6.27.2012

Ohio Medicaid Contract Drama

If it walks like a duck and quacks like a duck, chances are….

The recent flub by the state of Ohio on the new Medicaid contracts makes one think if this is how the state is performing with its own cost saving initiatives, what will it do with the healthcare reform and exchange implementation?


What Ohio was trying to do was simple! Save $1.5 billion in its tax-funded Medicaid program over the next two years through reforms, including new managed-care contracts serving two-thirds of enrollees, or roughly 1.5 million Ohioans.

To accomplish this task, Ohio allowed healthcare companies to submit their bids, plan information and contract applications. The contracts would then be scored and winners be announced.

Several companies competed and among the chosen ones were the Aetna, Meridian, CareSource, Paramount and United Healthcare Community. The Buckeye Community and Molina were in loser's line.

The decision was announced but because of billions of dollars at stake, Buckeye and Molina were not ready to back down. Molina hired lobbyists and Kasich political-operatives Robert F. Klaffky and Douglas J. Preisse (lobbyists with close ties to Gov. John Kasich). Apparently their political work paid off and in an unusual move, the state announced that it was dropping two of the five companies awarded the preliminary contracts in April, Aetna and Meridian, and replacing them with Molina and Buckeye.

In response to the rescoring Meridian has done nothing while Aetna has filed a lawsuit demanding its contract to be reinstated. The state's review found that Meridian should have been disqualified because it didn't have a necessary health-insuring corporation license or an application pending for one at the time of its bid. And Aetna lost many points for experience because the state said it did not provide evidence of full liability for certain plans with other states.

The problematic part in this whole Medicaid drama is that it was supposed to be about "saving money". The way state has moved with the rescoring and pulling back the awards hints at two worrisome possibilities: either the state officials were incompetent and were sleeping on their jobs when reviewing the contracts and assigning them a score or the scores were initially awarded as just but due to the political pressure from lobbyists and the two local companies the governor threw money saving goal out the window.

Apparently money can buy even a lost prize!

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