NC judge dismisses conflict-of-interest claims in Medicaid managed care contract process

Posted August 27, 2020 2:29 p.m. EDT
Updated August 28, 2020 2:26 p.m. EDT

N.C. health, mental health, Medicaid generic

— A state judge has dismissed claims filed by several losing bidders that Blue Cross Blue Shield of North Carolina was improperly awarded a massive contract for a chunk of North Carolina's Medicaid program when it shifts to a managed care format next year.

Blue Cross was among five providers to divide a $6-billion-a-year contract from the state Department of Health and Human Services to handle Medicaid claims. The state has for years been trying to move from a fee-for-service program, which often ran deficits the state had to pay, to a managed care format, with the providers getting a set amount for each person served. The transition is expected to occur next July.

Aetna Better Health of North Carolina, Optima Family Care of North Carolina and My Health by Health Providers, three providers who weren't selected for the Medicaid contract sued, alleging improprieties in how DHHS reviewed the bids.

Most notably, the three alleged that one DHHS employee involved in the process was dating a Blue Cross executive, another employee took a job with Blue Cross after the contract was awarded and a third worked for Blue Cross before joining DHHS.

DHHS and Blue Cross argued that those relationships were known when the bids were being reviewed and didn't amount to a conflict of interest. DHHS even noted in its filings in the case that its assistant secretary for Medicaid transformation previously worked for Aetna.

Administrative Law Judge Tenisha Jacobs ruled this week that the contract was properly awarded and dismissed the lawsuit.

"[O]nce again, court rulings affirm the integrity and fairness of the department’s managed care procurement process," DHHS said in a statement. "This is the second time that Judge Jacobs has ruled for the department and against entities that were not selected to participate as managed care health plans."

The three losing bidders have appealed the case to Superior Court.

"Administrative Law Judge Jacobs’ ruling validates our decision to pursue our Medicaid protests against DHHS in Superior Court," an Aetna spokesperson said in a statement. "After 18 months of trying to have our concerns heard by OAH, time is of the essence as North Carolina transformation Medicaid is scheduled for implementation in less than a year. We look forward to the opportunity to present our concerns about the state’s procurement process in Superior Court to help ensure that Medicaid beneficiaries in North Carolina have the most qualified and experienced health benefit plan to help them achieve optimal health outcomes."

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