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State Official Scraps Louisiana Medicaid Contract Awards, Citing 'Fatally Flawed' Process

Jan 21, 2020 04:12PM ● By News Desk
By David Jacobs | The Center Square

A state official has thrown out multibillion-dollar contracts the Louisiana Department of Health awarded to manage the care of most of the state’s Medicaid population.

The decision, made in response to complaints from two losing bidders, can be appealed and the dispute could end up in court.

In a letter describing her decision to rescind the awards to the four winning bidders, State Chief Procurement Officer Paula Tregre says LDH failed to comply with the law or its own request for proposals and evaluation guidelines.

Louisiana contracts with managed care organizations to oversee utilization, cost and quality of care for Medicaid recipients. The MCOs work much like private insurers, and the state pays them a fee for each recipient who signs up with their plan.

The state’s agreements with five MCOs were scheduled to expire at the end of 2019. LDH chose four companies – three of the current contract holders at the time and one new company – to manage care going forward.

Louisiana Healthcare Connections and Aetna Better Health, who had contracts with the state but were not picked for new contracts, filed protests alleging bias, forcing the state to enact emergency contracts with the current providers while the dispute is resolved.

Tregre says the department didn’t verify the bidders’ provider networks, as the request for proposals required, and “arbitrarily and capriciously” changed the provider network scoring system after the evaluation began. Such changes are supposed to be reviewed by the health department’s lawyers but were not, she says, resulting in a “fatally flawed procurement process.”

The decision can be appealed within seven days to Commissioner of Administration Jay Dardenne. If not happy with Dardenne’s decision, an affected party can turn to the 19th Judicial District Court in Baton Rouge.

Dr. Rebekah Gee, the current head of the state’s health department, is leaving at the end of the month. A successor has not been announced.

Though Gee has said she was not directly involved in the MCO selection process, the contract disputes were cited by administration critics who question the competence of the health department under Gov. John Bel Edwards. Edwards defended the contract awards on the campaign trail last fall.

Photo of Louisiana Department of Health Secretary Rebekah Gee
Photo courtesy of Louisiana Department of Health