The biggest contract in Ohio government history is split among 6 firms
More than 26 months after Gov. Mike DeWine ordered the revamp of a state setup that was facilitating an ongoing “rip-off” of Ohio taxpayers, the winners of contracts to lead sweeping changes in the $20 billion Medicaid managed care system were unveiled Friday.
In what was labeled as likely the largest pact in Ohio state government history, six companies are being hired to coordinate the federal-state health insurance for more than 3 million low-income or disabled Ohioans.
“What is really the revolutionary component here is that we have looked at all of the most cutting-edge practices, and we are pushing our system to the next generation,” said Ohio Medicaid Director Maureen Corcoran.
“The entire country is watching us because there are some really important things we are doing differently.”
What is the goal of the new system?
She said the basic goal of the “re-imagined” system is to “focus on people and not just the business of managed care.”
Yet even as DeWine’s push for reform was bearing fruit, the specter of past misdeeds haunted the announcement. One of the six companies that currently handle Medicaid managed care, Buckeye Community Health Plan, was at least temporarily barred from getting a piece of the huge deal. That’s because of a March 11 lawsuit filed by Attorney General Dave Yost on behalf of the Medicaid department alleging Buckeye and two associated firms improperly made off with tens of millions from the program.
The legal action involving Buckeye — which scored the second-highest in the competition for the new contracts — was a factor in delaying the much-anticipated announcement, originally scheduled for Jan. 25.
Corcoran acknowledged that legal challenges are likely since billions of dollars are at stake. The last time the managed-care contracts were re-bid eight years ago resulted in bitter litigation.
“We will not be at all surprised to have one or multiple lawsuits about this,” she said.
How the selections were made
Steven Voigt, the department’s legal counsel, said the agency went to extraordinary lengths to make sure the evaluation of each proposal was fair. The team that scored the bids was screen and isolated from the rest of the department. He said Corcoran played no role, and did not know who won until after the team was finished.
“They were working in a bubble,“ Voigt said. “I’m very confident in our process and really proud of the work by everybody.”
Two other companies on the state’s current list also didn’t make the cut: Aetna Better Health of Ohio and Paramount Advantage.
Here are the winning proposals
The six winners:
• AmeriHealth Caritas Ohio
• Anthem Blue Cross and Blue Shield
• CareSource Ohio
• Humana Health Plan of Ohio
• Molina Healthcare of Ohio
• UnitedHealthcare Community Plan of Ohio
Restructured system
The huge contract is part of an even-bigger restructuring that takes in everything from caring for children facing severe behavioral health challenges — so expensive that some desperate parents were forced to surrender relinquish custody of their children to the state to get help — to creating a single state pharmacy benefit manager to replace private-sector PBMs charging up to six times the industry rate and funneling pricey prescriptions to their own stores.
It was the PBMs’ actions that drew DeWine’s ire Feb. 1, 2019, less than a month after taking office.
“I want to save taxpayer dollars. It’s pretty simple. The PBM system we think has ripped us off,” he said then.
History of problematic pharmacy benefit managers
The Dispatch has published dozens of stories about the problematic pharmacy benefit managers, who are middlemen in the drug supply chain.
Corcoran said, “The ‘black box’ of PBMs requires more oversight and transparency. For a variety of reasons, the (existing managed care organizations) couldn’t and/or didn’t prevent the excesses and abuses discovered by the state auditor, (Medicaid consultant) HDS and The Columbus Dispatch — to the detriment of the taxpayers.”
Thus oversight of the PBMs was removed from the purview of the managed care organization and given via a $158 million to Gainwell Technologies: a single, state-regulated PBM that will replace the multibillion-dollar conglomerates such as CVS Caremark and Express Scripts that currently serve as middlemen in the Medicaid prescription drug supply chain.
Still to be hired is a pharmacy pricing and auditing consultant that will handle pharmacy reimbursements and audit the single state PBM.
And care for children with severe behavioral health challenges was split off into its own $1 billion program, called OhioRISE (Resilience through Integrated Systems and Excellence). Aetna Better Health of Ohio was awarded that contract Monday.
Overall, the restructuring should wind up roughly budget neutral, per Corcoran. The potential cost of $35 million to $58 million represents a small percentage of the multibillion-dollar program. she said.
Corcoran said the painful struggle to rein in PBMs prepared the department to develop tougher guidelines for the managed-care contracts.
“We learned a very valuable lesson from the PBMs,” she said. “We really have taken that learning to heart and tried to pay attention to what those business relationships are.”
Corcoran said a system of fines has been set up for violations by the managed-care organizations.
Re-investing in Ohio communities
Jim Tassie, the department’s deputy director for project management and procurement implementation, said one of the innovative aspects of the new agreement is requiring the companies to re-invest at least 3% of their net profits from Ohio back into local communities. The amount rises to 5% in later years of the contract.
That requirement is a response to Medicaid recipients’ frequent complaints that they were “treated as a number,” he said.
The newly hired firms are mandated to cooperate with each other and the state to provide a seamless system of health care to the neediest Ohioans — “rather than competing, trying to increase market share.”
Medicaid provides health insurance for almost half of Ohio children, pays for 50% of Ohio births and covers most residents of long-term-care facilities in the state. Ohio expanded Medicaid coverage in January 2014 to individuals making up to 138% of the federal poverty level
The “go-live” date for the new setup is Jan. 5, 2022.
The stakes of the new managed-care contract are enormous for the companies involved as well as regions of Ohio. For example, CareSource — one of the largest employer in Dayton — had 2,200 local jobs and nearly 4,000 across Ohio tied to its successful bid, company officials told the Dayton Daily News.
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