WellCare ‘committed’ to keeping contract

CEDAR RAPIDS — WellCare of Iowa is 'committed to pursuing all avenues and remedies to maintain' its managed-care contract with the state, an official with the company said.

In a telephone interview with The Gazette, Blair Todt, senior vice president, chief legal and administrative officer for WellCare, talked about an administrative law judge's Nov. 25 decision that recommended the state of Iowa throw out its contract and about the company's plans moving forward.

Gov. Terry Branstad announced plans to move its $5 billion Medicaid system to managed care in early 2015. The Tampa, Fla.-based WellCare is one of four private, out-of-state companies awarded a contract to manage the state's 560,000 Medicaid enrollees.

However, in the months since, the Department of Human Services in addition to WellCare and the three other companies — Amerigroup Iowa, AmeriHealth Caritas Iowa and the UnitedHealthcare Plan of the River Valley — have faced pushback from some health care providers and criticism from some Medicaid recipients.

In October, three companies who were passed over for managed-care contracts argued the bidding system was flawed and biased, pushing for the procurement process to be undone and replaced with a fairer scoring system.

Administrative law judge Christina Scase did not suggest the state needed to go that far, but did say WellCare's contract should be reversed. She cited the company's failure to disclose a corporate integrity agreement that would have included information on $137.5 million in fines to resolve false claim litigation.

The U.S. Department of Health and Human Services negotiates corporate integrity agreements with health care providers or entities as part of settlements that arise under a variety of civil false-claims statutes. Those entities agree to the obligations, and in exchange, HHS allows them to continue to participate in Medicare and Medicaid, according to the HHS website.

'Without this information, evaluators could not exercise reasoned judgment as to whether WellCare's failure to disclose these events in its initial response was an intentional or material omission,' she wrote.

'It's unfortunate'

However, WellCare argued in its request for review and appeal — filed last week — that it did disclose the corporate integrity agreement and settlement in its original proposal submission to DHS.

Todt called corporate integrity agreements 'well-known' and said they are used to maintain 'best-in-class compliance.' He went on to say that Scase essentially is faulting the evaluation committee and DHS Director Chuck Palmer for not reading the corporate integrity agreement 'front to back,' which is not allowing them to use their discretion.

'There's a very specific nature of the ruling,' he said. 'It's not based on our ability to serve members but on the nature of the procurement. It's unfortunate this happened, where we found ourselves here evaluating a committee's discretion to rely on their own judgment.'

Branstad has appointed Janet Phipps, director of the state Department of Administrative Services, to review the finding and render a decision.

In the meantime, Todt said the company is continuing to move forward, getting providers on board and speaking with members in preparation for the Jan. 1, 2016, start date. He said providers who already have signed contracts are willing to continue to move forward, adding the company hopes soon to announce a contract with a hospital system.

WellCare also is working with long-term services and support organizations, which Todt said the company is 'well on its way to having network adequacy — though there are a few regions where we have work to do.'

WellCare has made a significant investment in Iowa, he said — in both time and money — and the company is committed to having members 'on its rolls on Jan. 1.'

In a November earnings call, WellCare told investors it expected to incur $6 million to $9 million in pretax startup costs in the last calendar quarter of 2015 in connection with the new Iowa Medicaid Managed Care program. The company also announced in November that it would add 250 full-time positions in Iowa and open nine offices across the state.

'We have providers, members and third-party groups,' Todt said. 'We are committed to live up to our contract with the state.'

WellCare reported 3.8 million members nationwide as of Sept. 30.