KanCare company uses state officials’ emails to bolster protest of contracts in court

A company that was denied a new KanCare contract has asked a judge to review the bidding process in a court filing that also includes new details about what the company says went wrong.

Virginia-based Amerigroup, one of three private contractors that have administered the Kansas Medicaid program since 2013, still has an administrative protest of the contracts pending with the Kansas Department of Administration.

But the president of Amerigroup’s KanCare plan, Frank Clepper, said the company filed its petition for judicial review late Thursday in Shawnee County District Court “out of an abundance of caution.”

“I think people should know that we believe very strongly in the merits of this case,” Clepper said. “We clearly believe the (state) agencies didn’t follow legislative intent and the legislative intent was articulated very clearly.”

Since the new contracts were announced last month, Amerigroup has said that the process was not fair because the Kansas Legislature changed the parameters of “KanCare 2.0” after the bidding process began and the six bidders should have been allowed to change their proposals.

The petition filed Thursday includes emails between state officials, obtained through an open records request, that Amerigroup says bolster its case.

The emails contain a conversation between Jon Hamdorf, the state’s Medicaid director, and Tracy Diel, the director of the Office of Procurement and Contracts within the Department of Administration.

Diel asked Hamdorf in February what her office should do if the Legislature passed a bill under consideration at the time that would have prevented the Kansas Department of Health and Environment from making major changes to the KanCare program — changes that were already included in the contract bid documents.

Hamdorf responded that KDHE would have to work with the Department of Administration to revise the bid documents.

“Then the bidders would have a chance to change their responses and bids,” Hamdorf wrote.

Diel asked if the state could complete its review of the bids as is, then take out the parts the Legislature had disallowed.

“We could, but the bidders would still need to have the opportunity to change their responses and financial bid,” Hamdorf said.

The specific bill the two were discussing didn’t become law, but several provisions were plucked out and passed in May as part of the annual budget bill. Clepper said that means Amerigroup should have been afforded the opportunities Hamdorf outlined in the emails.

“Quite frankly, we’re just trying to encourage the agency to do what they promised to do and do this fairly,” Clepper said.

In a statement released by KDHE, Hamdorf repeated things he’s said previously in defense of the bidding process.

“All bidders were evaluated on the same criteria,” Hamdorf said. “We consistently conveyed the same to all parties throughout the process, which included in-person meetings, phone calls, etc. We look forward to a Jan. 1, 2019 new contract implementation date.”

Kansas Department of Administration spokesman John Milburn said via email that the department would not comment now that the matter is in court.

Amerigroup has engaged at least three law firms in protesting the state’s decision.

If it’s not successful, new contracts will go into effect Jan. 1, 2019. Two KanCare incumbents, Sunflower State Health Plan (a division of Centene) and UnitedHealthcare, will continue to serve the state’s Medicaid population, and Aetna will replace Amerigroup.

Clepper said the length of the new contracts is also in dispute. The bid documents call for five-year deals, but the Legislature’s guidelines are to repeat the original contracts, which were for three years followed by two one-year renewals at the state’s discretion.

The KanCare contracts are some of the biggest in Kansas government, worth about $1 billion a year in federal and state money to each company.

But Clepper said Amerigroup would have walked away if it thought the bidding process was fair.

“Honestly if the evaluation had been fair and comprehensive and complete and if we thought the guidance of the Legislature had been followed, we would not have had a basis to protest,” Clepper said.

As it is, he said, more than 300 Amerigroup employees and about 127,000 members of its KanCare plan are in limbo, waiting to find out whether they will need to find new jobs and new insurance plans soon.

“We have members obviously concerned,” Clepper said. “Everybody needs to act in a fairly expeditious fashion to get this resolved.”

This story was originally published July 20, 2018 at 1:34 PM.