Controversial contract gains in value

The Medicaid claims-processing contract alteration was prompted by a U.S. Department of Health and Human Services decision to delay a revamp in the international classification of disease codes, according to Jerry Phillips, DHH undersecretary.

A $185 million multiyear contract with a Maryland-based company to take over Medicaid claims processing is getting more lucrative.

State Department of Health and Hospitals Undersecretary Jerry Phillips said Tuesday that an amendment will add about $8 million to the money CNSI will receive under its contract with the state.

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

DHH Secretary Bruce Greenstein had once worked for CNSI. He repeatedly has denied having anything to do with CNSI’s selection by DHH.

The change increasing the contract by $8 million is pending approval by the governor’s Office of State Purchasing.

CNSI, of Gaithersburg, Md., will take over processing the Louisiana Medicaid claims at the end of 2014.

The current vendor, Molina Medicaid Solutions, of Long Beach, Calif., had been scheduled to do some work, which cost $8 million. Because the federal government delayed the deadlines, the state decided to reassign that work to CNSI, Phillips said. No additional appropriation will have to be made to cover the cost, he said.

Phillips said the contract alteration was prompted by a U.S. Department of Health and Human Services decision to delay a revamp in the international classification of diseases codes.

Instead of about 20,000 codes, there will now be close to 70,000, he said.

The codes are used to denote diagnosis and procedures used, including the reporting of conditions, symptoms and diseases for data collection, research and the like.

Originally, the federal agency had an October 2013 date for implementation of the billing codes, which provide “a more granular reporting breakdown (of services) ... and captures data on what’s being treated,” Phillips said.

Public and private providers were having a hard time meeting the deadline, so it’s been extended to October 2014, he said.

“Once that happened, it doesn’t make any sense for the current contractor to do it. It should be in the CNSI contract because it’s delayed,” Phillips said. “We would be wasting money on an old antiquated system.”

He said it will make the transition easier “because we don’t have to do through the old Legacy system.”

Molina has the current Medicaid Management Information System contract. The Molina contract will be phased out as CNSI assumes the role totally by Jan. 1, 2015.

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 1 million of the state’s residents.

The company has said it will be able to pay health-care providers faster for the services they deliver; improve fraud detection; and provide Medicaid recipients with access to their health-care services online and via a call center.

CNSI beat out three other firms competing for one of the largest contracts in state government.

Losing proposers claimed CNSI’s proposal contained many erroneous assumptions that DHH reviewers underscored. CNSI ranked third in the technical evaluation.

DHH officials said CNSI agreed to abide by its $185 million proposal.