Multibillion-dollar Medicaid contracts awarded by Gov. John Bel Edwards' administration have been scrapped by Louisiana's chief procurement officer, who determined the health department mishandled the bid process for deals to provide health services to 1.5 million people.
Louisiana's state procurement officer Paula Tregre said the health department failed to follow state law or its own evaluation and bid guidelines in determining which private companies should receive contracts to manage care for most of Louisiana's Medicaid patients. In a decision issued late Friday, Tregre wrote the health department's actions "resulted in a fatally flawed procurement process."
In response to protests filed by two losing bidders, Tregre rescinded the three-year contract awards estimated to be worth about $21 billion. She said the health department will have to redo the bid process to choose the insurance companies that will oversee care for about 90% of Louisiana's Medicaid enrollees — mostly adults covered by Medicaid expansion, pregnant women and children.
Tregre's decision, which can be contested, won't disrupt Medicaid health services to nearly one-third of Louisiana's population. The Edwards administration signed emergency contracts to keep the state's five current Medicaid managed care contractors in place this year because of the ongoing disputes about the contract awards and bid process.
Edwards spokeswoman Christina Stephens said in a statement Saturday that the administration was reviewing the decision and "will work with the Louisiana Department of Health to determine the next steps for this procurement moving forward."
The taxpayer-financed managed care contracts account for roughly one-quarter of Louisiana's annual operating budget.
The state's deals with five managed care companies had been slated to expire at the end of December. Through a bid process that began in February, the Edwards administration chose four companies to do the work going forward — three that currently hold contracts with the health department and one new insurer. But 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. The legal process stopped the new contract awards from taking effect, forcing the emergency contracts.
Louisiana Healthcare Connections and Aetna Better Health, which together cover more than 500,000 Medicaid patients, accused the health department of a biased bid review riddled with conflicts of interest, improprieties and illegal decisions. They argued the bid evaluation was skewed to benefit Humana Health Benefit Plan of Louisiana, which hasn't done Medicaid managed care work in the state but won a contract award.
The Edwards administration defended the bid evaluation and contractor selection process as following Louisiana law, with the new contracts aimed at improving health care and lowering costs.
"Our goal has always been to provide high quality coverage to the families that rely on Medicaid, while at the same time ensuring that the Medicaid program is efficient and accountable," Stephens said.
But Tregre said the bid evaluators didn't verify the accuracy of lists submitted by insurance companies detailing the network of doctors, clinics and other health providers they would use, as the health department's solicitation for contractors required. She also said multiple changes to one of the evaluation tools after bid reviews began damaged the scoring process.
Tregre's decision isn't expected to settle the dispute. The ruling can be appealed within seven days to her boss, Commissioner of Administration Jay Dardenne, the governor's chief budget adviser. Bidders that don't like the outcome of the appeal ultimately could take the dispute to court.
A new Louisiana health secretary and Medicaid director will inherit the contract dispute. Health Secretary Rebekah Gee is resigning from the job at the end of the month, and the department's Medicaid director, Jen Steele, has left the agency.
