Louisiana's health department wants to seek new bids for multibillion-dollar Medicaid contracts managing the healthcare of 1.5 million people, trying to end a legal dispute that has dragged out over a year about four contractors the agency previously picked for the work.
Health Department Secretary Courtney Phillips announced Friday that she's asked the governor's Division of Administration to let her rebid the Medicaid managed care contracts rather than continue the legal wrangling over deals her predecessor approved.
As the disagreement stretched over months, Phillips took over leadership of the department, the coronavirus outbreak surged across Louisiana and the Medicaid rolls have grown larger as more people lost their jobs.
"Much has changed in the healthcare industry since the original (request for proposals) was drafted, and we must look ahead to innovative solutions in healthcare delivery while increasing accountability and addressing health disparities," Phillips said in a statement.
The taxpayer-financed managed care contracts account for roughly one-quarter of Louisiana's annual operating budget. They allow private companies to oversee healthcare services for about 90% of Louisiana's Medicaid enrollees -- mostly adults covered by Medicaid expansion, pregnant women and children.
Phillips' push to start the contracting process from scratch won't disrupt healthcare for one-third of Louisiana's residents. Managed care companies are doing the work currently through emergency contracts that end in December, and the health department intends to seek another round of those arrangements to keep the companies in place if it rebids the work.
Louisiana currently has Medicaid managed care contracts with five companies.
Through a bid process that began in early 2019, the health department — overseen by then-Secretary Rebekah Gee — chose four companies to do the work going forward. Three of the insurers currently hold contracts with the health department, and one would be a new Medicaid contractor for Louisiana. The contracts would have been worth an estimated $21 billion over three years.
The two losing bidders that currently hold managed care contracts and were slated to lose them — Louisiana Healthcare Connections and Aetna Better Health — filed protests.
Louisiana's state procurement officer Paula Tregre was charged with reviewing the protests. She found the health department mishandled the bid process, failing to comply with state law or the agency's own evaluation and bid guidelines. She scrapped the contract awards and said the health department will have to redo the bid process.
The health department and the four insurance companies chosen for the Medicaid deals -- AmeriHealth Caritas Louisiana, Community Care Health Plan of Louisiana, Humana Health Benefit Plan of Louisiana and United Healthcare Community Plan -- challenged Tregre's decision. They say Tregre made factual and legal errors in her decision.
Their appeal is pending with Tregre's boss, Commissioner of Administration Jay Dardenne.
Dardenne was expected to make a decision earlier this year — but then the coronavirus outbreak consumed the state's focus. Even Dardenne's decision on the appeal wasn't expected to settle the argument, because bidders that don't like his ruling could ask a judge to review the bid process.
Humana, one of the companies chosen in the disputed bid process, said it was disappointed by Phillips' decision to redo the Medicaid managed care contractor search.
"Yet our goal remains the same, to work in partnership with the state of Louisiana to bring the best possible care and coverage to Healthy Louisiana program enrollees," the company said in a statement.