Attorneys allege improper dealings in Iowa Medicaid bidding process

DES MOINES - Email evidence introduced Thursday during an administrative challenge to the state's process of selecting private companies to manage the state's $4.2 billion Medicaid program indicated representatives from one winning bidder had improper contact with a member of Gov. Terry Branstad's staff during a 'blackout period” when such communications were not to take place.

Attorneys for Aetna Better Health - one of three companies whose bids were rejected by the state - argued subpoenaed emails they received for the first time this week from competitor Wellcare of Iowa indicated two former state legislators employed by Wellcare had discussions with Michael Bousselot, the governor's legal counsel and health care expert, during a period before the Aug. 17 awarding of four state contracts when there were to be no communications between bidders and state officials about the request for proposal (RFP) process other than through an Iowa Department of Human Services designee.

'We believe we have been prejudiced” in the state's Medicaid modernization managed care selection process, Aetna attorney Sarah Franklin told state administrative law judge Christine Scase during the fourth day of testimony by losing bidders seeking to have the RFP outcome set aside and a new bidding process ordered that would be conducted in a fairer, more-objective manner.

During Thursday's proceedings, Aetna attorney Mark Weinhardt used the emails to build a case that WellCare enlisted former Iowa House Speaker Christopher Rants, R-Sioux City, as a lobbyist and former Rep. Renee Schulte, R-Cedar Rapids, to help draft a proposal using her inside connection as a former contractor with the state Department of Human Services. Schulte testified Thursday and Scase granted an Aetna motion to subpoena Rants' testimony to take place during Friday's hearing.

Internal WellCare emails discussed Thursday indicated Rants and Schulte had communications with Bousselot, who now serves as Branstad's chief of staff, during the blackout period. Weinhardt asked Schulte if it was a 'likely conclusion” that the email traffic included discussions related to the Medicaid managed care proposals. 'Yes, it's a likely conclusion,” Schulte said.

Weinhardt also used the emails to support allegations that WellCare attempted to enlist third-party sources to make positive portrayals of the company to 'suspected” members of a DHS project evaluation committee that was charged with scoring the 11 bids that would become the basis whereby DHS Director Charles Palmer decided the four winning bidders on Aug. 17.

A spokesman for the governor's office did not immediately respond to a request for comment.

Three companies - Aetna Better Health, Iowa Total Care and Meridian Health Care Plan of Iowa - who are seeking to be part of Iowa's Medicaid modernization program are alleging the state used a 'flawed” and 'biased” bidding process to award contracts to four competitors that represents the largest procurement in state history.

Attorneys for the state counter that the Iowa Department of Human Services met its legal obligations in the bidding process that resulted in contracts being awarded to Amerigroup Iowa, Inc.; AmeriHealth Caritas Iowa, Inc.; UnitedHealthcare Plan of the River Valley, Inc.; and WellCare of Iowa, Inc. by structuring a process that was fair and reasonable.

Scase has said she expects the hearing will span the entire week, after which she will make a proposed decision that would go to the director of the state agency. However, since Palmer made the decision to deny the requests for consideration, she said she believed the administrative procedures act would call for the appointment of an alternate decision-maker by the governor.

Scase said she hoped to be able to complete her report in less than a month after the hearing is concluded, with the possibility that case ultimately could go to judicial review.