It’s been 20 months since the Jindal administration canceled a nearly $200 million Medicaid claims processing contract amid allegations of improprieties in the way it was awarded.
During that time, the administration has not sought any new proposals from private contractors.
Instead, the vendor that had the contract, Molina Healthcare Inc., continued to enroll Medicaid providers, pay medical claims, monitor for fraud and provide prior authorization for certain medical services for more than 1 million Louisiana residents. Based in Long Beach, California, Molina operates similar businesses in 16 states, including Louisiana. Molina has made more than $420 million over the life of its contracts with this state, which date back to fiscal year 2005.
The state Department of Health and Hospitals will be asking the Louisiana Legislature later this month for permission to extend the contract one more time.
Back when the administration was considering a new contractor, officials criticized the company’s computer systems, which they called antiquated. That led to the 2011 hiring of Client Network Services Inc., a company based in the Maryland suburbs of Washington, D.C. It was how CNSI ended up winning that contract that led to state and federal grand jury investigations, the firing and subsequent indictment of Gov. Bobby Jindal’s top health official and the March 2013 cancellation of the contract with CNSI.
Molina technology rating was deemed to be too low for the company’s proposal to be considered. Molina unsuccessfully protested, claiming bias by the state health agency. CNSI eventually won the bid.
State health executives say they now need to extend the giant Medicaid Management Information Systems contract one more time. This would allow Molina to provide services while Louisiana Medicaid moves toward a system of greater privatization from several different companies.
“We must continue to operate the business functions of Medicaid to ensure recipients continue to access services and providers get paid” as the transition occurs, DHH Chief of Staff Calder Lynch said. “The renewal allows us time to ensure the proper systems are in place and there is no interruption to these services.”
DHH Secretary Kathy Kliebert said the federal Centers for Medicare and Medicaid Services, called CMS, favors moving away from the “one size fits all” approach. CMS is the federal agency that must approve changes to state-run Medicaid programs that are funded mostly with federal dollars.
Nationwide, the lucrative, long-term MMIS contracts have prompted cutthroat competition and challenges to awards as well as delays, cost overruns and failures because states relied on one company. The federal agency has decided to reverse course, Kliebert said.
When the CNSI contract was canceled in March 2013, the state reassessed how those services would be provided, said Kliebert, who became DHH secretary when Bruce Greenstein was fired upon news breaking that CNSI’s contract award was being investigated. Greenstein had served as a CNSI vice president before leaving to work at Microsoft Corp. and then taking the job with the Jindal administration. Greenstein, who returned to Washington state, since has been indicted for allegedly lying about communications with CNSI executives before, during and after the contract award. He denies the accusations.
Kliebert said a big part of the state’s contract assessment involved what would be needed as Louisiana’s Medicaid program services become privatized, with insurance companies managing the care of more and more of the state’s 1.4 million recipients. That dramatically changed the requirements of the medical management contract.
“It will not be necessary to build a system of the same size or scope,” Kliebert said.
Insurance companies handle their own claims processing as well as prior authorizations for health care services, traditional megacontract functions. On the flip side, there would still be a need for medical records data management and fraud detection to ensure care is being delivered and that it’s high quality.
The multiple-contract approach gives flexibility “rather than having all your eggs in one basket,” Lynch said.
“We also believe there are significant savings to be had by building a system in modules,” Kliebert said. “It won’t be the same MMIS.”
The state already has entered into a contract with FirstData for “electronic visit verification” — a telephone- and computer-based system that ensures in-home services for the elderly and disabled are actually being delivered.
DHH anticipates releasing a request for proposals for Medicaid eligibility and enrollment services by January. The system will receive Medicaid initial applications and renewals and process them to determine eligibility for the government health insurance program for the poor. The MMIS contractor will no longer deal with those functions. The information will flow directly from the new system to physicians, hospitals and other health care providers and to the private insurance companies.
Soon after seeking a contractor for the eligibility function, DHH will seek proposals for “enterprise architecture” — a data management system that includes centralized storage of information about Medicaid recipients as well as the capacity to generate specialized reports on such things as service usage trends.
DHH continues to explore its needs for Medicaid provider enrollment and fiscal intermediary functions “in light of the ongoing shift to managed care,” Lynch said.
He said there is likely still a need for some claims processing functions after Medicaid privatization. “This could potentially be achieved through a standalone claims processing contract or by potentially contracting with an existing health plan in the state,” he said.
In addition, DHH is “actively exploring” the scope of its program integrity function and strategies to obtain advanced tools to combat fraud and abuse prevention, he said.
Different companies can provide the functions required for Medicaid program operations as long as their systems can talk to each other, Kliebert said.
“With an enterprise approach, we will be positioned to select modules that are the best solutions,” she said.