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MCOS- Iowa Medicaid contract triggers legal action over alleged conflicts of interest
MM Curator summary
The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.
[MM Curator Summary]: In which an extensively documented set of concerns about the way the state made its MCO award decision is discussed. TL/DR- Lucy, you got some splainin’ to do.
Clipped from: https://iowacapitaldispatch.com/2023/06/13/iowa-medicaid-contract-triggers-legal-action-over-alleged-conflicts-of-interest/
The state of Iowa is accused of conflicts of interest in hiring a company that soon will begin managing the state’s billion-dollar Medicaid program. (Photo illustration via Canva)
With Iowa’s newest Medicaid managed-care provider set to begin work in less than three weeks, the state is now being accused of conflicts of interest in hiring the company.
A civil petition filed in Polk County District Court alleges Iowa’s newest Medicaid managed-care provider, Molina Healthcare of Iowa, was selected last fall in part because its CEO, Jennifer Vermeer, is Iowa’s former Medicaid director.
Vermeer, the petition claims, “worked closely over time” with those who played a key role in hiring her company to help deliver billions of dollars’ worth of Medicaid-funded health care services to almost 800,000 Iowans.
Molina is expected to begin working in Iowa on July 1.
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The petition was filed recently by CareSource Iowa Co., an Ohio-based nonprofit Medicaid managed-care company that failed to win the Iowa contract.
CareSource now seeks judicial review of the Iowa Department of Health and Human Services’ decision to hire Molina over CareSource, alleging the competitive bidding process used by DHHS produced an “unfair, biased result” that resulted in the hiring of “the only bidder that hired as its CEO a longtime colleague/supervisor” of state workers tasked with evaluating the bidders.
The petition notes that Molina earned 98% of the available points handed out during the evaluation process — a score that “even DHHS’s top witnesses admitted was shockingly high” and which CareSource argues “was no coincidence and demonstrates unfair bias” on the part of DHHS.
In court filings, DHHS has admitted to many of the factual claims made by CareSource, but has denied any bias or wrongdoing.
Bid evaluators allegedly lacked experience
The hiring process that sparked the petition dates back to May 2021, when DHHS published a notice of its intent to solicit proposals from companies to manage Iowa’s Medicaid program. At the time, DHHS said it planned to select “up to four” companies for the work.
DHHS’s written solicitation for proposals did not disclose the specific evaluation criteria to be used in selecting the winning companies, and instead said only that DHHS would conduct a “comprehensive, fair and impartial evaluation.”
CareSource says it “invested millions of dollars and thousands of hours in learning about Iowa Medicaid’s needs and preparing an extensive and detailed proposal” to submit.
Each of the five members of DHHS’s evaluation committee independently reviewed each of the proposals submitted by five bidders: CareSource, Molina, UCare Iowa, Aetna Health of Iowa, and an incumbent Iowa Medicaid managed-care provider, Amerigroup.
According to CareSource, none of the evaluators compared any features of the proposals to any of the competing proposals, nor did they compare the proposals to the specific evaluation criteria or any other objective scoring methods.
The five evaluators eventually met to engage in scoring the bids through a pro
cess of consensus – although, according to Care Source, “there is no documentation of the reasoning justifying the consensus scores assigned to the various proposals.”
CareSource alleges the evaluation committee was comprised of DHHS staffers who “had spare time to devote to the evaluation process,” but didn’t necessarily have the expertise the job required.
“The disparity of the evaluators’ levels of experience with Medicaid managed care contracts was striking,” CareSource alleges. One evaluator, Jennifer Steenblock, had more than 30 years of experience specifically in Medicaid, but was the only member of Iowa’s Medicaid Leadership Team to assist with the evaluations.
A second evaluator had worked at Iowa Medicaid for only nine months at the time, while a third had no experience with Medicaid managed care oversight and helped run a state-run, long-term care facility that was the focus of a U.S. Department of Justice investigation.The remaining two evaluators had some management experience within DHHS but lacked “substantial experience with Medicaid managed care,” CareSource alleges.
Questions raised about conflicts of interest
While two of the five evaluators allegedly individually contacted the state’s procurement officer to raise concerns about their potential or perceived conflicts of interest due to their close working relationship with Amerigroup, these same evaluators would later testify that they “were told not to worry” about the issue, the petition claims.
