Texas gave two consultancies and a law firm a sneak peek into how managed care companies bid to run Texas’ $116 billion Medicaid program, which some insurers contend gave CVS Health's Aetna subsidiary an unfair advantage.
The Texas Health and Human Services Commission last August released 18 companies’ redacted proposals to manage the state's Medicaid program to consultancy Health Management Associates and law firm Hahn, Loeser and Parks after the two submitted public information requests. In October, the state sent the bids to RAH Consulting in response to the firm's Freedom of Information Act request. Health Management Associates posted insurers’ redacted bids on its website in December.
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HHSC in January emailed the law firm and consultancies asking them to destroy copies of the bids as the state mistakenly sent them to the group, according to emails health insurance company Centene provided to Modern Healthcare. Centene, which operates as Superior HealthPlan in Texas, asked the state for copies of all emails between the state, Hahn, Loeser and Parks, Health Management Associates and RAH Consulting last month in anticipation that the state would decrease its Medicaid managed care contract's market share. The Texas Tribune first reported on error.
"The [Public Information Act] copies were sent to you in error as this procurement is still in the open stage. As a courtesy, would you please destroy the copies? Once the Notices of Award are issued, we will provide the PIA copies to you," Sandy Cardiff, legal assistant in HHSC's open records division, wrote to Hahn, Loeser and Parks, Health Management Associates and RAH Consulting on Jan. 12.
Cardiff also asked Health Management Associates to remove insurers’ redacted bids from its website, and the consultancy consented, according to the emails.
In an April 19 letter to the Texas HHSC, Centene alleges that the law firms and consultancies worked for Aetna.
"There must be a fair and level playing field for all respondents in a competitive procurement process like the one Texas uses to award Medicaid contracts. It’s clear that wasn’t the case here. With the integrity of these competitive bids compromised, these proposed contract awards should be canceled immediately," Superior HealthPlan President and CEO Mark Sanders said in an emailed statement.
No state law or procurement requirement prohibits HHSC from releasing redacted proposals at any point during the process, an HHSC spokesperson wrote in an email. HHSC does not believe disclosure of the bids impacted its Medicaid managed care contract awards, the spokesperson said. The spokesperson did not respond to questions about whether Aetna had access to bids through the law firm or consultancies.
Aetna did not respond to an interview request about whether it received an early look at competitors' bids.
“While we defer to the state of Texas to comment on its procurement process, we remain confident in Aetna’s ability to deliver excellent service and value across these Medicaid contracts,” an Aetna spokesperson wrote in an email.
Eight insurance companies have filed protests in response to the state’s intent to award new, six-year contracts to Aetna and other companies. State Medicaid contract awards are always subject to litigation by companies that lose business, and Texas’ disclosure of proprietary information to Aetna would give teeth to managed care companies’ arguments, said Kristen Lunde, director of managed care strategy and operations at ATI Advisory, a consultancy for health plans.
"If the state was in active procurement, it is unheard of for them to provide a competitive advantage to one of the Medicaid organizations," Lunde said.
Last month, Texas announced it intended to award Medicaid contracts to 14 companies including Aetna, Centene, Elevance Health, Humana, Molina Healthcare and UnitedHealthcare, and cut three hospital-based carriers from the program. Aetna will gain at least 461,000 new members from the award, the most among large for-profit insurers, according to a report last month by investment bank Stephens. Centene, meanwhile, will lose 652,000 enrollees and Elevance Health will lose 255,000 members because of the new contract, according to Stephens.
Elevance Health did not respond to an interview request.
Karen Love, president of Cook Children’s Health Plan, contended Texas Medicaid improperly sent Aetna a copy of Superior HealthPlan and other rivals' Medicaid proposals. The nonprofit insurer, which is owned by Fort Worth-based Cook Children's Health Care System, has not received notification from the state that its bid was among those disclosed to Aetna, she said. “There’s no reason to think ours was excluded,” Love said.
If the award goes through, Cook Children's is poised to lose its entire 125,000-member Medicaid contract for the first time in its 20-year history. The new contract represents the largest change to Texas' Medicaid program since the carrier has been in business, Love said.
“A procurement is about setting a level playing field for competition and it certainly doesn't feel like a level playing field if, in fact, before the process was completed, one of the competitors was given access to information submitted by the other plans that it was competing with,” Love said.
Texas has not successfully re-procured its Medicaid managed care contracts since 2011. The state issued an intent to award new contracts in 2018 but had to cancel the plan because of inconsistencies in how it scored carriers' proposals. After cancelling the new award, Texas Medicaid extended its existing managed care contracts.
