Appeals dropped in lawsuit challenging state’s Medicaid transformation decisions
Less than a week before lawyers on both sides of the case were scheduled to head to the N.C. Court of Appeals, a lawsuit challenging key decisions in North Carolina’s Medicaid “transformation” is going away.
Two health care providers, Aetna and My Health, filed paperwork Wednesday asking the Appeals Court to dismiss their appeals. Both groups had challenged state regulators’ decision-making process for awarding major Medicaid contracts.
The legal dispute started in 2019, but the challenged Medicaid transformation took effect last year.
“Medicaid transformation, which puts Medicaid beneficiaries into managed-care plans, went into effect 1 July 2021,” according to the court filing. “Although My Health still believes in the merits of its appeal and the promise of provider-led managed care, My Health and its North Carolina health system owners have decided that they do not want to disturb the management of care for over 1.6 million North Carolina Medicaid beneficiaries during this global pandemic.”
“In light of My Health’s decision, Aetna has also decided to move to withdraw its appeal in this matter,” the document added.
Carolina Journal first reported on the dispute in October 2019. “Health management company Aetna has charged the N.C. Department of Health and Human Services with manipulating the process for awarding Medicaid managed care contracts to favor Blue Cross N.C.,” CJ’s Don Carrington reported.
The initial report went on to highlight accusations involving the process N.C. DHHS used to select winners of state Medicaid contracts. That process allowed Blue Cross Blue Shield of North Carolina’s Healthy Blue to beat out Aetna for a state contract.
“Aetna claims Healthy Blue got an unfair advantage in an unusual way,” Carrington reported in 2019. “DHHS employee Amanda Van Vleet, a member of the evaluation committee, is living with J.P. Sharp, Blue Cross N.C.’s director of health care strategy and transformation.”
“In a Sept. 4  deposition, Van Vleet testified she had seen a document showing Aetna initially making the top four. Healthy Blue didn’t make the cut.”
… “Aetna’s filing says DHHS Deputy General Counsel Lotta Crabtree intervened in the evaluation process, moving Healthy Blue into third place and knocking Aetna out of the top four.”
Only the top four ranked providers were designated to win contracts.
“Aetna says it initially won the right to a contract, but DHHS leadership wanted a different outcome,” Carrington reported. “The department’s leadership manipulated the scores by adding a ‘quality assurance’ process Crabtree administered. It was ‘unwritten, unscheduled, unannounced, and undocumented anywhere in the [bidding] materials.’”
Jim Bostian, Aetna’s MidSouth Market president, shared his concerns with CJ in 2019.
“While the inconsistent scoring and obvious conflicts of interest within DHHS cannot be ignored, the public should not lose sight of the fact that DHHS strayed from its own prescribed process by changing the scores after their scoring process was completed and scores were known,” Bostian said more than two years ago. “Whether or not this misdeed was motivated by the conflicts of interest is secondary to the fact that the misdeed occurred – and it should not stand.”
Wednesday’s court filing should mark the end of the case.