Protest by Medicaid bidder not expected to delay start of Nebraska managed care contracts

Nebraska Medicaid officials have delayed signing new contracts with private companies to manage most of the state's $1.8 billion Medicaid services until a protest filed by a losing bidder is resolved.

But the Department of Health and Human Services said last week that there should be plenty of time for the three winning bidders to prepare before the planned Jan. 1, 2024, start date for the contracts.

Community Care Plan of Nebraska, doing business as Healthy Blue, filed a protest last month of the department's announced intent to award new Medicaid managed care contracts to three other companies. Healthy Blue currently holds one of the contracts.

HHS officials announced plans in September to award the new contracts to Molina Healthcare of Nebraska, Nebraska Total Care and United HealthCare of the Midlands. Two of those, Nebraska Total Care and United HealthCare, have current contracts. Molina Healthcare is new to Nebraska but provides Medicaid, Medicare and Affordable Care Act marketplace plans in several other states.

The three companies will be responsible for managing physical and behavioral health care, pharmacy services and dental benefits for almost all Medicaid patients in a program called Heritage Health. Together, they will oversee the care of some 347,000 Nebraskans.

State Medicaid Director Kevin Bagley told state lawmakers Friday that Healthy Blue had been in third place after evaluators reviewed and scored all of the bids.

But he said the margin between the third- and fourth-place companies was very small, prompting officials to add oral interviews with all the bidders. Molina moved up in the rankings after those interviews, which focused on the companies' plans for innovation, integration and access to care for marginalized communities.

Larry Kahl, the HHS chief operating officer, denied the company's protest in a letter dated Oct. 24. Healthy Blue now has the option to request a meeting with Dannette Smith, the HHS CEO. The company also can pursue the issue in court.

Bagley said he was not part of the initial scoring and is not involved with the protest. But he defended the bidding process that the state has followed.

"We believe this has been a very robust and clean process," he said in a briefing for the Health and Human Services Committee.

Nebraska's procurement process has come under scrutiny after a series of cases in which officials wound up choosing a low-cost bidder that failed to do the job. The most recent case was the selection of St. Francis Ministries, a Kansas-based nonprofit, to manage Omaha-area child welfare cases.

St. Francis got the job after bidding 40% less than the previous contractor, the Omaha-based PromiseShip. Although the agency fell short on key contract requirements, the state was forced to sign an emergency rate increase in January 2021. By December, state officials announced an early termination of the contract.

Bagley said Friday that the Medicaid managed care bidders were not competing on cost. Rather, each was required to accept the per-member, per-month payment rates set by the state and to compete on other factors, such as being able to produce better health care results.

The winning bidders were selected from among five contenders. The fifth bidder, Medica Community Health Plan, which currently offers health coverage to Nebraskans through the ACA marketplace, has not filed a protest.

The current Heritage Health contracts date to 2017, when the state signed with three private companies to administer what was then $1.2 billion worth of Medicaid services. Since then, two of the original three companies merged, which led to the state signing a contract with Healthy Blue.

Heritage Health does not cover nursing home care and other long-term support and services for the elderly and people with disabilities.