Medicaid: Allegations of bias in awarding care contracts are ‘disingenuous’

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The Division of Medicaid emphatically rejects the official protests of two insurance companies asking the agency to redo the procurement process for its managed care program, MississippiCAN.

The insurers, Amerigroup and the new state-based nonprofit, Mississippi True, had argued that the agency had unfairly discriminated against them when awarding managed care contracts in June. Some arguments of their protest were that Medicaid used a biased grading system for the proposals, that the agency had improperly approved the contracts and that agency director Dr. David Dzielak had an improper relationship with one of the companies granted a contract, Molina Healthcare.

But the Division of Medicaid’s office of procurement rejected each of these arguments on Tuesday, affirming its earlier decision to award the three MississippiCAN contracts to incumbent insurers United HealthCare and Magnolia Health and a newcomer, the California-based Molina Healthcare.

“The protests were without merit, and the allegations against me and the agency were disingenuous. The MississippiCAN procurement process was conducted with the highest professional standards, and we look forward to working with Magnolia, Molina and United to provide our members with access to quality healthcare,” said Dzielak in a statement.

Mississippi True and Amerigroups protests will now be considered by the Personal Services Contract Review Board, which approves state contracts, in September.

Since it began in 2011, Mississippi’s managed care program has been administered by just two insurers, United Healthcare and Magnolia Health. In February, the agency put out a request for proposals, intending to award MississippiCAN contracts to three companies. Ultimately, seven submitted proposals, which were graded by an internal evaluation committee. In June, Medicaid announced it had granted the contracts to the three insurers who had received the highest scores: United, Magnolia and Molina.

Within two weeks, Mississippi True had filed suit in county court, alleging the procurement process was biased. A second insurer, Amerigroup, joined the protest soon after. Since then legislators on both sides have publicly expressed support for Mississippi True, in particular, and questioned whether the procurement process was fair.

Mississippi True was a provider-sponsored plan, formed by a coalition of 60 hospitals across the state. It was an unprecedented approach for managed care, which Medicaid factored into its decision. In the category of corporate background experience, Mississippi True received the lowest score of the seven companies.

In its response Tuesday, Medicaid included a letter of support from Molina, which took issue with this point of Mississippi True’s protest.

“The Division’s decision to award the contracts here to three well established and successful managed-care plans as opposed to an entity with little relevant experience does not evidence bad faith, discrimination, or bias. It only evidences that, after evaluating the proposals and oral presentations of the offerors, the Division ultimately decided that Mississippi True’s proposal was not sufficient for the needs of the MississippiCAN program,” wrote attorneys for Molina Healthcare.

Mississippi True responded, criticizing both Medicaid’s response and the procurement process.

“Unfortunately, we are not surprised at Mr. Dzielak’s decision given both the haste in signing MississippiCAN contracts well before the completion of the Division of Medicaid’s designated appeal process and the substantial evidence of bias discovered after the contracts were awarded,” wrote Chairman Chuck Reece, in a statement. “Of course they deny any wrongdoing or impropriety. What’s telling is that Medicaid’s response fails to explain why answers from other bidders were given higher scores than similar answers provided by Mississippi True.”