Kentucky violated bidding process in awarding Medicaid contracts, Passport says

Written by Tom Loftus The Courier-Journal
Oct. 31

FRANKFORT, KY. — The state violated its own bidding process and will spend as much as $80 million more than necessary per year under its new Medicaid managed care contracts for the Jefferson County region, Passport Health Plan charged Thursday.
In another bump for the state’s transition to Medicaid managed care, Passport Health Plan filed a formal protest of the process that resulted last month in the awarding of state contracts to four companies in the Jefferson County region now served exclusively by Passport.

Passport’s complaint is over the way the state Cabinet for Health and Family Services’ divided the region’s 170,000 Medicaid recipients among the four companies.
The protest letter says that Passport officials learned Wednesday that Passport will initially be assigned only 27 percent of the region’s Medicaid recipients while the contracting process and a cabinet official previously indicated it would get 41 percent. “I am convinced that patients will be harmed if the arbitrary assignment process is utilized,” Passport CEO Mark Carter said in a news release.

The protest asks that for a halt of the assignment process and for the cabinet to “make different decisions that will protect both the state budget and the Medicaid recipients.”
The cabinet released a statement late Thursday that said, “Passport is protesting issues that all bidders were advised of during negotiations. Passport was well aware of the assignment plan before it signed a contract.”

Passport, a nonprofit formed by local health care providers, has held an exclusive contract to manage the state’s Medicaid program in the Jefferson County region for 15 years.
In an effort to save money in the Medicaid program, the Beshear administration last year awarded contracts to managed care companies to serve the remaining 104 counties in the state. This year the federal government directed Kentucky to establish more than one managed care provider in the Jefferson County region.

That resulted in a long bid-negotiation process ending in the cabinet’s announcement a month ago that starting on Jan. 1, four companies will serve the region: Passport, Wellcare, Coventry Cares and Humana.

In its letter of protest, Passport said that discussions before and after contracts were awarded indicated that a formula for assigning members to one of the four companies would result in Passport getting 41 percent of the region’s Medicaid population.

The letter said that as recently as last week Passport was told by Medicaid Commissioner Lawrence Kissner that he believed Passport would get 41 percent. That’s because the formula is partly based on the company’s network of doctors, hospitals and other providers. Passport has had a comprehensive roster of health-care providers under contract in the region for more than a decade.

But on Wednesday Passport was told that under the formula, it will initially be assigned only 27 percent.

“To Passport’s knowledge, nothing has been done by the Commonwealth to assess whether the other (companies) are ready” in the region, the letter says. “Passport, based on its long history as a Medicaid contractor in the region, is clearly ready.”
Passport also charged that the cabinet’s approach will be much more expensive than necessary.

The bidding process, the letter says, resulted in the cabinet awarding contracts that will pay the four companies the following average amount per Medicaid member they serve per month: $446 for Wellcare, $457 for Passport, and $473 for both Coventry and Humana.

But in the protest letter, Carter said Passport had told the state at the beginning of the bidding process it was willing and able to bid much lower — $423 per member per month — if it could be assured it would be assigned about 80 percent of the region’s recipients.
The state will end up spending “about $80 million more than it would have been required to spend,” had it agreed with that offer, Carter said in the letter.
Reporter Tom Loftus can be reached at (502) 875-5136.