News: CJ Exclusives

Aetna says N.C. DHHS rigged Medicaid procurement process and tried to cover it up

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. 

Aetna is taking legal action, asking a judge to force DHHS to award Aetna a Medicaid contract.

The legal challenge, now before the N.C. Office of Administrative Hearings, comes as the state has begun open enrollment for Medicaid recipients. DHHS plans to roll out the $6 billion program under managed care in February 2020.

Last year, DHHS opened a bidding process for health management companies to administer Medicaid managed care services. Aetna (doing business as Aetna Better Health N.C.), Blue Cross N.C. (doing business as Healthy Blue N.C.), and six other companies submitted proposals.

The department established a seven-member evaluation committee and a scoring process to evaluate the proposals. It said it would award statewide contracts to the companies with the four highest scores. Medicaid recipients could choose among plans the companies offered, much as people buying health insurance on the individual market pick a plan from competing providers.

When the results became public in February, Healthy Blue scored in the top four. Aetna did not.

Aetna challenged the scoring process and filed a formal complaint with DHHS.

After the department rejected Aetna’s challenge, Aetna took its complaint to OAH, an independent quasi-judicial state agency where people and companies resolve disputes with state agencies. The case file includes more than 6,000 pages. Administrative Law Judge Tenisha Jacobs has scheduled a hearing in January. If OAH can’t resolve a dispute, the case goes to the civil court system. 

“We are pursuing legal action against DHHS because the State of North Carolina’s Medicaid program and its beneficiaries deserve to have the most qualified and experienced managed health care providers delivering the services,” Jim Bostian, Aetna’s MidSouth Market president, told Carolina Journal.

Aetna claims Healthy Blue got an unfair advantage in an unusual way. 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.

Reacting to Van Vleet’s statement, an Aetna attorney said he hadn’t seen such a document and told the attorney for DHHS it should have been produced during the discovery process or in response to Aetna’s public records request. He demanded DHHS turn over that document. DHHS later produced the document, and it became a central part of an amended complaint Aetna wants the judge to accept.

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. 

Aetna says it initially won the right to a contract, but DHHS leadership wanted a different outcome. 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.” 

Citing attorney-client privilege, DHHS won’t let Aetna see emails and other documents involving Crabtree and others involved in the proposal evaluation process. For the same reason, DHHS won’t let Aetna take Crabtree’s deposition. 

While Aetna says the romantic relationship between Van Vleet and Sharp constitutes a conflict of interest, DHHS says it doesn’t.

Quality Assurance?

The evaluation committee’s work was supervised by a contracts team, made up of Medicaid Chief Operating Officer Mona Moon, Contract Specialist Kimberley Kilpatrick, Crabtree, and others. Aetna took depositions from Moon and Kilpatrick. 

According to Aetna, on Jan. 11 Moon learned Healthy Blue didn’t score in the top four.

On Jan. 14, the contracts team decided to add a quality assurance step to the process. Aetna has sought communications about the quality assurance process, but DHHS claims those communications are privileged and unavailable to Aetna or the public.

Aetna says attorney-client privilege doesn’t apply to the active role Crabtree had in the proposal evaluation process. Aetna wants a judge to compel DHHS to produce complete and unredacted copies of relevant documents and require Crabtree to answer questions under oath about her role in the evaluation process. 

Aetna filed the deposition transcripts for Van Vleet and other DHHS employees with OAH.

“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.  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.” Aetna’s Bostian said.

Accountability, trust, and fairness are key to the process, said Jordan Roberts, health care policy analyst at the John Locke Foundation.

“Due to the size of our Medicaid program, getting Medicaid managed care right is extremely important,” Roberts said. “Awarding contracts to managed care providers is a complicated but crucial part of ensuring the most vulnerable citizens of our state have access to quality care. 

“The allegations against DHHS are serious,” he said. “We are placing trust in the department and these companies to manage the care of more than 1 million North Carolinians, which means we should expect a fair process that awards the contracts to the companies best suited to provide care.”