THE NEVER-ENDING HEALTH CARE CONTRACTING FIASCO
THE average DC resident reading the Department of Health Care Finance Support Act of 2021 as proposed by Mayor Muriel Bowser could be forgiven for being confused. The bill is deliberately opaque.
It also appears to be an end-run around a ruling by the DC Contract Appeals Board that exposes contract violations, yet again, in the city’s multi-billion-dollar Medicaid program. Additionally, the measure has the potential for harming small minority businesses at a time the mayor and other elected officials have professed fidelity to achieving racial and economic equity.
DC Council Chairman Pro Tempore Kenyan McDuffie said the bill is “clearly an attempt to circumvent” the statutory requirements of the Certified Business Enterprise (CBE) law and “to avoid compliance with the CAB ruling.”
Unsurprisingly, Deputy Mayor for Health and Human Services Wayne Turnage has denied that charge, which has been leveled by others. “This is designed to address a problem that exists because of the way the government interpreted the law for 15 years,” he said during a recent interview with me.
As written, the Health Finance Support Act, would exempt three contracts--the Medicaid Management Information System, the DC Access System, and the Medicaid Managed Care Organization (MCO)-- from the procurement law that requires bidders to provide minority subcontracting plans at the time their applications are submitted. The Office of Contracting and Procurement has repeatedly failed to enforce that law, often accepting such plans at the end of the bidding process or even after a contract has been awarded.
The Bowser administration has essentially asked the DC Council to become a conspirator in the procurement violation by deeming the targeted contracts legal. The mayor and Turnage also have asked legislators to engage in a game of make-believe, supporting the notion that the legislative proposal, as submitted, is entirely about health care delivery and not about
how CBEs are being treated by the government through a series of contracts that total more than $1.5 billion.
Turnage admitted to me that the Health Care Finance Support Act was specifically written so that it would be assigned to his favorite council member, Vincent C. Gray, chairman of the Committee on Health. Gray and Turnage have a special bond: When he was mayor, Gray hired Turnage as director of the city’s Department of Health Care Finance.
“Obviously, the decision about proper jurisdiction is not mine to make,” said Turnage, adding that he hoped Council Chairman Phil Mendelson would “look at the contracts and what is being impacted and agree that it falls under the committee of health; Council member Gray knows this stuff as well as I do.”
McDuffie called the legislation a “health care bill in name only.” Apparently, Mendelson has agreed, thwarting Turnage’s jurisdictional desire. The bill was assigned sequentially to the health committee and then to McDuffie’s Committee on Business and Economic Development.
“I am a champion for local certified business enterprises. I don’t think there should be support for bypassing the CBE law, particularly during a pandemic,” said McDuffie. “Also, it can’t be ignored that the [contracting office]somehow allowed this to happen under its watch.
In other words, the Bowser administration has itself to blame.
Approval of the mayor’s bill would send the wrong message to other companies interested in doing business in the city. Further, it would embolden the corrupt practices of the procurement office.
This latest controversy involving the city’s Medicaid program began after the CAB ordered the executive to terminate its agreement with DXC Technology Services, LLC to handle the Medicaid Management Information System because it failed to submit the subcontracting plan as required by law. The CAB’s ruling affirmed aspects of a complaint filed by Conduent State Healthcare, LLC.
That ruling follows another made by the CAB in December 2020. In that case, the mayor and her team were found to have violated procurement laws and regulations in the handling of its MCO contact. Affirming a protest filed by Amerigroup, the appeals board ordered re-evaluation of that contract. “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 said.
That means one of the contracts could expire on Sept. 30, 2021. MedStar Family Choice, Inc. appears to be the MCO contract in greatest danger. The total MCO contract is a $1.5 billion deal; the money is divided between three companies—MedStar, AmeriHealth Caritas of District of Columbia, Inc. and CareFirst BlueCross BlueShield Community Health Plan of DC .
They could all receive greater scrutiny based on the CAB’s subcontracting ruling. After all, some losing bidders questioned the legitimacy of preference points that were provided to CareFirst. Others also challenged the scope of approved minority subcontracting plans.
By law, any company with a contract above $250,000 is required to subcontract at least 35% of the contract value with DC certified businesses. Under emergency COVID-19 legislation approved by the council, that mandate was increased to 50%.
Ignoring the law, the OCP and the city’s Department of Small Local Business Development set an extremely low cap for the MCOs. The “MedStar subcontract [was set at ] 5.25% of its contract value with Small Business Enterprises/CBEs, AmeriHealth Caritas’ subcontract was approved at 5.25% of its contract value with SBEs/CBEs, and all the Eligible Expenditure accrued by [CareFirst] was applied toward the SBE/CBE goal.”
Turnage told me the city “can’t apply 35% or 50% [mandate] to managed care” contracts because beneficiaries “can’t be locked into any particulars.” He said that such requirements could only come from the “15% administrative costs.”
That kind of creative interpretation is probably how the Bowser administration has repeatedly gotten itself in trouble with multiple findings of violating local procurement laws, rules and regulations.
The mayor and Turnage may be in a panic about all of this. If the council doesn’t approve the Health Finance Support Act, the executive may have to re-bid not just tech contracts, but it also may be forced to do the same with its MCO contract. That could mean upsetting for a second time during the pandemic the health care of more than 200,000 low-income and working-class residents, many of them people of color.
In 2020, when the executive decided to move forward with bidding the MCO contract, health care advocates and providers expressed serious concerns about the wisdom of making such a move. Turnage argued that the change would be beneficial. “We worked day and night to make sure people did not miss appointments or surgeries,” said Turnage, discussing the difficulty of the challenge to reassign recipients to MCOs.
As an example of the positive outcome of the change, he heralded universal agreements with all health care providers that was written into the MCO contracts. On March 4, Bowser touted that that goal had been achieved.
“With the plethora of world-class [health] care we have in our city, we are proud that for the first time, equal access to key providers is available across the Medicaid program,” she said in a prepared statement. She specifically cited MedStar and its agreement with the George Washington Medical Faculty Associations, although the other two MCOs have struck similar arrangements.
The mayor and Turnage tried previously to get legislation passed on an emergency that would circumvent the CAB’s order. Then, the administration focused only on the MCO contract. Now it has added two other contracts.
Is the mayor playing a shell game? Is the real pea MedStar?
The first time around, the administration couldn’t secure the nine votes in the council that are required to declare an emergency. Now it has decided to travel the standard route for passage of legislation.
Turnage admitted to me, however, that after speaking with five or six council members, the outlook is uncertain: two are against the bill, four “seemed open.” Gray has said he will hold a hearing in April.
“We’re hoping that we can get seven votes,” added Turnage.
If the council is serious about advancing good, ethical government and about the need for racial equity, legislators should ignore the administration’s desire to continue violating a critical local law. They should send the mayor and her team back to the drawing board, forcing them to do the right thing.