The face of waste fraud and abuse in DC government
The DC Council has decided to permit the controversial Medicaid managed care contract recently submitted by DC Mayor Muriel Bowser’s administration to move forward. That decision comes one week after information presented during a public roundtable on a disapproval resolution made clear that the procurement represents, in my opinion, a classic example of government waste, fraud and abuse — heavily seasoned with incompetence.
The contracting process appears flawed by incorrect scoring, the deliberate misrepresentation by CareFirst BlueCross BlueShield of its local organizational structure, and the participation of MedStar Family Choice, a managed care organization (MCO) whose behavior as a previous DC contractor disrupted the program’s fiscal balance and its delivery of health care services. Testimony from executive branch officials — including Wayne Turnage, deputy mayor of health and human services; George Schutter, DC’s chief procurement officer; and Kristi Whitfield, director of the Department of Small and Local Business Development (DSLBD) — during the roundtable underscored those facts, as did interviews I have had over the past several weeks with knowledgeable individuals.
“The process seems to have been manipulated,” said one highly placed government source.
Responses provided by Bowser administration officials during the roundtable were extremely troubling. They danced, obfuscated, and spoke out of both sides of their mouths.
For example, Turnage initially said he was informed by the Office of the Attorney General (OAG) that he could not amend or alter the existing managed care contracts; the inability to do so was the stated reason for the new procurement. When he was asked for a copy of that OAG legal opinion, he then said he didn’t have anything in writing. “If we can’t get the current counsel [in my office] to approve [the change], what chance do we have convincing the OCP [Office of Contracting and Procurement] and OAG lawyers?” Turnage replied.
On the one hand he described MedStar’s previous behavior as “predatory.” On the other, Turnage said the company had done nothing that was either “illegal” or “unethical.”
See what I mean about doublespeak?
Schutter admitted that his office applied nine preference points to the CareFirst proposal submission, although the authority to take such action actually lies within DSLBD. Further, as a nonprofit, Maryland-based entity, it should not have received any special consideration. Such advantages are by law limited to for-profit, certified DC-based small, local and minority-owned or -operated businesses (known as CBEs).
For her part, Whitfield was unable to answer even basic questions, including why it took four months for her agency to review the CBE status of CareFirst. “There really isn’t a typical” time for completion, she said. “This was a complex deal; the team was very thorough. The review was done while adjusting to a global pandemic.”
While the Contract Appeals Board (CAB) has authority to consider any protest over how a procurement may have been handled, the city’s independent Office of the Inspector General can conduct major investigations of waste, fraud and abuse throughout the government. The shenanigans associated with this contract deserve IG Daniel Lucas’ immediate attention.
Interestingly, many of the problems in the current procurement are similar to errors made by the government in 2017 that resulted in MedStar filing a protest before the CAB. Yes, the cheek of larger corporations can be breathtaking.
The contracting officer’s mishandling of the 2017 procurement was so spectacular that MedStar won its case. The board concluded “the District violated procurement law and regulation, finding that [its] evaluation of the offerors’ proposals was unreasonable and arbitrary and capricious,” according to the CAB’s report, a copy of which I obtained. The board further noted that “the numerous errors and improprieties in the District’s conduct of this procurement, including the [city’s] failure to treat all the offerors equally, undermined the integrity of the procurement process.”
Administrative Law Judge Maxine McBean ordered the DC Department of Health Care Finance to reevaluate and rank the proposals. Eventually, it revised its ruling, telling the administration to rebid the contract.
The District filed an appeal of the CAB’s decision in DC Superior Court on Dec. 21, 2017, asserting that the ruling was “arbitrary, capricious, [and] erroneous as a matter of law” and “not supported by evidence.” The legal case continued until June 2019, when MedStar withdrew its complaint and the city settled with the company, paying $350,000, partially covering costs associated with the litigation and proposal submission.
Interestingly, a few months earlier, in March 2019, the U.S. Department of Justice ordered MedStar to pay $35 million to resolve allegations that it provided kickbacks to a cardiology group in exchange for referrals, according to previously published media reports.
