Judge recommends throwing out 1 of 4 Medicaid contracts
Jason Clayworth, email@example.com:06 a.m. CST November 26, 2015
An administrative law judge has recommended that Iowa throw out one of the four contracts awarded to for-profit companies that are in line to manage Iowa’s Medicaid program.
The ruling calls for the state to reverse the contract awarded to WellCare, a company that has faced millions of dollars in fines for fraud or mismanagement in other states and last year saw three former executives sentenced to prison for fraud convictions.
The ruling was released after 4:30 p.m. Wednesday. It was not immediately clear how the ruling will affect a plan to launch the largest privatization effort in state history. The annual $4.2 billion Medicaid program provides health coverage to 560,000 poor and disabled Iowans.
However, Gov. Terry Branstad's office issued a statement late Wednesday expressing confidence the plan would "remain on schedule" for a Jan. 1 launch.
The administrative law judge's decision "allows Medicaid Modernization to move forward," said the statement, issued by communications director Ben Hammes. "Tonight’s decision emphasizes that the process was both 'thorough and methodical.' We continue to evaluate the next steps in the administrative review of the procurement process and remain on schedule to implement our plan on January 1, 2016.”
The ruling is considered a “proposed decision.” Branstad is expected to appoint Iowa Department of Administrative Services Director Janet Phipps to review the decision to help decide what should occur next. Further legal challenges from any of the parties involved is possible.
It’s also possible that the state will continue to work with WellCare through any possible ongoing litigation and that the company’s work with the state will launch on Jan. 1 along with the three other companies as planned.
The three companies that lost in a public bid process to land the Medicaid contracts filed legal challenges questioning how the Department of Human Services handled selection procedures. And WellCare was at the center of that controversy.
Judge Christie Scase found that WellCare should have disclosed information about its “integrity agreement” with the federal government following convictions in 2014 of three former executives who had schemed to keep money for the company that should have been returned to the state of Florida.
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That information, initially withheld from WellCare's bid to the state, should have been shared with the bid evaluation committee and Iowa DHS Director Chuck Palmer before the bids were awarded, the judge found.
“Without this information, they could not exercise reasoned judgment as to whether WellCare’s failure to disclose these events in its initial response was an intentional or material omission,” Scase wrote.
WellCare officials issued a statement late Wednesday criticizing the proposed decision.
“WellCare strongly disagrees with Judge Scase’s recommended order,” spokeswoman Crystal Walker said. “We intend to bring its erroneous conclusions to Director Phipps’ attention and urge that she uphold the Department of Health and Human Services’ contract awards.”
Among the losing bidders' other key arguments:
· Former Iowa House Speaker Christopher Rants and former state Rep. Renee Schulte — both hired to do work for WellCare — tried to identify the confidential makeup of the selection committee.
· Michael Bousselot, Gov. Terry Branstad’s policy director for human services at the time of the bid selection, was answering questions and providing the company with information about the work. That was a violation of a so-called “blackout period,” where bidders were supposed to funnel all questions through one DHS staffer to avoid conflicts of interest or favoritism, the companies said. Bousselot was promoted on July 30 to be the governor’s chief of staff.
Scase dismissed the argument involving Rants and Schulte, saying that, while troublesome, “the record lacks hard facts proving that WellCare had an organizational conflict of interest” and that the improper communications do not "sufficiently taint the entire process to necessitate reversal of the award of contracts to the remaining successful bidders.”
Branstad's push to privatize management of the Medicaid program has become highly controversial. Current clients and health care providers have questioned whether enough providers will be signed up to provide adequate care by Jan. 1.
DHS has projected that Iowa will save $51 million by privatizing management of the program and improve care by better coordinating services. Clients, their families and advocates have voiced fears that services eventually will be cut to achieve desired savings.