Government Contract Rigged for MIHS?


CASH

Magellan Health Services filed a “formal protest and a lawsuit” against Maricopa Integrated Health Services or MIHS. Magellan had managed a contract that included serving Maricopa County’s poor since 2007. Magellan’s complaint alleges numerous irregularities:

In its protest, Magellan alleges that Mercy Maricopa has “serious conflicts of interest” because Mercy Maricopa intends to both manage the system and provide services, which is prohibited by the contract and by state law. Magellan also claims that Mercy Maricopa should have been ineligible to bid on the contract but that state procurement officials improperly amended the request for proposals “to permit the winning bidder to qualify as an eligible bidder.”

Magellan Arizona CEO Richard Clarke told The Arizona Republic that there were “serious irregularities in the bidding process,” such as the state twice amending the proposal request “at the last moment” to allow bidders to subcontract services, which benefited the Mercy Maricopa proposal.

Magellan also claims that the bids were improperly scored and that “there was an overall bias in favor of the winning bidder.”

For example, Clarke said, both organizations proposed eliminating the separate provider network for children’s treatment and using the administrative savings for direct services. Mercy Maricopa earned points for that portion of its proposal, but Magellan did not, he said. “There are a number of errors like that where it’s really clear to us that the two entities were judged very differently,” he said.

Magellan’s complaint targets not only MIHS but Betsey Bayless, MIHS’ CEO. Bayless has previously been under scrutiny for receiving a $125,000 taxpayer funded pay raise earlier this year, bringing her annual salary to $500,000 – in taxpayer money.  Bayless was viewed by many as a spoiler in the 2002 governor’s race between Matt Salmon and Governor Napolitano. Napolitano won by less than 10,000 votes and in return, Bayless was appointed as director of the Department of Administration. Bayless’ appointment would serve as a launching pad to her lucrative position at MIHS, a position which many view is beyond her qualifications.

The Arizona Republic also states an interesting fact about the state contract:

The contract, worth $2 billion to $3 billion, depending on whether the state expands Medicaid, is the states first for integrated health care, which blends physical- and mental-health treatment.

The difference between $2 billion and $3 billion is staggering. The Arizona Republic understates the amount and ignores the underlying possible nefarious motive for the changing of state law, bidding processes, and why MIHS would want the contract.  To put this into context, the difference between $2 billion and $3 billion is the difference between, say, Jerry Jones and Steven Spielberg.

Another key factor easily glossed over by the Arizona Republic is that MIHS receives nearly $60 million dollars in property taxes each year.  So, you essentially have a taxpayer-subsidized government entity bidding against private providers for the largest behavioral health contract the state has ever offered.  Does that seem fair?

The legal challenge by Magellan will hopefully shed light on the seemingly back door deal and reveal what really took place in the bidding process. When $3 billion in taxpayer dollars is at stake, the people deserve complete transparency on state contracts.


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  1. […] Health Systems by the State of Arizona is gaining momentum.  Several local conservative blogs have reported on the story recently.  The contract, which stands to be worth $2 billion to $3 billion (depending on whether […]

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