Center for Open Government: Use of consultant raises questions about Medicaid Managed Care contract process

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A detail in a recent post related to the award of Kentucky's Medicaid Managed Care contracts caught the Center's eye.

Kentucky Health News reported earlier this week:

In a June 26 supplement to its appeal, (Anthem) says Molina should be disqualified because the company had “an unfair advantage” by employing Emily Parento, who signed a non-disclosure agreement to see “non-public files” about the bidding as part of the transition team at the start of the Beshear administration.

(Note: Anthem and Passport Health Plan were not among the five health insurers selected to provide Medicaid managed care. Passport is also appealing the contract awards).

The MCO ("managed care organization") contracts are among the largest state government awards. A timeline of the actions taken with this contract is helpful:

11/26/19 - Outgoing Bevin administration awards the MCO contracts.
12/23/19 - Beshear administration cancels the contracts awarded at the end of the Bevin administration.
1/10/20 - Beshear administration re-issues a solicitation for new contract bids.
2/7/20 - New contract bids due from vendors.
5/29/20 - Beshear administration awards the new MCO contracts.

Molina Healthcare was a new entrant to Kentucky. It provides managed care in several other states but this is the first time it has won a Kentucky MCO contract.

In its proposal to the re-issued RFP it wrote, "We have engaged Emily Whelan Parento, JD, LLM, to assist in developing an implementation strategy that is fully synergistic with the goals of the Commonwealth and its managed care program."

Parento has credentials. She was the Executive Director at the Office of Health Policy during Gov. Steve Beshear's administration and appears to have worked in the healthcare policy field in various capacities.

Parento was asked to serve on the Beshear-Coleman transition as a co-chair of the Cabinet for Health and Family Services team. (CHFS oversees Medicaid Managed Care).

Service on the transition team in and of itself isn't problematic. Additional details, however, raise serious questions about potential abuse of the state procurement process.

One responsibility of the CHFS transition team was to evaluate the Bevin administration's decision to award the MCO contracts at the end of his term.

CHFS transition team members were required to sign a non-disclosure agreement. Signers of the NDA agreed "not to disclose or otherwise divulge any information pertaining to the contents, status, or ranking of the proposals submitted in response to the (MCO) solicitation."

Parento signed the NDA on November 20, 2019. (See an image of the signed NDA at the bottom of the post).

Jump ahead to January. The Bevin-awarded contracts have been rescinded. The Beshear administration has issued a new RFP.

On January 28, 2020, Parento filed articles of organization for the Parento Group with the Kentucky Secretary of State.

Less than two weeks later, Molina submits its bid with notice it has "engaged" Parento as part of its team.

Let's revisit the earlier timeline with these new facts:

11/15/19 - Parento named co-chair of Beshear-Coleman CHFS transition team.
11/20/19 - Parento signs a non-disclosure agreement which authorizes her to review the MCO bids.
11/26/19 - Outgoing Bevin administration awards the MCO contracts.
12/23/19 - Beshear administration cancels the contracts awarded at the end of the Bevin administration.
1/10/20 -  Beshear administration re-issues a solicitation for new MCO contract bids.
1/28/20 -  Parento incorporates the Parento Group.
2/7/20 - New contract bids due from vendors. Molina Health Care highlights bringing Parento on-board as part of their team.
5/29/20 -  Beshear administration awards the MCO contracts.

Molina was careful in their choice of words. Their engagement with Parento is part of their "implementation strategy" after the contract is awarded. The implication is Parento didn't provide any input into the preparation of the second bid. With a history of this kind of thing in Kentucky -- well connected consultants brought in to secure big contracts -- the public is right to be skeptical.

What now? The process continues to play out.

The Bluegrass Institute's Center for Open Government will monitor future developments

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