Two other evaluators identified potential conflicts of interest on DHHS-supplied disclosure forms but, according to CareSource, there was no follow-up by DHS and the two were never asked if they could set aside any bias or personal opinions they might have.
The most qualified evaluator, Steenblock, had worked closely with Molina’s CEO, Vermeer, when Vermeer served as Iowa’s Medicaid director and when she later consulted for Iowa Medicaid, CareSource alleges in its petition to the court.
CareSource also claims that documents produced by DHHS demonstrate that the department’s “leadership was concerned Amerigroup would pursue litigation if not selected for an managed care organization contract.”
In the end, Molina was the top-scoring bidder, followed by Amerigroup and then CareSource. Rather than award all three of the companies a contract, DHHS Director Kelly Garcia opted to award only two contracts — one for Molina and one for Amerigroup.
Separately, Iowa Total Care has a managed care contract with Iowa that is expected to run through 2025. Together, the three companies are expected to manage the Medicaid program that each year provides $7 billion worth of health care services to 788,000 low-income or disabled Iowans.
According to the petition, Garcia later testified that her decision to hire Molina was based solely on the points awarded by the evaluators. According to CareSource, Garcia was “surprised and concerned by Molina’s extraordinarily high score,” but didn’t go back to the evaluation committee to investigate the basis for the score.
Withheld documents allegedly contradict testimony
Last September, CareSource filed a formal request to have DHHS reconsider its decision, but the request was denied. CareSource then filed an administrative appeal, sought documents from DHHS and deposed the five evaluators and Garcia.
An administrative law judge held a hearing over several days last November and eventually issued a decision denying CareSource’s appeal.
On March 24, DHHS allegedly advised CareSource that it had discovered in its own offices three binders of procurement-related materials belonging to one of the evaluators, Brandi Archibald, that had not been turned over to CareSource in response to prior requests for such information.
The newly disclosed documents included handwritten notes on the proposals submitted by Molina, Amerigroup, and CareSource and “were squarely covered by CareSource’s September 2022 public records request” to DHHS, the petition alleges. The state agency admits the records “were merely sitting on a shelf in DHHS’s own offices,” according to the petition. The records allegedly contradict testimony by Archibald that she took no notes during her review of the bid proposals.
After the discovery of those records, CareSource asked DHHS to conduct another sweep of its offices to ensure no other relevant materials were missed. In April, DHHS turned over “still more evaluator materials it had failed to produce in response to the public records request,” the petition alleges.
This second batch of newly discovered records include handwritten notes from another evaluator who had testified that he took no notes, as well as extensive, typed notes prepared by Steenblock, the petition alleges.
Molina has been sanctioned by states, feds
CareSource is now asking that a district court judge review DHHS’s decision, reverse that decision, and order the department to either add CareSource as a third winning bidder or begin a new evaluation process, using a “fresh slate of unbiased and properly trained evaluators who are instructed to compare the proposals as required by Iowa law.”
A hearing on the matter is scheduled for Oct. 20. Amerigroup and Molina have each been granted the right to intervene and be heard in the case.
In recent years, Molina has had problems with state and federal regulators.
Last June, the state of California took enforcement action against Molina Healthcare of California and imposed a $1 million fine against the company for its failure to acknowledge and resolve 29,124 provider disputes between September 2017 and September 2018.
Days later, Molina Healthcare and its previously owned subsidiary, Pathways of Massachusetts, agreed to pay $4.6 million for alleged violations of the False Claims Act. Federal officials had alleged that Molina owned and operated a group of mental health centers that improperly submitted claims for reimbursement while failing to properly license and supervise mental health center staff.
In 2019, the Molina of Texas was fined $500,000 by regulators in Texas who alleged the company had been unable to pay beneficiaries’ claims on time. That penalty was imposed one year after the company agreed to settle allegations of late payments by paying a combined total of $7.7 million to the Texas Department of Insurance and various health care providers in the state.
EXPANSION- NC will get $1 billion Medicaid expansion ‘bonus,’ but there’s disagreement on how to spend it
MM Curator summary
The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.
[MM Curator Summary]: How do we split the loot?
Clipped from: https://www.bpr.org/2023-06-14/nc-billion-medicaid-expansion-bonus-disagreement-spend
The decision by North Carolina lawmakers to expand Medicaid will come with a billion dollars of new federal funds for the state. But the House and Senate disagree on how to spend the money.
