The Louisiana Department of Health will scrap multi-billion-dollar contracts for Medicaid services nearly 1.7 million people and restart the bid process, after challenges to the deals tied them up for more than a year.
The decision ends a saga that began in early 2019 with the goal of contracting with new companies to manage care for Medicaid enrollees, contracts that are among the most lucrative in state government.
The Health Department asked permission from Commissioner of Administration Jay Dardenne to withdraw its intent to award four contracts that have been halted for a year and start a new bid process for the deals.
Dardenne agreed to cancel the request for proposals Friday.
After selecting four organizations to do the work for an estimated $21 billion over three years, the two losing bidders challenged the decision almost exactly one year ago. Since then, the Health Department has been unable to move forward with the deals as the challenges ground the effort to a halt.
Courtney Phillips, who took over as the Health Department’s secretary this spring after the deals had been tied up for months, said it’s time to restart the process.
“Much has changed in the healthcare industry since the original RFP (request for proposal) was drafted, and we must look ahead to innovative solutions in health care delivery while increasing accountability and addressing health disparities,” Phillips said in a statement.
In January, the state procurement officer tossed out the awards issued by the Health Department. The agency then appealed the decision. The appeal has been pending Dardenne's decision since.
Since the protests of the contracts began, the Health Department has had emergency contracts in place with the previous managed care organizations, and said Friday the new process will not interrupt access to care for enrollees. Open enrollment for Medicaid recipients runs from October 15 to November 30.
The Health Department said withdrawing the contracts will end the ongoing protests by the two losing bidders, Louisiana Healthcare Connections and Aetna Better Health. The agency had tried to move forward with contracts with four organizations: AmeriHealth Caritas Louisiana, Healthy Blue, Humana Health Benefit Plan of Louisiana and UnitedHealthcare Community Plan.
The agency said it will start developing a new request for proposals and hopes to publish it next year.
Medicaid in Louisiana covers more than 1.6 million people and represents a $13.8 billion annual budget, most of which is paid by the federal government.
The contract dispute turned into a headache for Edwards, a Democrat, as he was running for re-election last year in a heated race.
Workers for one of the losing bidders, donning orange shirts and waving signs, met Edwards at qualifying in that 2019 race to protest his administration's decision. Meanwhile, billboards from a mysterious group – which the losing bidders claimed to not be affiliated with – popped up, criticizing his administration's decision.
The challenges to the decision were initially successful, with the state procurement officer tossing them after deciding the Health Department, under then-Secretary Rebekah Gee, mishandled the bid process. The state procurement officer, Paula Tregre, said the agency didn't follow state law or its own bid guidelines when awarding the contracts to
Meanwhile, lawmakers had scrutinized the contracts, becoming frustrated with delays in the process over the largest contracts awarded by the state.
After Tregre's decision, the contracts awaited action from Dardenne's office when the pandemic hit, and Edwards suspended legal deadlines, causing further delays. A deadline for Dardenne's decision was delayed multiple times until the Health Department's decision Friday.
In 2012, then-Gov. Bobby Jindal, a Republican, privatized the state's Medicaid system by installing the managed care program. Before, the state reimbursed doctors and hospitals directly in a fee-for-service model. Now, the state pays the organizations a monthly fee based on the number of enrollees.