In most states, the responsibility for ensuring that children enrolled in Medicaid receive needed services rests with managed care organizations (MCOs). They are stewards for millions of children and billions of Medicaid funding intended to meet children’s health care needs. Yet there is little transparency about how individual MCOs are performing for children. The logical place to look for that information is the state Medicaid agency’s website, but these are not always as helpful as they should be. The websites of individual MCOs and their parent companies are also not particularly edifying. In this opaque environment, any potential opportunity to learn more about the performance of individual MCOs is worth exploring. One such opportunity is the selection of MCO contractors. The question is: can the potential for transparency in the procurement process be realized?
In Medicaid managed care states, the process of selecting the MCOs with which the state agency contracts is known as a procurement. Each state has its own procurement laws and processes. The procurement of MCO contracts can be administered by the state Medicaid agency, the state procurement agency, or some collaboration of the two. States plan and design their procurements, including the number of contracts to be awarded, the populations and services covered, the geographic areas to be served, the value-based payment arrangements with providers, and more. Managed care procurements can be the largest contracts that a state awards for any purpose, with hundreds of millions or billions of state and federal dollars in play, depending on the size of the state’s Medicaid enrollment. Even in a relatively less populous like Oklahoma, the initial Medicaid MCO procurement is projected to be worth more than $2 billion.
Bottom line: Medicaid MCO procurements are a big deal, but they don’t come around very often.
Medicaid MCO contracts are usually for terms of three years, often with options to extend for additional years. A recent review of Medicaid MCO procurement by Allan Baumgarten for the Robert Wood Johnson Foundation explains why: “Both the Medicaid agency and the bidding MCOs have a strong interest in longer contract terms. The procurement process can be all-consuming for the Medicaid agency for a year or more, especially if it is drawn out by appeals from unsuccessful bidders. The state would like to spread the costs of the procurement as well as the risk over as long a term as possible. MCOs, particularly new entrants to that state, want to spread their investments in preparing their response and then constructing the necessary administrative infrastructure and provider relationships over an extended period of time.” So, when procurements do happen, child health advocates need to make the most of the opportunities presented.
One such opportunity that presents itself during the procurement process is the chance to reset the state’s expectations of MCO performance for children. An example of this is the procurement now underway in Ohio (proposals are due November 20). The Center for Community Solutions in Cleveland reviewed External Quality Review Organization (EQRO) reports about the MCOs with which the state now contracts and concluded: “Taken in totality, the current managed care performance ranges from good in specific ways, mediocre in most ways, and deeply concerning for particular populations, most notably children and adolescents.” The Center seems hopeful that, because of improvements the state has made in the risk contract on which MCOs are bidding, the procurement will result in better MCO performance for children and other populations.
The procurement process also gives the state Medicaid agency the opportunity to replace poorly performing contractors. If an MCO has failed to perform for its enrolled children, awarding its contract to another qualified bidder would send an important message that children matter, and that MCOs will be held accountable if they do not meet their contractual responsibilities to this population.
Of course, to weed out substandard MCOs, the state agency running the procurement would need to know how each bidder—whether a current contractor or a potential new entrant—has performed for children. The agency would have to specify in its Request for Proposal (RFP) what is expected of contractors going forward. And it would have to ask bidders about track records specific to children and to document their responses: Have the children you enroll received the EPSDT services to which they are entitled? What has been your performance on each of the Child Core Set measures? Has access to EPSDT services or quality of care as measured by the Child Core Set metrics varied by race and/or ethnicity among the children you enroll and if so, what is the explanation?
Asking performance-based questions, and scoring the answers, would enable states to protect children and other Medicaid beneficiaries from substandard MCOs. It could also lead to litigation. It turns out that losing bidders don’t like losing. They can challenge the process or the scoring system that led to the results through administrative appeals or lawsuits in state court, or both. Currently litigation contesting the results of Medicaid MCO procurements is underway in Kentucky, North Carolina, and Pennsylvania, among other states. In Louisiana, litigation led the state to cancel its contract awards and start a new procurement.
What are the coming attractions? According to the Health Management Associates Weekly Roundup, five states have released or are expected to release RFPs over the course of the next year: Oklahoma (October 2020), North Dakota (October 2020), Hawaii (December 2020), Nevada (January 2021), and California (late 2021).
The largest of these procurements by far is California, where contracts for an estimated 3.1 million Medicaid beneficiaries are in play. (Counties in which County Organized Health Systems or Local Initiatives operate are not subject to this procurement). The state currently contracts with 24 different MCOs, and their performance over time on HEDIS metrics has varied markedly. Child health advocates in California are on the case, having posted child-specific performance data for each MCO and enlisting more than 600 groups in a campaign to push the state to use its upcoming procurement to hold MCOs accountable for their performance for children.
Several of the MCOs currently contracting with California’s Medicaid program are subsidiaries of Aetna/CVS Health, Anthem, Centene, Molina, or UnitedHealth Group. These parent companies have posted strong financial results during the pandemic and are widely expected to try to maintain, if not expand, their market share in the upcoming procurement. Each has subsidiaries in at least 10 other states. These companies know how their subsidiaries are performing for children; because of the lack of transparency, the public does not.
Can the procurement process fix this asymmetry in information? More specifically, if these companies decide to bid on contracts in California, will there be an opportunity for advocates there—and in the other states where the companies have Medicaid products—to learn more about the performance of their subsidiaries for children? At this point, it’s not clear whether, and if so when, bids submitted in response to the RFP that the state Medicaid agency issues will be available to the public. But there is no question that transparency of bidders’ responses would help advocates and the public hold MCOs accountable for poor performance for children.