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DC's Medicaid Fiasco Continues

No one should be surprised that the DC Contract Appeals Board (CAB) has found that Mayor Muriel Bowser’s administration violated city “procurement laws and regulations as well as the terms of the solicitation” in awarding the District’s Medicaid Managed Care contract earlier this year. The CAB also determined that the evaluation of the offerors’ proposals was “unreasonable.”

Those conclusions came as the CAB ruled on an “instant protest” filed by Amerigroup, a company that previously served as one of the DC’s managed care organizations (MCOs). In July, after losing its bid to remain one of three organizations handling the claims and other health care needs of more than 250,000 Medicaid recipients, Amerigroup challenged the selection of CareFirst BlueCross BlueShield Community Health Plan of DC, MedStar Family Choice Inc. and AmeriHealth Caritas District of Columbia Inc.

Amerigroup accused the city of unreasonably evaluating the proposals, not conducting meaningful discussions with company representatives, and failing to make a proper determination of one contractor’s responsibility. Further, it argued that the government’s contracting officer “failed to independently evaluate the proposals.”

The CAB also found problems related to actual scoring of the contracts by that staffer at the DC Office of Contracting and Procurement (OCP). For example, MedStar seemed to receive a high score although it failed to present a completed chart listing the names and qualifications of individuals who would actually work on the contract. If the contract officer had followed the rules in this instance, Amerigroup might have been a winner. Equally important, CareFirst was awarded nine preference points usually provided only to local minority businesses. Without that advantage, the company also may not have been awarded the contract, according to information provided in the CAB report.

In its reply to the CAB, the District essentially asserted that everything it did was “proper.”

Wayne Turnage, deputy mayor for health and human services and director of the DC Health Care Finance Agency, did not respond to my request for comment made earlier this week. However, government sources told me he has suggested privately that he will not make any changes to the existing program.

“The mayor seems to be allowing him to take the lead. She doesn’t really care about poor people on Medicaid,” added one source.

Tony Felts, a spokesperson for Amerigroup D.C., said in an email that the company remains committed to “improving lives and communities” by providing access to quality health care and support services. “We are pleased the [CAB] has ordered the District to re-evaluate the proposals to remedy violations of D.C. procurement.“

DC Council member Kenyan McDuffie said in a prepared statement that the CAB’s findings “further diminished public confidence in the integrity and fairness of this contract award. The gravity of the reported procurement irregularities in the Medicaid contract is what led me to call a hearing during the Council’s [summer] recess to demand answers. …

“It is particularly noteworthy that the CAB ruled against the OCP in this matter without even addressing all of the ways that OCP allegedly ran afoul of existing procurement laws,” continued McDuffie. “Naturally, some people are asking whether this decision is merely the tip of the iceberg.”

Do not mistake this for some minor dispute. Not only is the health care for hundreds of thousands of DC residents impacted. The contract involves $1.5 billion of public money divided among three companies. Equally important, it is illustrative of the systemic management issues within the District government’s executive branch.

In 2017, after the government mishandled yet another Medicaid managed care contract, MedStar filed a protest with the CAB. The appeals board ordered a do-over. Turnage was upset and with assistance from the Office of the Attorney General filed a suit in DC Superior Court appealing the CAB decision. The case ultimately was settled. That cost District residents $350,000.

How much of your money will be wasted this time around?

The OCP has been stubbornly resistant to systemic reforms, dating as far back as the late 1990s when the financial control board sought to set standards and operational procedures that would enhance the quality of goods and services purchased by the DC government. In 2009, DC Council member Mary Cheh, working with then-Chief Procurement Officer David Gragan, conducted a review of contracting problems in the Office of the Chief Technology Officer. In 2013, the DC Inspector General investigated contracting irregularities in the Office of the Chief Financial Officer.

In 2015, the council, led by Chairman Phil Mendelson, approved the Procurement Integrity, Transparency and Accountability Amendment Act, which among other things “established the Office of the Ombudsman for Contracting and Procurement.” The act also made “changes to the council’s review of contracts [and] set guidelines for privatization contracts.”

None of that seems to have made much of a difference. On a regular basis there are reports about flawed procurements. As I was writing this column, I received a telephone call from another small business accusing the city of steering contracts; that company also has filed a protest with the CAB.

This summer I wrote on multiple occasions about the massive level of incompetence and general shenanigans surrounding the awarding of the managed care contract. It seemed like contract-steering: CareFirst BlueCross BlueShield was allowed to misrepresent its organizational structure by casting itself as a local, small business, rather than a national corporation and giant in the health care industry. (That prompted McDuffie to introduce emergency legislation to prevent outside companies from passing themselves off as local.)

Additionally, despite a lawsuit filed on behalf of the DC government, Group Hospitalization and Medical Services Inc. — a division of CareFirst in DC — consistently refused to release millions of dollars that exceeded what it needed to operate. That money — often called excess surpluses — could be invested in responding to the health needs of the community, particularly in combating the effects of the coronavirus pandemic, noted Walter Smith, executive director of DC Appleseed Center for Law and Justice, which took the legal action.

MedStar Family Choice, a managed care organization, was a previous DC contractor. It declined to work with other contractors, disrupting the program’s fiscal balance and its delivery of health care services. Nevertheless, Turnage refused to eliminate MedStar from the bidding this time around. “We cannot not give a contract because we are mad at what they did in the past,” he told me earlier this year. Actually, DC law does allow past behavior to be considered in awarding a contract.

While the council has acknowledged through its various reform attempts that contracting and procurement is a troubled management area, it has been mostly an enabler. The legislature often has chosen to approve contracts despite obvious flaws or concerns. It did the same thing this time around.

Neither Mendelson nor Council member Robert White, who as chair of the Committee on Facilities and Procurement has oversight of the OCP, returned my emails requesting comment on the appeals board’s Dec. 1 ruling.

If the council’s blind eye is déjà vu all over again, the CAB’s solution is similar to what it proposed in 2017.

This time, the CAB has ordered a reevaluation of the proposals “in accordance with District procurement law and regulation, the terms of the solicitation,” and its decision surrounding the Amerigroup protest. “If any existing awardee is determined to no longer be one of the three most highly rated offerors, the District shall not exercise any option year under that contract,” the decision says. That means one of the contracts could expire on Sept. 30, 2021.

The Bowser administration would be forced to solicit another round of proposals and issue yet another Medicaid managed care contract. The past seems always prologue in DC contracting and procurement.

Maybe I have grown cynical, but raise your hand if you think 2021 will be any different from 2017 or 2020.

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