Medicaid contracts hit with problems

Thursday, Jan. 5, 2006 | 8:25 a.m.

CARSON CITY -- At least one error and doubts about fairness have convinced the state to pull back in awarding two of its largest contracts to provide medical care for the needy.

The Purchasing Division on Wednesday notified five companies that it is rejecting their proposals. It will seek new bids for contracts on managed care for those enrolled in the state-operated Medicaid program.

"We stubbed our toe," Division Administrator Greg Smith said.

There are about 105,000 low-income residents covered by managed care under the two contracts, each worth about $238 million. But their care probably will not be affected by the about-face, officials said.

"We're trying our best to continue service uninterrupted," said Chuck Duarte, who heads the state's Medicaid program.

"I'm not convinced everything was done without imperfection," said Smith, who added there was nothing illegal in the handling of the bids. But there was a human error and concerns were raised about the evaluation process.

Health Plan of Nevada and Nevada Care Inc. have held the contracts since the original bidding in 1997. As part of the normal rebidding process, the state sought new proposals last year and opened bids Oct. 24.

There were five bidders including the current contractors. Also bidding were Amerigroup Nevada Inc., based in Virginia Beach, Va.; Molina Health Care of Midville, Utah; and HMO Nevada, which is also called Blue Cross Anthem.

The Purchasing Division on Nov. 8 decided to award the contracts to Blue Cross Anthem and Health Plan of Nevada. But after rechecking the bids, Smith said a scoring error was discovered Dec. 22.

An employee found that three numbers were dropped from Amerigroup's score, which would have made it the top-rated bidder. Health Plan of Nevada was knocked from second to third place.

It was "human error" Smith said. "Nobody was trying to influence anything. We were attempting to put things in their correct order."

Smith said he chose to check the bid process. "I was increasingly worried an unsuccessful vendor would take us to an appeal or a court. I was worried I was not playing the strongest hand. This could be dragged out."

There were originally five evaluators. But two dropped out. Legally, Smith said he needed only two evaluators, but now feels that he should have had five on such large contracts.

After further examination, he said it "was unclear to me all the evaluators were operating under the same instructions. I was worried there could have been confusion. There were no clear, concise instructions prior to the scoring. "

Smith decided Tuesday to cancel the bids and start over. He said he wants to make sure there is "fair and equal competition."

The present contracts expire on June 30. Duarte said he wants to get the new bids out as soon as possible so the contracts can be awarded quickly.

In the meantime, he said he will talk to the present contractors to see if they would be willing to extend their contract if necessary. If not, he said the division could open a "fee for service" system where the state would pay the medical providers directly for participants' treatments.

Smith said his division will "make sure these errors and other errors don't happen again" in the evaluation of the bids. "This is a huge issue."

Cy Ryan can be reached at (775) 687 5032 or at cy@lasvegassun.com.