Companies appeal Iowa’s Medicaid privatization bidding process

DES MOINES - Three private companies seeking to be part of Iowa's Medicaid modernization program when it launches next year have appealed their requests for reconsiderations that were turned down by the head of the state's Department of Human Services.

Attorneys representing Aetna Better Health, Iowa Total Care and Meridian Health Care Plan of Iowa have requested hearings before an administrative law judge to challenge the 'fundamentally flawed” process DHS officials used to determine four winning bids among the 11 responses to the state's request for proposals seeking private companies to manage Iowa's $4.2 billion Medicaid program.

During Wednesday's meeting of the Iowa Council on Human Services, DHS Director Charles Palmer said he expects negotiations will take place next week to finalize contracts with four bidders who will participate in transforming Iowa's Medicaid program into a risk-based system under Gov. Terry Branstad's Medicaid Modernization initiative - a change that requires federal approval.

The winning bidders were identified as Amerigroup Iowa, AmeriHealth Caritas Iowa, UnitedHealthcare Plan of the River Valley and WellCare of Iowa.

Three competing companies - Aetna, Iowa Total Care and Meridian - have challenged the selection process on a variety of grounds, including evaluator bias, scoring methodology deficiencies, process flaws and potential conflict of interests.

In appeals filed with the agency, attorneys say the DHS intent to award must be overturned and the department ordered to re-evaluate the bids using an independent, disinterested arbiter.

'Several of the plans selected for award are affiliated with other plans with documented histories of serious misconduct and poor quality that have resulted in contractual, civil, and even criminal sanctions for either the organization or their managing personnel,” according to Meridian appeal documents.

Before he departed for a trade mission to Japan and South Korea, Branstad defended his administration's handling of the bidding process and expressed hope that legal challenges could be avoided that potentially might delay plans to privatize the program serving 560,000 Iowans annually beginning Jan. 1. The new approach is projected to save the state $51.3 million in the first six months.

'Obviously, when there is this much money at stake and you're not one of the four successful ones, you're going to be disappointed, and that's true in just about any time that you have this type of process,” Branstad told reporters last month. 'I believe the process is fair. I feel confident that the Department of Human Services is approaching this in the correct way.”