The billion-dollar allocation from the federal government is called a “signing bonus” for expanding the government health care program to hundreds of thousands of people. It’s an incentive from Washington to convince more states to expand Medicaid.
Gov. Roy Cooper and leading House Republicans think the billion dollars should be used to fix the state’s troubled mental healthcare system. Supporters of the plan, including Ashish George with the National Alliance on Mental Illness, say the federal money creates a rare opportunity.
“I think it’s the best shot we’ve had in many, many years,” George said.
A state House bill calls for about a quarter of the money to go toward increasing Medicaid reimbursement rates to mental health providers.
Health and Human Services Secretary Kody Kinsley says the current reimbursement rates are too low, and that makes it hard to keep enough mental health professionals in North Carolina.
“If you can’t get an increased rate, or if you can’t get a rate that will sustain your business, you won’t stay in business in any place,” Kinsley said. “This is really stark, and I want to make this clear: Medicaid has not increased its behavioral health rates since 2012.”
The House plan also includes $50 million to help mental health practitioners pay back student loans. And it would fund a variety of new mental health care facilities.
Rep. Donny Lambeth, R-Forsyth, developed the House plan. He says hundreds of patients are stuck daily in emergency rooms waiting for treatment beds to come available at mental health facilities.
“We have a once-in-a-generation opportunity to strengthen our care,” Lambeth said. “Thus, the focus will be on opening more care options, providing incentives to staff more beds.”
Senate leaders want to spend ‘bonus’ on new children’s hospital, health sciences training
But Senate leaders want to take a different approach to spending the billion-dollar fund. Their budget directs the money to a wider variety of health care projects, including new hospital construction and new health sciences training facilities at community colleges and universities.
The WUNC Politics Podcast is a free-flowing discussion of what we’re hearing in the back hallways of the General Assembly and on the campaign trail across North Carolina.
Senate leader Phil Berger says he recognizes the state’s mental health crisis, but he’s not sure a one-time infusion of money can fix it.
“There is some concern as to whether or not just throwing a lot of money at a particular problem is actually going to move the needle that much, and maybe if there are other things in the health space that we can actually have some impact on with some of those dollars, it’s probably better to do that,” Berger said.
The biggest project in the Senate’s proposal is a hundred million dollars for a new UNC children’s hospital, which will include a mental health component.
Sen. Ralph Hise, R-Mitchell, says the children’s hospital is in need of an expansion.
“A lot of young kids are having to travel to Atlanta and Pennsylvania to get high-end children’s services and we hope to be able to offer that here,” he said.
The Senate plan also includes $40 million in incentives to entice more health care providers to locate in rural areas of the state. And it includes funding to help keep rural hospitals from closing.
Senators also want to build new community college health sciences buildings in smaller counties like Caldwell, Robeson and Pamlico. The goal is to train more health care providers in those areas.
Working on a compromise
Budget writers from the House and the Senate are now working to negotiate a compromise plan for the final budget. Kinsley says he’s hearing support from both chambers for mental health, but there’s disagreement on whether to use the Medicaid expansion money or other funding sources. He argues that while the backlog of mental health needs looks costly, it can ultimately save the state money.
“What I try to remind folks is that, you know, when you spend money on behavioral health, you drive down costs in the short and long term in a number of other buckets, right?” Kinsley said. “You drive down costs in incarceration costs and jail-based costs, you drive down costs for physical health controls. We know that people that have their behavioral health issues managed, their costs for diabetes and other chronic diseases decrease. You drive down costs around homelessness and other social services.”
Kinsley added: “Investing in behavioral health is not just about finding more money to spend, it is about spending that money first, because the payoff is huge in a number of other places.”
The final budget agreement will likely be released in the coming weeks.
PROVIDERS- Montana governor boosts Medicaid payments for health care providers by hundreds of millions
MM Curator summary
The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.
[MM Curator Summary]: The pretend Medicaid math is out for Montana this year.
Gov. Greg Gianforte gives his State of the State address in the state House chamber on Wednesday, Jan. 25, 2023. Credit: Samuel Wilson / Bozeman Daily Chronicle
Gov. Greg Gianforte on Wednesday announced signing the state’s roughly $14.3 billion primary budget bill, creating a roadmap for funding state government for the next two years and substantially increasing reimbursement rates for health care providers who care for Medicaid patients.
