A circuit court judge has ordered the state to make Anthem Kentucky Managed Care Plan Inc. the sixth company allowed to administer Medicaid in Kentucky.
Franklin Circuit Court Judge Phillip Shepherd entered the order late Friday after a lawsuit Anthem filed in September argued that it was wrongly skipped over during the Beshear administration’s awarding of five big-dollar Medicaid contracts. Collectively, those contracts are worth about $8 billion.
At the beginning of his administration, Gov. Andy Beshear ordered that the state redo an RFP process for the state’s five Medicaid contracts after outgoing Gov. Matt Bevin awarded the contracts after losing the election.
Shepherd wrote that the court had to “balance the competing equities” presented in the lawsuit — ultimately finding that the most equitable outcome would be to have Anthem included as a Medicaid company when contract awards begin Jan. 1, 2021.
Earlier in the month, Shepherd handed down a temporary restraining order in the case until he reached a decision.
Anthem sued the state and the companies that got the contracts, demanding that the court disqualify one of the contract recipients (Long Beach, California-based Molina Healthcare Inc.); have the state correct what Anthem saw as irregularities in Medicaid contract bid scoring process; and/or restart the bidding process for a third time.
It’s not immediately clear if the order will stand until the effective date of the new contracts as the defendants in the suit may appeal the decision to a higher court.
WHAT DID SHEPHERD BALANCE?
One of the equities Shepherd sought to balance, as he noted in the temporary restraining order, was that Anthem would suffer irreparable harm without injunctive action.
“If Anthem were to lose its status as an incumbent [Medicaid company] but then ultimately prevail, it would have [been] impossible to obtain meaningful relief,” Shepherd wrote. “Further, the court finds that Anthem’s current members themselves would be irreparably harmed in the absence of an injunction, even if Anthem were to ultimately prevail.”
He also wrote that adding Anthem to the list of Medicaid companies available to Kentuckians would not harm the defendants in the case or the public: He further argued it would benefit the public by increasing competition among Medicaid companies and reducing confusion over who was in or out of the Medicaid program.
He also argued that the benefit of increased competition to the public outweighs any harm to the other Medicaid companies who will share the same pool of potential enrollees.
Further, Shepherd points out that Medicaid open enrollment begins Nov. 2, giving current Medicaid enrollees the chance to change plans if they so choose.
ANTHEM COMPLAINTS VALIDATED
In May, the Beshear administration awarded the Medicaid contracts to the bidders with the five highest scores from a state evaluation team that reviewed and scored the RFP responses.
Only 16 points, less than 1 percent, separated Anthem from Molina Healthcare. Anthem came in at No. 6: Molina was No. 5. Here are the scores:
- WellCare Health Insurance of Kentucky: 1,662
- Aetna Better Health of Kentucky: 1,653
- Humana Health Plan Inc: 1,605
- UnitedHealthcare Community Plan of Kentucky: 1,520.5
- Molina Healthcare of Kentucky: 1,507
- Anthem: 1,491
- Passport Health Plan: 1,409.5
Anthem’s initial contention was that the evaluation team made several scoring errors and deviated from the RFP and state law in how it scored the RFPs. Later in the process, it further contended Molina Healthcare should be disqualified from the awards because it hired a former Beshear transition team member that helped set up the Cabinet for Health and Family Services, the cabinet that oversees the Medicaid program.
Further, Shepherd wrote that the evaluation team acted arbitrarily in how it scored the responses — in deciding not to hold oral presentations despite the close scores; giving all bidders full-points on to sections of the RFP assessment without examination; and docking Anthem 10 points for a missing document from its electronic bid submission that was present in the paper submission.
The decision to skip oral presentation did not stand up to applicable law, Shepherd wrote.
The assessment team did not preserve their assessment notes. “The lack of documentation for these decisions supports the court’s finding that the scoring of the proposal was arbitrary,” Shepherd wrote.
The order also states that Molina Healthcare’s hiring or former Beshear transition team member Emily Parento “was likely violative of the Model Procurement Code, the Executive Branch Ethics Code, and their stated purpose.”
Parento was formerly the co-chair of the CHFS transition team. Shortly after leaving the administration, she started her own consulting firm and was hired by Molina Healthcare to help it with its bid for a Medicaid contract soon after that. Parento had access to Medicaid bid materials while on the administration team and had to sign a nondisclosure agreement before seeing them.
Further, the Executive Branch Ethics Code prohibits former executive branch officials from working in the private sector in areas where they worked in the public sector for one year.
Shepherd dismissed arguments that these provisions did not apply to Parento because she was not a paid employee of the state. However, Shepherd’s order states that Parento claims to have never had confidential information that was relevant to the bid process.
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