The Jindal administration on Thursday announced it has canceled a controversial contract that has come under scrutiny by a federal grand jury.

Commissioner of Administration Kristy Nichols issued a prepared statement announcing the decision affecting a $185 million-plus contract to process Medicaid claims with CNSI, a firm with ties to state health Secretary Bruce Greenstein.

“Based on consultation with the Attorney General’s Office, today I am terminating the state’s contract with CNSI, effective immediately. The state will work with the current contractor, Molina Medicaid Solutions, to provide services during this transition and until a new RFP (request for proposal), overseen by the Division of Administration, is completed,” Nichols said. A part of the state procurement process, a request for proposal asks interested businesses to submit offers on what they would do and how much they would charge.

Nichols said the administration has asked the state inspector general to look into this matter and provide assistance. “We have zero tolerance for wrongdoing, and we will continue to cooperate fully with any investigation,” she said.

Greenstein’s office directed media inquiries to Nichols’ office.

Gov. Bobby Jindal declined a request to be interviewed on Greenstein’s job status. Jindal’s office released a prepared statement from Paul Rainwater, the governor’s chief of staff, that said: “We have confidence in Bruce.”

The development occurred just hours after news broke that a federal grand jury was investigating the administration’s award of the contract.

The Baton Rouge-based federal grand jury subpoenaed documents related to the state’s awarding of the contract to the Gaithersburg, Md.-based Client Network Services Inc. Greenstein was a vice president with CNSI from 1995 to 1996.

The company got the contract for Medicaid claims processing in 2011 amid some complaints that the firm “low balled” the price and made erroneous assumptions in its proposal.

The contract was awarded by the state Department of Health and Hospitals and signed off on by the Jindal administration amid complaints from other vendors.

At the time, Greenstein said he took himself out of the contract dealings. Documents revealed Greenstein influenced a change in the solicitation for proposals that allowed CNSI to compete.

Nichols said the state DOA complied with the federal subpoena and delivered the documents requested. She said she only recently became aware of its existence. “We have zero tolerance for any wrongdoing and are fully prepared to cooperate,” she said.

Nichols released a copy of the subpoena in response to a public records request filed by The Advocate.

The subpoena was issued by U.S. Attorney for the Middle District Don Cazayoux. The documents were to be returned to the grand jury room by Jan. 30. Cazayoux declined comment Thursday.

The subpoena sought:

  • All documents submitted by the four proposers in response to the state’s solicitation of proposals. The proposers were CNSI, ACS State Healthcare, LLC; HP Enterprise Services LLC; and Molina Medicaid Solutions.
  • All financial information, including but not limited to financial statements, income statements, balance sheets, and statements of profit and loss, submitted by the firms in connection with or response to the proposal.
  • Documents sufficient to show the date and time at which each response to the proposal was received by the state of Louisiana.

DHH released a prepared statement in response to questions: “DHH does not have any details regarding an investigation of the MMIS (Medicaid Management Information Systems) contract award. DHH has not received a subpoena and to our knowledge no employee at DHH has received a subpoena.”

CNSI was supposed to take over the processing of Medicaid claims from doctors, hospitals and others who provide health care services to the poor in 2014. At that time, the full conversion from current vendor Molina would occur.

Nichols said she learned of the subpoena March 15 from the Attorney General’s Office, which advised caution and to “just be aware of (CNSI contract) amendments in general.”

The CNSI contract has been amended once since it was signed, increasing its $185 million cost by about $9 million. A second contract amendment proposed by DHH that would have added another $40 millionwas sidelined recently by the state Division of Administration.

When the contract was approved, legislators — wary of the low price — said they would keep an eye on contract changes. At the time, state health officials said that CNSI was picked because it submitted the lowest price for the 10-year pact.The second-lowest price was $238 million, submitted by ACS State Healthcare of Atlanta.