In a press release Wednesday afternoon, the governor’s office touted many aspects included in House Bill 2, including income and property tax cuts, investments in state infrastructure, boosts to affordable childcare and housing programs, and a “historic” increase to Medicaid provider rates.
” Any one of these accomplishments would be historic on its own. Taken together, we’ve passed one of the most transformational budgets in state history,” Gianforte said.
The governor’s deputy communications director, Brooke Stroyke, later confirmed that Gianforte approved the Medicaid rate increases as passed by the Legislature, despite a suggestion in May from House Majority Leader Steve Fitzpatrick, R-Great Falls, to cut $15 million from the overall rate increases. The most recently available analysis of the final rates from the Legislative Fiscal Division calculated an increase of $339.4 million in combined state and federal funds over fiscal years 2024 and 2025.
Advocates for behavioral health providers and other impacted services heralded the governor’s announcement.
“Montana’s mental health system and our citizens who rely on it desperately needed better reimbursements,” said Matt Kuntz, director of NAMI Montana, a mental health advocacy group, in a Wednesday text message. “It’s wonderful to have them pass.”
The fight over how much to increase Medicaid reimbursements for certain types of providers dominated much of the 2023 Legislature. Republicans and Democrats, responding to a recently commissioned study that found the state underpays behavioral health, developmental disabilities and senior and long-term care providers, pushed to close that gap beyond what Gianforte’s budget originally proposed, though to different degrees.
While Democrats and providers sought to raise rates to meet the benchmarks identified in the 2022 study, some Republicans were wary of releasing a sudden flood of funding into that sector of the health care industry. Other members of the party, including the health budget subcommittee chair, Rep. Bob Keenan, R-Bigfork, supported record increases to rates but raised concerns that the surge in funds suggested by Democrats and service providers would put rates on the chopping block during future budget shortfalls.
Health care providers, many of whom testified to lawmakers that Medicaid patients make up the majority of their caseloads, insisted that fully funding the rates identified in the study was the only way to prevent further closures of health care providers. At least 11 nursing homes shuttered around the state in 2021 and 2022, a trend also seen at local group homes and behavioral health services. In addition to inflation and a pervasive strain on direct-service providers during the pandemic, providers often pointed to inadequate Medicaid reimbursement rates as a leading cause of the closures.
Throughout the course of the session, bipartisan support for funding for rate increases eventually brought levels up to those in the contracted study. Providers slated to receive the largest rate increases said Wednesday that the governor’s approval signaled less financial strain in the years ahead.
“The provider rate increase combined with our temporary county tax levy that we are receiving will allow us some more time to continue caring for our own community members that built and maintained our towns and that they will not have to relocate due to a closure,” said Wes Thompson, administrator at Valley View Home, a nursing home in Glasgow. “Stabilization in long-term care is not met with this rate increase but it’s a starting point that is so desperately needed due to Montana’s growing elderly population.”
The roughly month-long delay between the session’s conclusion and the governor’s approval of the budget created anxiety among many in the health care fields. In recent weeks, Democrats accused Gianforte’s office of holding provider rates and other high-profile bills hostage while legislators debated whether to override his vetoes of bipartisan reforms to the state psychiatric hospital in Warm Springs and the child welfare system. Two out of three of those override efforts were successful — lawmakers fell seven votes short of turning the child welfare reform into law.
Members of both parties endorsed the final rates approved by Gianforte.
“Good to see that’s checked off the list,” Keenan said in a Wednesday statement.
Democrats celebrated the news as well while taking credit for their role in the result.
“This session, Montana Democrats finally convinced Republicans to invest in our community health care providers, and Montana’s seniors and working families will at last have a better shot at getting the care they need close to home,” said Rep. Mary Caferro, D-Helena in an emailed Democratic press release.
The fiscal year begins July 1.
RX- Inflationary Rebates for Generic Drugs Offset Medicaid Spending
MM Curator summary
The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.
[MM Curator Summary]: Good luck figuring out this nonsense. Will drug costs go down? Why did they go up? Stop asking those questions and believe the official “we have a clue what we are doing” line from HHS.
