West Virginia officials are preparing to enter into nearly $600million worth of no-bid contracts with three health care insurancecompanies. Its a decision by the state Department of Health andHuman Resources that is now under fire. Critics say the arrangementcould cost the state millions of dollars and that the plan may beillegal. When is the last time the state of West Virginia wouldallow a $600 million contract and not bid it? said Delegate RonWalters, R-Kanawha. Walters urged House leaders to call for aspecial investigation or audit. Delegate Nancy Peoples Guthrie, D-Kanawha, said Attorney General Darrell McGraw should rule on whetherthe arrangement is legal. The fact that they were not bid out shouldbe alarming to all of us, she said. Right now, the state hasagreements with three health insurance companies to provide care tomore than 160,000 Medicaid recipients who receive government-sponsored health insurance because they are on welfare. Thoseagreements are worth a total of about $290 million a year to thecompanies The Health Plan of the Upper Ohio Valley, Unicare andCarelink. Those so-called managed care companies help provide thewelfare recipients with what is, for the most part, standard medicalcare, including doctor visits. Beginning next year, the state isplanning to send more customers to those companies in the form of55,000 more Medicaid recipients, a deal worth about $270 milliontotal. That group of Medicaid recipients is part of the SocialSecurity Income program, which means they have a different and moreexpensive set of medical needs than the welfare group. To qualifyfor SSI, a person must be aged, blind or disabled, a category thatincludes people with serious mental disorders. But even though thestate is doubling the size of the program, DHHR doesnt see anyreason to put the contract out for bid. While the secretary of DHHRis authorized to request bids for managed care products, he or sheis not required to do so, said department spokesman John Law. Aprocedure is set forth in statute if the secretary determines tosolicit bids for the managed care products. The law says thesecretary is authorized to execute a contract to implement a numberof services, including providing managed care. But others arent sureif the law is as lenient as DHHR thinks. Walter said he thinks thelaw forces the state to bid out its contracts. I honestly think thelaw says theyve got to do it, he said. Again, (the legislativecommittee on) special investigations should get involved in it orlegislative auditor ought to get involved to force their hand onthis. Walters added, Isnt the fed looking at us for other issues nowand wouldnt this send a flag straight up the pole? He was referringto federal prosecutors who recently subpoenaed records from thestate Division of Highways and Department of Administration. DHHRs$600 million in agreements with the three managed care companieswould practically be small potatoes compared to other statecontracts. The state Purchasing Division, which processes most statecontracts, handled only about $540 million in contacts during thelast budget year. The agency does not handle DHHR contracts or roadconstruction contracts. States have two major goals in turning theirMedicaid patients over to managed-care companies. These same twogoals apply in West Virginia to the new population of SSI recipientsthe state wants to automatically enroll in managed care programs.First, DHHR wants to control costs. Second, it wants to integratethe normal medical care it provides with the behavioral care itprovides SSI recipients mental health problems. The goal is to drivedown costs by making sure, for instance, that mentally ill peopleare taking good physical care of themselves. The three managedcompanies are tasked with controlling costs by, among other things,providing monetary incentives for physicians and patients to pickless costly forms of care; reviewing the medical necessity oftreatments; and controlling inpatient admissions and lengths ofstay. By entering into agreements with these companies, the statecontrols its costs by paying the companies a lump sum each year.That essentially shields the state from unexpected expenses byforcing the companies to assume responsibility for controllingcosts. DHHRs critics did not express problems with the servicesbeing provided now by the Health Plan of the Upper Ohio Valley,Unicare or Carelink But now that a significant number of mentallydisabled patients are going to enroll, there is concern those threemight not be ideal. Plus, different companies can provide moreefficiency. Tom Susman, a lobbyist for the West Virginia BehavioralHealth Care Providers Association, said even if DHHRs approach isntillegal, its not reasonable. Aside from what the law says thoughthats pretty important you can get a better product and save moneyif you put it out in a competitive fashion, Susman said. Critics ofDHHRs current plans say, now that the population of customers isexpanding from 166,000 to more than 200,000, the state may be moreattractive for other out-of-state companies, which can come in andprovide services cheaper than the three companies operating herenow. Even if the expanded pool of customers doesnt interest newcompanies, the critics say maybe the bidding process itself wouldforce the three existing companies to give the state a better deal.Its also not clear if either The Health Plan of the Upper OhioValley, Unicare or Carelink have much experience dealing withpatients with mental health problems or that they can, as the statehopes, automatically integrate the care for these patients. Unicareand Carelink, for instance, are both said to have hiredsubcontractors to deal with the influx of SSI patients. Bob Hansen,the executive director of Prestera, which provides mental healthcare in eight counties including Kanawha and Putnam, said thecurrent system isnt integrated. But he isnt sure if the new systemwill be, either. We cant see how that is going to happen, he said.When they say that is the goal, its not clear how this managed careinitiative is going to happen. Right now, Prestera works on a fee-for-service basis. While one company does pre-authorize Medicaidpatients to receive mental health care, the company does not do thesame kind of work to control costs that manage care companies willdo. The companies can, among other things, negotiate rates using asleverage the huge number of patients they have. But Hansen alsofears he will have to add staff to deal with all the new paperwork,something that he said could drive up costs for services. Contactwriter Ry Rivard at ry.
