A $46 million, one-year contract extension for the company that processes bills for services rendered to Louisiana’s Medicaid patients was reluctantly approved Thursday by state lawmakers who raised cost concerns.
State health department officials said they had no possibilities for quickly replacing the company that has been doing the work, Molina Information Systems LLC. Health and Hospitals Secretary Kathy Kliebert said her agency was still working on a public bid process to select new contractors.
“Our really only option at this time is a one-year extension,” Kliebert said.
Without an extension, payments to doctors, hospitals and others that provide Medicaid services would have stopped Jan. 1. Because of the tight deadline, members of the House and Senate health care committees agreed without objection to continue the contract.
But agreement came after they worried the price tag for the work — and the possible increased costs allowed under the extension — were too high.
Sen. Dale Erdey, R-Livingston, said it was unfair to ask lawmakers for approval only two weeks before the new deal would take effect, giving them little time to explore alternatives. “It kind of puts us in a jam here,” Erdey said.
Louisiana had hired another company to take over Medicaid claims processing, Maryland-based Client Network Services Inc., known as CNSI.
But amid the transition to the new firm in 2013, Gov. Bobby Jindal canceled that contract with CNSI because of concerns the company received favorable treatment from his ex-health secretary, Bruce Greenstein, a former CNSI vice president.
Greenstein has been indicted on multiple perjury charges stemming from a criminal investigation into the contract award, and CNSI is suing the state for wrongful termination.
Unable to move to the new contractor, the health department kept California-based Molina, which was hired 11 years ago, on the job to continue processing claims. To keep paying Molina requires annual contract extensions.
“There’s not a whole lot of leverage and options from our side at all,” said Sen. Fred Mills, R-Parks.
The latest extension will retain Molina through Dec. 31, 2016.
Molina’s been paid $472 million over the last 11 years for its work, according to health department data, a figure that will grow to an estimated $518 million by the end of next year.
“Molina has been a good partner for many, many years. It did not have to step up when the CNSI contract was canceled, but it did,” said Charles Castille, a Molina lobbyist.
Lawmakers initially resisted approving the contract extension. They worried a possible Medicaid expansion, which would add hundreds of thousands more to the Medicaid program, could become a windfall for Molina and a huge expense for the state.
But after a three-hour break, with talks moving behind closed doors, lawmakers returned and backed the deal.
Jeff Reynolds, undersecretary for the health department, expects to seek another Molina contract extension next year while the state continues the lengthy and complicated process for selecting new companies to handle the work and modernize the Medicaid bill payment system.