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Health Plans Mount Challenges Over Medicaid Contracts

Twelve managed-care companies challenging the state’s award of tens of billions of dollars in Medicaid contracts have spelled out their arguments about why Florida officials were wrong in the handling of the coveted multi-year deals.

The filings allege a long list of errors by the Agency from Health Care Administration ranging from math mistakes, to not finishing reviews on time, to awarding a contract to a vendor that submitted the wrong bid.

In some cases, the petitions allege wrongdoing by rival health plans.

The challenges by the managed-care companies reflect the high stakes surrounding Florida’s massive Medicaid program. If the initial contracting decisions stand, some companies will be shut out of the managed-care program for the next five years.

The 12 plans filed challenges in 11 regions across the state for decisions involving a variety of health care services, including comprehensive care and specialty care such as providing services to people with mental-health issues or HIV and AIDS. In all, the companies filed 88 petitions by a Monday deadline.

Chief among the companies protesting the state’s handling of the contracts is Molina Healthcare, which currently has a footprint in eight of the state’s 11 Medicaid regions. The health plan applied for openings --- through a process formally known as an invitation to negotiate --- in all 11 regions but wasn’t among the top-scoring plans chosen by AHCA for negotiations.

Lawyers for Molina argue, among other things, that agency staff made mathematical errors throughout the scoring process. They contend the state was required to average scores of three different evaluators to determine top-ranking health plans but, instead, used aggregate scores.

Tallahassee attorney Robert Vezina wrote that AHCA’s alleged failure to follow criteria about scoring and ranking was “clearly erroneous, contrary to competition, and arbitrary and capricious” and made the “entire procurement process fundamentally and fatally flawed.”

Molina is requesting that if the disputes cannot be amicably resolved that the state be required to start over with a new procurement process.

The Agency for Health Care Administration went through a lengthy process before it announced its April 24 decisions to award five-year contracts to nine managed care plans. For contracting purposes, the state is divided into 11 regions. State law establishes a minimum and maximum number of plans that can operate in each of the 11 areas.

This is the second such procurement since the Florida Legislature passed a law in 2011 mandating that most Medicaid patients enroll in managed-care plans. A top Medicaid official has said that the new contracts, in aggregate, could be worth up to $90 billion.

The new contracts also have the potential to upend parts of the existing Medicaid program because, in some instances, existing providers would be eliminated. Magellan, a long-standing Medicaid provider specializing in mental-health services, would be locked out of the managed-care program if the agency decisions remain intact.

Attorneys for Magellan allege in filings that numerous mistakes and errors were made during the procurement process. The plan argues that competitor Staywell was awarded a Medicaid contract to provide mental-health services to patients in Medicaid Region 2 despite not submitting a bid for the area, which stretches across 14 counties in Northwest Florida, including Leon County.

Magellan’s attorneys argue that Staywell erroneously responded to the invitation to negotiate in Region 2 by submitting its response to the so-called ITN for Region 5, which covers Pasco and Pinellas counties.

State evaluators “noted the discrepancies,” according to Magellan’s petition, but “there is no evidence that AHCA requested, or that Staywell submitted, a corrected Region 2 response.”

Magellan’s attorneys are asking that AHCA award a contract to Magellan or, alternatively, reject all specialty-plan submissions and conduct a new procurement.

Not all plans that filed petitions with the state would be locked out of the Medicaid program in the coming years. For instance, UnitedHealthcare was awarded contracts in Medicaid Regions 6 and 11 for comprehensive care, which includes long-term care services as well as traditional health care covered under Medicaid.

But United also wanted contracts statewide to provide services to people with serious mental illnesses and was shut out of that market. United filed 11 petitions --- one in each region --- challenging those decisions. United alleges in its petitions that AHCA agreed to extend an internal deadline for a trio of evaluators to complete their work but that time ran short before one of them --- “evaluator No. 3” --- could finish the review. 

According to United’s petition, “evaluator No. 3” completed 20 percent of the task by the Dec. 29 extended deadline and executed what is known as an “independent evaluators certification.” The certification stated that any plan that scored a zero “was intended to score a zero”

But United attorney Seann Frazier argued that a score of zero should only be given if the vendor didn’t provide a response. Frazier said that “in reality,” a large number of the components in the ITN were scored by two, and not the required three, evaluators.

Not all of the allegations of wrongdoing were leveled against the state, though. In filings for Simply Healthcare, attorney Robert Hosay accused competing health plans of not following rules.

For instance, the ITN required health plans to disclose their largest out-of-state Medicaid contracts. But Hosay argued that Humana --- which could operate statewide if the agency’s decisions stand --- failed to disclose an out-of-state contract it has in Wisconsin or report on how the plan performed on certain quality-of-care measurements.

The contract is with a company called iCare, which is a joint venture between Humana and the Centers for Independence, a Milwaukee-based non-profit rehabilitation provider.

Hosay also alleged in the petitions that Staywell was not truthful when it disclosed that its Medicaid contract had been terminated in Iowa in December 2015. Staywell attributed the termination to bid protest proceedings, but Hosay argued the disclosure was misleading.

“In reality, WellCare’s Iowa contract was terminated as a result of unfair bidding practices on WellCare’s part being discovered, including a violation of bidding rules and an attempt to acquire an unfair advantage over competing bidders,” wrote Hosay, referring to Staywell’s parent company.