Ohio Medicaid won’t say if it considered federal oversight reports in massive procurement

The Ohio Department of Medicaid not only is refusing to release key oversight reports from its contractors, it’s refusing to say whether it even considered them last year as it undertook the largest public procurement in Ohio history. 

As a consequence of that procurement, the company with the highest score on the federally required oversight reports lost its business with the state. Meanwhile, another company got the second-lowest score, yet it retained state business worth billions.

Medicaid Director Maureen Corcoran apparently owned stock in that company’s corporate parent, UnitedHealth Group, but she has steadfastly refused to say just how much she owned as she negotiated and signed a contract with United Healthcare Community Plan of Ohio. 

How much the business will be worth to the company in the future is unknown. But it collected almost $1.8 billion from the state in 2019.

Managing care — and trying to manage profits

When the states and the federal government invited private corporations into Medicaid systems, they wanted to introduce private-sector efficiencies, but prevent undue profiteering.

The corporations, known as “managed care organizations,” play roles similar to those health insurers do for private businesses. They create provider networks, help determine what services are covered, and they pay claims.

In an attempt to ensure they aren’t overly profiting off of funds meant for the poor and disabled, the federal government requires the managed care organizations to file annual “medical-loss ratio” reports. The “ratio” referred to in the name is meant to determine how much taxpayer money the companies are spending on patient care, quality improvement and fraud prevention — and how much they’re pocketing in the form of profits and administrative fees.

In Ohio, Medicaid managed-care organizations can at most keep 15% of the money they’re paid for profit and administration.

The Medicaid department regularly boasts of its commitment to transparency. But earlier this month it refused to release the care organizations’ medical-loss ratio, or MLR, reports. It said they contained trade secrets — even though some other states’ Medicaid departments post the reports on their websites, and health care advocacy groups say the data they contain are essential for non-insiders to evaluate the efficiency of the huge programs.

Some information

The Medicaid department did, however, release summaries of MLR reports from 2019. They show that even the lowest-scoring of the state’s managed-care organizations was spending less than the maximum 15% of the taxpayer money it was getting on profit and administration.

Even so, the numbers raise some important questions.

One is why, when it procured contracts for $22 billion worth of managed-care business, the Medicaid department passed over a long-serving company that had the best score. 

According to the summaries provided by the department, Toledo-based Paramount Advantage in 2019 spent just 2.71% of the revenue it received from the state on profit and administration. It was followed by Dayton-based CareSource, which spent 4.5% and Buckeye Health Plan, which spent 5.03%. 

Bringing up the rear by some distance were United Healthcare Community Plan, which spent 8.38% on profit and administration and Molina, which spent 9.3%. In other words, United Healthcare was selected to keep serving the Ohio Medicaid program and Paramount wasn’t — even though United Healthcare was plowing three times as much of its taxpayer revenue into profit and administration.

A nonpartisan congressional agency in January wrote that the MLR allows for “comparisons of plan performance across states and programs,” but it’s unclear whether the Ohio Department of Medicaid even considered it when it rebid its vast managed-care business last year. When asked earlier this month, Medicaid spokeswoman Lisa Lawless didn’t answer directly.

“Regarding the procurement, Ohio Medicaid conducted a thorough and thoughtful analysis of all of the proposals,” she said in an email. “Extensive work went into the procurement and the analysis of proposals and, as you are aware, the entirety of the (request for proposals) is available for you to review.”

Fraud accusations, appearance of conflict not considered

It’s already known that the Medicaid department didn’t consider whether the companies had been accused of fraud in the past, or even currently. 

Paramount, the failed bidder, hasn’t been. 

But United Health subsidiary OptumRx is the subject of a lawsuit by Ohio Attorney General Dave Yost accusing the company of cheating the Ohio Bureau of Workers Compensation out of $16 million. OptumRx also handles Medicaid pharmacy benefits for United Healthcare Community Plan of Ohio. 

Nor did the Medicaid department hold it against another successful bidder, Buckeye, that its parent, Centene, last June agreed to pay Ohio $88.3 million and set aside a total of $1.3 billion to settle claims that it ripped off Medicaid programs in 22 states.

Centene and United Health deny wrongdoing and United didn’t respond to questions for this story.

An additional way the Medicaid department has been less than transparent: Director Corcoran filed ethics disclosures with the state saying that in each year of her service prior to negotiating the new contracts, she owned at least $1,000 worth of stock in UnitedHealth Group. However, she didn’t file an affidavit disclosing her exact holdings at the time of negotiations that would have exempted her from a possible legal finding that she had a conflict of interest.

She subsequently has repeatedly refused to disclose her holdings and she has made claims about her knowledge of her investments that seem hard to square with other legal declarations she made. Regardless of its legality, some ethics experts have said Corcoran had a clear conflict if she owned United stock while she negotiated and signed a huge contract with its subsidiary.

When it lost its business with Ohio Medicaid last year, Paramount sued, claiming it was the victim of bias. After hearings in October and November, Franklin County Common Pleas Judge Julie Lynch dismissed the case.

Lawless, the Medicaid spokeswoman, said the dismissal shows that the bidding process was proper.

“The Franklin County Court of Common Pleas conducted a full, fair, and open hearing related to allegations by one bidder (Paramount) that did not score well enough to be selected, and the Court ruled in Ohio Medicaid’s favor on all of the claims,” she said. “Director Corcoran has complied with the law in all respects.”

However, before dismissing the case, Judge Lynch blocked Paramount’s lawyers from questioning Corcoran about her stock holdings. 

She also blocked them from seeing whether Mercer, the consulting firm that was paid $10 million to facilitate the procurement process, counted any of the successful bidders among its clients prior to taking on its business with Ohio Medicaid. If Mercer did have a business relationship with any of the bidders, that also could be a conflict.