With that kind of record, shouldn’t the city have moved to debar the company?
Instead, Turnage has behaved as if the folks at MedStar are near gods. He claimed they had one of the best proposals and it’s time to let bygones be bygones.
By all appearances, the Bowser administration does not ascribe to the widely held belief that insanity is doing the same thing over and over again but expecting different results. It could be that their consistent inability to properly execute the managed care contract is linked to the reality that they don’t bear the burden of their incompetence.
DC residents are paying the price, either for flawed contracting that risks squandering taxpayer dollars or by having their health care repeatedly disrupted. Expect more of the same this time around — especially given the council’s deference to its internal structure, which appears to assign greater importance to the desires of committee chairs than it does to the need to hold the mayor’s team accountable.
Council Chairman Pro Tempore Kenyan McDuffie has been the principal legislator demanding fidelity to DC laws in this procurement. He has blasted the administration’s decision to shuttle Medicaid patients from their existing doctors to other unknown physicians in the middle of a pandemic and to allow large corporations to claim benefits that by law should go only to CBEs.
“Based on the conversations my staff and I have had with the agencies, the documents we have reviewed, and the information that continues to come out through the press, I remain deeply concerned about the handling of this procurement, the past performance of MedStar, and the long-term ramifications these contracts will have on small and local businesses,” he wrote to Ward 7 Council member Vincent Gray in an Aug. 28 letter, a copy of which I obtained.
Gray, who chairs the Committee on Health, has not replied to my multiple requests for a comment.
On July 29, McDuffie, Council Chairman Phil Mendelson and at-large Council member Robert White introduced a disapproval resolution. That action allowed the legislature to take 35 additional days to examine the procurement.
The roundtable was supposed to be the walk-up to a rejection by the full council, which would have had to take place by this week. An early sign that things were off track came when Mendelson convened the public hearing but disappeared after quickly turning over the gavel to McDuffie, who heads the Committee on Business and Economic Development.
White didn’t show at all. His chief of staff, Mtokufa Ngwenya, sent me an email Tuesday asserting that his boss, who chairs the Committee on Facilities and Procurement, was “still looking into this issue; we haven’t been able to complete our due diligence in time [for] your deadline.”
At-large Council member Elissa Silverman and Ward 2’s Brooke Pinto actually attended portions of the roundtable. The other legislators apparently couldn’t be bothered to take a break from their summer recess, although more than 275,000 of the city’s 721,000 residents could be affected.
To get an idea of the amount of public money expected to be spent, consider that worldwide box office sales for the movie Black Panther totaled $1.3 billion. The Medicaid managed care contract for fiscal year 2021 is expected to be $1.5 billion.
“The council must protect our most vulnerable residents and do what is in the best interest of the District. In this case, that means disapproval of this contract,” McDuffie told me in a statement sent via email earlier this week.
Ambrose I. Lane Jr., chair of the Health Alliance Network, reportedly DC’s largest community-based health advocacy organization, had hoped the council would vote on each contract separately, giving them a chance to reject controversial providers, especially CareFirst. He thought that company should pay the debt it allegedly owes the city for hoarding surpluses.
Lane also argued that the best way to protect the interest of residents is to have them involved in the selection process. “This has to be weighted. It has to be part of the scoring,” he said.
He also worried about the impact of shifting patients from one doctor to another. “It’s just as hard to establish a new relationship with a new doctor as it is to go to a different church,” Lane continued. “Even with my MCO, I went through three doctors before I found the [right] one. It causes stress and anxiety.”
Isn’t that just what Medicaid clients need in the midst of a deadly pandemic?
It has baffled me that so few council members have publicly expressed any interest in this contract as compared with the attention they gave last year to the $215 million sports wagering procurement. In that instance, small, local and minority businesses were expected to receive sizable subcontracts. This time around, large corporations will walk away with the lion’s share of the $1.5 billion contract. There also is little hard evidence that the quality of health care provided to the city’s poor and working class will be significantly improved.
That all leaves me to ask: Whose interest is the council representing