major point of disagreement in the litigation, Murrill said.
UnitedHealthcare has been fighting Louisiana for years in court in order to prevent sharing information that would allow the state to determine if the company had overcharged the Medicaid program, according to the attorney general.
“[The 90-day extension] will give United an opportunity to come and talk to me and provide us with what we’ve asked for,” Murrill said in an interview with reporters. “They have to decide whether they want to do business with our state.”
Witz, UnitedHealthcare’s spokeswoman, disputed Murrill’s assertion that UnitedHealthcare has violated laws by withholding documents.
“UnitedHealthcare has always maintained compliance with Louisiana law and our Medicaid contract and have been consistently responsive to the State’s request for data records and documentation,” she wrote Tuesday.
Miscommunication with lawmakers
The attorney general also pushed back on suggestions she had urged the health department to cancel UnitedHealthcare’s contract in response to an unfavorable court ruling she received in the case.
State lawmakers signed off on all six Medicaid contracts, including the one with UnitedHealthcare, at the urging of the Landry administration on Nov. 20. The following day, Louisiana’s First Circuit of Appeal ruled in favor of UnitedHealthcare over Murrill. She then asked the health department to end UnitedHealthcare’s contract 11 days later.
On Tuesday, Murrill said the First Circuit court ruling has no bearing on her decision to push for the end of the Medicaid contract. She said she had told UnitedHealthcare weeks before the court ruling came out, at an Oct. 15 meeting, that she would direct the health department to end the contract if negotiations didn’t go anywhere.
The First Circuit ruling only applies to a side issue in the overall lawsuit, she said. UnitedHealthcare has challenged the structure of the legal contract with Salim-Beasley, the Natchitoches law firm Murrill has hired to work on the case. The First Circuit decided Nov. 21 that the lower district court had to deliberate over the merits of UnitedHealthcare’s arguments about Murrill’s pay arrangement with the firm.
The attorney general said she is confident her office will win that court fight.
“It is convenient … to somehow try and blame [the contract termination] on me being vindictive. It is not about that,” Murrill said in an interview.
She also pointed to a different, favorable ruling from the Louisiana Supreme Court released Nov. 12 that could compel UnitedHealthcare to produce more of the documents she has been seeking.
But legislators were still confused about why they were asked to sign off on the UnitedHealthcare contract by the Landry administration on Nov. 20 if the attorney general was opposed to it.
On Tuesday, Murrill told lawmakers she didn’t realize they were voting to allow the contract to move forward at the November meeting.
“Let me be clear. I wasn’t invited to the committee hearing at [the Joint Legislative Committee on the Budget on Nov. 20],” she told senators. “I didn’t know it was on the agenda at JLCB, and I’m not sure I would have gotten into litigation strategy.”