Clipped from: https://healthpayerintelligence.com/news/inflationary-rebates-for-generic-drugs-offset-medicaid-spending
Inflationary rebates for generic drugs totaled between 2 and 12 percent of the $53.6 billion Medicaid spent on the drugs between 2017 and 2020.
Source: Getty Images
June 14, 2023 – Inflationary rebates for generic drugs helped offset Medicaid spending from 2017 to 2020, but additional policies are needed to improve generic competition, according to a study published in Health Affairs.
Competition from generic drugs helps reduce spending on expensive brand-name drugs. Between 2014 and 2017, one in five generic drugs doubled in price over one year, leading to $1.5 billion of excess Medicaid spending.
The Bipartisan Budget Act of 2015 extended inflationary rebates under the Medicaid Drug Rebate Program to generic drugs starting in 2017 to help limit Medicaid spending when drug prices increase. Before this, generic drugs were subject to a baseline rebate of 13 percent of the average manufacturer price (AMP).
Researchers used Medicaid State Drug Utilization and CMS data to assess the economic impact of Medicaid inflationary rebates for generic drugs between 2017 and 2020.
They looked at three different drug price measures: AMP or the average price paid by pharmacies that purchase the drug directly from a manufacturer, the National Average Drug Acquisition Cost (NADAC) or the price paid by independent and chain retail pharmacies, and the average spending per unit reimbursed by state Medicaid programs.
Researchers obtained spending and utilization data for 33,656 national drug codes (NCDs) between 2017 and 2020. The median Medicaid reimbursement per prescription was $18. Total Medicaid generic drug spending over the four years was $53.6 billion, ranging from $2.9 billion to $4.1 billion per quarter.
AMP estimates were available in at least one quarter for 20,353 generic NDCs, representing $29.8 billion of gross generic drug spending. NADAC values were available for 27,583 NDCs, accounting for $43.2 billion of generic drug spending.
The percentage of generic drugs with non-zero inflationary rebates in each quarter across the study period ranged from 14 percent to 33 percent. Around half of the drugs owed inflationary rebates when they were calculated using AMPs (46 percent) and average Medicaid reimbursement (51 percent). A third of drugs had inflationary rebates when NADACs were used for calculations.
Inflationary rebates calculated using AMPs totaled $516 million between 2017 and 2020, offsetting 1.7 percent of the $29.8 billion pre-rebate Medicaid spending on generic drugs. In comparison, the baseline rebates of 13 percent of AMP totaled $1.7 billion or 5.7 percent of spending.
When using NADAC values, the total inflationary rebates were $1.5 billion, representing 3.5 percent of the $43.2 million in Medicaid spending. The baseline rebates totaled $3.5 billion or 8.2 percent of spending.
When using average Medicaid reimbursement prices, inflationary rebates totaled $6.5 billion or 12.1 percent of spending, while baseline rebates were $7.0 billion or 13 percent of spending.
Rebates were higher for drugs that were not orally administered, the study found. Using average Medicaid reimbursement, orally administered drugs accounted for 68 percent of drugs with rebates but only 30 percent of the total rebate amount. Meanwhile, injected drugs accounted for only 18 percent of drugs with rebates and 61 percent of the rebate amount.
Rebates were also concentrated among drugs with the highest use and prices. When using average Medicaid reimbursement to calculate rebates, drugs with 5,000 or more prescriptions per quarter accounted for 14 percent of rebated drugs but 67 percent of rebates. Drugs costing Medicaid $50 per prescription or more accounted for 28 percent of rebated drugs but 78 percent of total rebates.
The study findings suggest that some generic manufacturers continued to raise drug prices despite Medicaid implementing inflationary rebates in 2017.
“This may be because Medicaid represented only 10 percent of the prescription drug market, so Medicaid rebates were more than offset by higher revenue from private insurers and Medicare, which were not subject to inflationary rebates,” researchers wrote.
The Inflation Reduction Act of 2022 implemented similar inflationary rebates in Medicare, but it may still not be enough to stop manufacturers from raising prices.
“Inflationary rebates do not address the root causes of market failures that lead to rising generic prices, and it will be important for policymakers to ensure that the implementation of inflationary rebates now across both Medicare and Medicaid does not lead to market exits and shortages of essential generic drugs,” the study stated.
Future initiatives should target drugs with little or no generics, as prices are lower when more generic options are available.