DES MOINES — WellCare of Iowa, one of the four companies initially awarded a state contract to help manage Iowa’s $5 billion Medicaid program, fought on Monday to keep its foothold after a state arbiter ruled its contract should be thrown out in December.
The company went before a district court judge to appeal a decision by Director of the State Department of Administrative Services Janet Phipps, who in December said the company had failed to disclose in its bid a corporate integrity agreement and information regarding $137.5 million in fines to resolve false claims litigation.
The transition of the state’s more than 560,000 Medicaid recipients and 30,000 Medicaid providers from a fee-for-service system to a managed-care system is scheduled to begin March 1, pending federal approval.
Lawyers for the Tampa-based company said that information was provided after the state committee in charge of evaluating the managed-care bid applicants asked a clarifying question in regard to false claims litigation. WellCare officials said it provided detailed information about its corporate integrity agreement as well as why it had to pay “substantial” fines.
Robert Highsmith, an Atlanta-based attorney for WellCare, argued that Iowa Department of Human Services Director Charles Palmer acknowledged in a September letter as well as during an October hearing in front of an administrative law judge that he knew about the settlement and chose to not disqualify WellCare from the bid process.
But Highsmith conceded to Polk County District Judge Robert Blink that the company did not disclose the specific dollar amount it paid in fines in the clarifying question, adding that “nowhere in those questions does it say, ‘List a specific amount.’”
Also discussed during Monday’s hearing was whether WellCare violated any rules that should result in disqualification when Christopher Rants, a lobbyist, had conversations with Michael Bousselot — Gov. Terry Branstad’s chief of staff who was his policy director and legal counsel at the time.
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WellCare and the state’s disagreement centers around a rule that laid out who the company could and could not be in contact with during the request-for-proposal process. The state contends the communication was inappropriate, while WellCare argued the rule only prohibited the bidders from communicating with Department of Human Services employees.
Amy Licht, a state attorney, said the rule, which contains the phrasing “other employees,” means WellCare and the other bidders were not to have communication with any state employees as well as members of the executive, judicial or legislative branches, including those branch employees. But WellCare contended the rule is too vague.
“If you’re going to limit communications with an elected official and his or her staff, you do it with narrow specificity,” Highsmith said. “You have to do it clearly.”
But Licht said Rants’s conversations, when paired with conversations between Renee Schulte — a WellCare consultant — and Mikki Stier — director of the Iowa Medicaid Enterprise — during a blackout period paints a picture that suggests WellCare manipulated the rules to win the contract.
“This was a clear technical violation of the terms of the RFP,” Licht said. “Public integrity is an agency priority. ... This is a huge procurement, in both dollars and people affected. It’s important to take steps so that people are confident.”
Judge Blink said he recognizes the go-live date for the Medicaid transition is a month away and will work quickly to produce a ruling.