Judge approves state Medicaid contract

TALLAHASSEE -- An administrative law judge has approved a proposed three-year, $51 million contract with a new company to manage Florida’s Medicaid program even though the current vendor bid $12.2 million less.

Judge John D.C. Newton II issued a recommended order Wednesday saying the Agency for Health Care Administration did not violate state laws or regulations by proposing to award the new contract to eQHealthSolutions Inc. of Baton Rouge, La.

The case now goes back to the agency for a final decision.

The contract, which would begin July 1, includes making prior authorization decisions for such Medicaid services as hospital admissions and home health visits much as an insurance company does in the private sector to prevent improper or fraudulent payments.

It would continue a fraud verification program for home health services that began earlier this year through a contract amendment. Inspectors check on patients to make sure they are getting services being paid for and those services are appropriate.

The agency determined eQHealthSolutions showed a better understanding of what’s needed to successfully administer the state-federal health care program for low-income and disabled people and that Keystone Peer Review Organization Inc. had understated its expenses.

Newton also found Keystone falsely claimed ownership of a data system it planned to use.

Keystone, which is based in Harrisburg, Pa., challenged the proposal. A lawyer for the company said Thursday that no decision had yet been made but an appeal is likely.

“Bottom line is they proposed $12.2 million more to the state with a company that’s never handled a contract this size before,” said Keystone lawyer J. Stephen Menton.

He said Keystone probably would file exceptions to Newton’s order with the agency and if still denied the contract it could turn to the 1st District Court of Appeal.

Robert Hosay, a lawyer representing eQHealthSolutions, said the price difference is not significant in a $19 billion annual program.

“Why would the state choose a vendor that’s lowballed the price?” he asked.

A third vendor, Alliant ASO, submitted a bid that was nearly $5 million less than eQHealthSolutions but did not appeal.

Newton noted in his order that 85 percent of home health services nationally are expended in Miami-Dade County. One reason for eQHealthSolutions’ higher bid is that it plans to send two inspectors on each home visit instead of Keystone’s one.

That’s “due to the fraud detection facet of the visits and bad experiences of individuals making similar visits in the past,” Newton wrote.

The home care part of the contract would apply statewide. The rest would cover all except the five counties participating in Florida’s experiment with private managed care under a federal waiver.

Legislative leaders, though, are pushing to expand managed care, which uses health maintenance organizations and similar agencies, statewide if Florida can get another federal waiver.

That would make the contract dispute a moot issue, but would be a lengthy procedure, Hosay said.

“Everybody knew that going in,” Hosay said. “That’s certainly out there.”