'They scored the way they wanted to score it': Iowa once again is being accused of privatized Medicaid bias by a losing bidder

Jason Clayworth | The Des Moines Register

Show Caption Hide Caption Iowa's privatized Medicaid program About 600,000 poor or disabled Iowans have their health care covered by Medicaid, which has been managed by for-profit companies since 2016.

Iowa’s recent selection of a new private Medicaid manager included a “mystery evaluator” and inaccurate assumptions about a rival company’s financial solvency, its CEO alleged in documents obtained by the Des Moines Register.

Trusted Health Plan of Washington, D.C., was one of two companies seeking a contract to help manage Iowa’s annual $5 billion Medicaid program that provides care for 600,000 poor and disabled Iowans.

It lost that bid to Iowa Total Care, a subsidiary of Centene that is one of the largest for-profit Medicaid providers in the nation.

Trusted Health Plan alleges much of the criteria Iowa used to evaluate the two bids is subjective. The four Department of Human Services executives who reviewed the bid provided mostly positive feedback, yet the company received a score of 28.8 out of 100 possible points, the company says.

Iowa Total Care/Centene received 46.3 points out of 100.

“When subjectivity is a decision factor, politics plays a major role in those decisions,” Trusted Health Plan CEO Thomas Duncan told the Register.

DHS contends process was fair

Trusted Health received the same or lower score even in less subjective areas of the state’s review where it should have scored higher, Duncan said.

In a category that reviewed past litigation, for example, both companies received 0.8 points out of 3 total points despite Centene reporting at least $23.6 million in penalties in more than a dozen states. (Trusted Health reported a single $25,000 administrative fine.)

Duncan was denied reconsideration last month and an in-person meeting with Iowa Human Services Director Jerry Foxhoven.

“I think they scored the way they wanted to score it,” Duncan said.

Foxhoven contends the evaluation was done properly. He said there was not an unnamed evaluator but, instead, a separate set of notes kept by one of four state officials who scored the bids.

Those notes might have appeared as if there was a fifth review, he said.

Foxhoven said the review committee’s citation of strengths and weaknesses were used to show the evaluation process “was thorough and thoughtful” but cannot be directly tied to the numerical scores.

“After careful review of the concerns raised in Trusted Health Plan’s request for reconsideration, the determination in the agency’s decision was correct,” Foxhoven said in rejecting the company’s appeal.

Problems made way for a new Iowa Medicaid company

Employees of Iowa Human Services had for decades managed the state’s Medicaid plan until an April 2016 transition when three for-profit companies took over: AmeriHealth, UnitedHealthcare and Amerigroup.

At the time the private companies were first sought in 2015, Gov. Terry Branstad said the goal was to improve services, save money and create budget predictability.

But savings and improved services have been elusive.

The state has struggled to explain how it calculated savings, which is the subject of an ongoing audit. (The for-profit companies are paid up to 12 percent of the program's annual cost, while the state’s previous management costs were between 4 and 8 percent.)

And hundreds of people have alleged they’ve been unable to obtain care or equipment their doctors have said is medically necessary.

In October, Human Services announced UnitedHealthcare and Amerigroup were granted 3.3 percent increases following complaints from the companies that they were losing millions of dollars each year in managing the Iowa program.

AmeriHealth — a third company hired in 2015 — terminated its contract with Iowa late last year following an unsuccessful effort to renegotiate its rates.

AmeriHealth’s termination opened the door for a new company to enter Iowa’s privatized Medicaid management.

Iowa Total Care is expected to officially join Amerigroup and UnitedHealthcare in managing the Iowa Medicaid program in July 2019.

Nepotism, unfair practices alleged in 2015

The allegations from Trusted Health Plan this year mark the second consecutive time Iowa has sought competitive bids to manage Iowa’s Medicaid program where “deeply concerning” tactics were allegedly used to award the lucrative contracts.

The first, in 2015, resulted in a court battle when three companies — one of which was Iowa Total Care, the company that won this year’s bid — alleged that nepotism fueled a “haphazard, inconsistent, inaccurate, arbitrary and capricious” review.

The 2015 battle resulted with one company that initially won an Iowa Medicaid contract — WellCare — losing its contract.

Anne Kinzel, former executive director of Iowa's Legislative Healthcare Reform Commission, believes the bidding process for the Medicaid contracts is biased toward larger companies.

With their sheer size, the companies have more resources to complete complicated bidding processes that can include thousands of pages of documents and responses, she noted.

And larger companies tend to have more lobbyists, Kinzel said.

For example, Iowa Total Care/Centene — the winner of the newest Medicaid slot in Iowa — gave Gov. Terry Branstad’s campaign $15,000 in 2013. Craig Schoenfeld, the company’s Iowa lobbyist, gave Gov. Kim Reynolds $500 in 2017, records show.

Trusted Health Plan gave no money to Iowa politicians, according to the Register’s review of campaign records.

Campaign contributions and lobbying efforts are not considered as part of the evaluation process, Human Services spokesman Matt Highland said in response to questions about Centene’s donations.

But Kinzel said she believes the lobbying is part of a larger effort that builds relationships and helps pave the way for big companies to win Medicaid contracts in Iowa and other states.

Foxhoven said information about Trusted Health Plan’s capital and surplus evaluations as compared with the larger company that won this year’s bid was not a scored item.

Kinzel, however, said it is background information that she believes influences items that are scored. And the relationships built by lobbying efforts helps assist in the influence, she contends.

“I think Mr. Duncan may have a point there,” Kinzel said.