House wants to throw out $3 billion in Medicaid contracts

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The House has voted to give Mississippi’s only provider-sponsored insurance plan another shot at winning a contract with the Division of Medicaid, an unorthodox move that some say lets the Legislature pick agency contracts.

On Thursday, the House passed an amendment that would require the Division of Medicaid to rebid contracts for its lucrative managed care program, valued at approximately $3 billion a year. Under managed care, the agency hires insurers to manage the health care of Medicaid recipients.

Although lawmakers passed the amendment unanimously, some expressed concern that the legislature was setting a dangerous precedent.

Mississippi House

Rep. Jarvis Dortch, D-Jackson

“I’m all for Mississippi True. I think we should have a provider-sponsored contract, but is this the way the Legislature should work, come in and redo the bidding process after it’s already been bid?” said Rep. Jarvis Dortch, D-Jackson.

The move is the latest in a string of attempts to find a way to let Mississippi True, a nonprofit insurance plan made up of 60 Mississippi hospitals, into the state’s managed care market. After the new company, which has the support of the state’s powerful Hospital Association, failed to win a contract last summer, several powerful lawmakers cried foul, suggesting — often publicly — that the Division of Medicaid had unfairly favored other companies.

Contracts were awarded to United Healthcare, Magnolia Health and Molina Healthcare, all of which are based out of state. Within weeks of the announcement, however, Mississippi True and another insurer sued the Division of Medicaid, arguing the agency had unfairly favored those companies. And several legislators have said they agree.

Gabriel Austin, Mississippi Today

Rep. Jason White, R-West

“Around the coffee pot and water cooler and everywhere else in this building and other places, the cry was that the (bidding) process was not fair,” said Rep. Jason White, R-West, who presented the bill.

Thursday’s amendment is part of the House’s Medicaid technical bill, which reauthorizes the rules governing the state’s Medicaid program. An earlier version of the bill would have given Mississippi True a small managed care contract under the guise of a “pilot program,” mandating that the agency move up to 10 percent of the managed care population to the new company. Although this provision passed out of committee, few seemed happy with it as written.

Chuck Reece

The current managed care contracts guarantee each company in the program at least 20 percent of the managed care population. Chuck Reece, chairman of the board of Mississippi True told Mississippi Today last week that a carve out of 10 percent of the population “wasn’t actuarially sound. It just won’t work.”

But even those in support of the legislation, including White who presented the plan, had worried that giving more than 10 percent of the population to this company would turn the “pilot program” into “a straight no-bid contract to the hospitals.”

Although Thursday’s amendment was approved unanimously, the change didn’t erase these fears. During the floor debate, Dortch questioned whether the Legislature was stepping into legal territory.

“Are you not concerned at all this is setting a bad precedent? There’s currently a lawsuit going on right now, and we’re settling that lawsuit as a legislative body,” Dortch said.

“If we want Mississippi True to receive it, why don’t we just give this contract to Mississippi True?”

The question proved somewhat rhetorical, however. Dortch and several of his colleagues approved the bill by a vote of 108 to three.

For years, lawmakers have struggled to get a handle on the size of Medicaid’s budget, which currently tops $6 billion in state and federal funds. Managed care, which the agency implemented in 2011, is an attempt to contain costs. Under managed care, Medicaid pays insurance companies a flat fee per beneficiary, giving these companies an incentive to keep patients well  — and minimize the services they use.

But the hospitals have long been at odds with the managed care companies, arguing that managed care reimbursements are often less consistent than traditional Medicaid. A provider-sponsored plan, in which the hospitals would manage the care of their own patients, is an attempt for hospitals to take control of these complaints— and get a piece of the valuable managed care pie.

One reason for the widespread legislative support for Mississippi True is the company itself has a wide reach. Unlike the three managed care companies that won contracts,  Mississippi True is a partnership of 60 hospitals across the state, meaning the vast majority of legislators have a member hospital in their districts.

As the House Medicaid committee debated an earlier draft of the bill last week, Rep. Becky Currie, R-Brookhaven, said that a vote against Mississippi True “was a vote against your hospitals. Because they are for this.”

The original contracts were procured under Medicaid’s former executive director David Dzielak, who resigned in December. Dzielak’s last year had been dogged by allegations of special interests, particularly during the bidding process for managed care contracts. In his presentation, White expressed support for interim director Drew Snyder, calling him “a breath of fresh air,” and suggesting a procurement process under him might be more fair.

“So we’ll let the light shine in on that and see where we go from there,” White said.

The Division of Medicaid indicated it was not yet clear how rebidding the contract would affect the agency.

An agency release stated, “While there have been many proposals related to the technical amendments bill that could result in extensive changes to the Medicaid program, it is still early in the process, and many changes are likely before this legislation reaches the governor’s desk. We only became aware of the language of this particular amendment this afternoon and are still exploring how it might impact the agency,”