Judge: Toss WellCare out of Iowa Medicaid program

WellCare of Iowa, one of four companies chosen by state officials to receive lucrative contracts for privately managing Iowa's $4.2 billion Medicaid program, should be bounced from the mix, according to a ruling proposed Wednesday by an administrative judge. The judge heard testimony last month about meddling by the insurance company to secure the work.

The administrative law judge ruled that the other three companies could proceed.

'In the end, although the improper communication by WellCare representatives present a sufficient independent basis for disqualification of the WellCare proposal, this misconduct does not sufficiently taint the entire process to necessitate reversal of the award of contracts to the remaining successful bidders,” wrote Judge Christie Scase.

Three rival companies that were not chosen for the work - said to be the largest procurement in state history - last month challenged the decision. Although the rivals took on winning bidders Amerigroup of Iowa, AmeriHealth Caritas and UnitedHealthcare Plan of the River Valley, they unleashed their biggest assault on WellCare.

Among the company's representatives during the bidding process were a former Iowa House speaker and a former state representative from Cedar Rapids, who both had contact with the now-chief-of-staff for the governor's office during what was supposed to be a blackout period in the bidding process.

WellCare also did not initially disclose all its past legal troubles. The company has faced millions of dollars in fines in other states. Last year, three former WellCare executives went to prison for fraud.

It was unclear after the ruling was released late Wednesday what the future holds for Iowa's transformation of its Medicaid program, which enrolls about 560,000 poor and disabled people.

Republican Gov. Terry Branstad has repeatedly said the transition from public to private management would begin Jan. 1 - despite calls from Democrats and the Iowa Hospital Association, among other health care groups, could to slow it down.

In a statement late Wednesday, he continued to say the plan will go forward. 'Tonight's decision emphasizes that the process was both ‘thorough and methodical.' We continue to evaluate the next steps in the administrative review of the procurement process and remain on schedule to implement our plan” on Jan. 1, Branstad said.

The administrative law judge's ruling is not the final word. The state Department of Human Services - which has overseen the process - would not say late Wednesday what it would try to do now.

The matter still could be taken to civil court. Moreover, federal officials must give approval for the plan to advance - one state official said initially the plan will save the public more than $50 million.

During last month's hearings on the challenge, attorneys for rival insurer Aetna used 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 DHS.

Internal WellCare emails introduced at the hearing indicated Rants and Schulte had communications at the time with Michael Bousselot, then the governor's legal counsel and health care expert, and now his chief of staff.

In her ruling, Scase indicated she was troubled by the contact. She wrote that Bousselot was 'certainly in a position” to influence the content of the bidding documents, as well as the 'ultimate decision.” In referring to the communication Rants had with him, she wrote, 'this conduct violated” bid rules. When Schulte contacted another state official about the bid process, the judge wrote, her actions 'were also clearly improper.”