State amends Medicaid claims pact

A $185 million multi-year contract for Medicaid claims processing just got an $8.9 million boost.

The governor’s Division of Administration signed off on a contract amendment benefitting contractor CNSI, of Maryland.

CNSI won the state contract, overcoming protests from unsuccessful bidders who claimed the firm “lowballed” costs. Skeptical legislators in 2011 said they would monitor the contract for any amendments that increased expenses.

State Department of Health and Hospitals Undersecretary Jerry Phillips said the new work was not a part of the original contract and is a result of a change in the federal deadline for implementation of new medical billing codes.

The solicitation for proposals to which CNSI and other firms responded had as a requirement implementation of the new international classification of diseases codes on federal timelines. In addition, the winning proposer was supposed to have an “online cross-reference” of codes.

DHH Secretary Bruce Greenstein is a former CNSI executive. He has denied any role in CNSI’s selection.

Phillips said the contract alteration came after the U.S. Department of Health and Human Services delayed the disease code changes from October 2013 until October 2014. CNSI will take over Louisiana’s Medicaid claims processing at the end of 2014

Once that happened, it made no sense for the current contractor — Molina Medicaid Solutions — to do the work, Phillips said. So, DHH decided to amend CNSI’s contract to cover the work, he said.

But, Molina along with Deloitte LLP, a subcontracted professional services firm, already were well into the work. The state had already paid out $7.09 million on the project when it transferred the job to CNSI.

“It’s not work done without some value to the state,” Phillips said. “The work product does transfer to the state.”

He said the work done by Deloitte will be made available to DHH.

The Office of State Purchasing approved the contract amendment after conducting a full review, said Division of Administration spokesman Michael DiResto.

“The contract amendment did in fact expand the scope of work to add implementation of the code conversion plan, which was being handled by Molina,” DiResto said.

No additional state appropriation is required, he said.

CNSI beat out three other firms for one of the largest contracts in state government. Losing proposers claimed CNSI’s proposal contained many erroneous assumptions that DHH reviewers had pointed out.

CNSI’s price was far below that submitted by others. DHH officials said CNSI agreed to stick by its $185 million contract price.

Under the 10-year contract, CNSI will handle claims and pay the invoices for health care provided under Medicaid, the government health insurance program for the poor. The program covers more than one million of the state’s residents.