In fight to keep Medicaid contract, Anthem alleges Molina Health, new to Ky., had unfair edge in member of Beshear transition team

By Lisa Gillespie
Kentucky Health News

Insurance company Molina Health had an unfair advantage in winning a state Medicaid contract, claims rival insurer Anthem, which was a loser in the bidding.

Anthem claims California-based Molina hired a former employee of Gov. Andy Beshear who was privy to key documents that other bidders couldn’t see. Anthem says that’s just one reason the state should withdraw the contract awards and start over again.

Kentucky pays private insurers more than $8 billion to manage the care of more than a million Medicaid beneficiaries. Molina and giant insurer United Healthcare won new contracts to start Jan. 1, along with current insurers WellCare, Aetna and Humana. Current insurers Anthem and Passport Health Plan did not get new contracts.

Emily Parento (University of Louisville photo)

Anthem is appealing the decision. In a June 26 supplement to its appeal, it 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.

Parento “had unfettered access to inside information” about other bidders “as well as the evaluators’ notes regarding the strengths and weaknesses of each of those bids,” Anthem wrote.

As a member of the transition team, Parento “would have assisted in identifying and vetting new executive talent for the cabinet, and she would have been known as having significant influence in the new administration,” Anthem wrote, and that Molina “undoubtedly believed” that its hiring of her, which was noted in its bid, “would give Molina an edge in scoring.”

Anthem also objected to Molina making confidential required information about lawsuits in which it had been involved and any official sanctions levied against it. It says in a footnote, “it appears that the decision to waive scoring of this item occurred at the final stages of the process and apparently after the individual evaluators had completed their preliminary scoresheets.”

Molina and Parento, who was health-policy director for the governor’s father, then-Gov. Steve Beshear, did not respond to requests for comment. Spokespersons for the Cabinet for Health and Family Services and the Finance and Administration Cabinet declined to comment, saying the protest review by the latter cabinet is preliminary and ongoing.

The controversy goes back to 2019, when the outgoing administration of Matt Bevin chose the same set of companies for managed-care contracts, dropping Anthem and Passport. Beshear invalidated the contracts and ordered rebidding, but the outcome was the same. He indicated that Molina is willing to take over the new headquarters Passport is building in western Louisville.

Anthem and Passport say the Bevin and Beshear administrations used the same state employees to score how well each insurer would do managing Medicaid for enrollees. Anthem notes that Medicaid Commissioner Lisa Lee said new reviewers would be needed, only to be corrected by the Finance Cabinet. The scorers were all non-political appointee employees.

Anthem notes that Beshear, in announcing the new contract awards, said people should have confidence in them because the scoring was done by “two different groups of scorers.” It says he “must have been misinformed.” Beshear’s office declined to comment.

Anthem’s appeal alleges several flaws in the scoring process, including: It should have received 10 points for a required document that was included in the bid; the state didn’t allow oral presentations, which would have made a difference in points; and the state didn’t score two sections that would have boosted Anthem’s score.

The scores of Molina and Anthem were quite close, according to Louisville Business Insider. Here are all the scores:

• WellCare Health Insurance of Kentucky: 1,662
• Aetna Better Health of Kentucky: 1,653
• Humana Health Plan Inc: 1,605
• UnitedHealthcare Community Plan of Kentucky: 1,520.5
• Molina Healthcare of Kentucky: 1,507
• Anthem: 1,491
• Passport: 1,409.5

Anthem’s appeal says the scoring errors, if corrected, would add 130.5 points to its score. It also says scorers should have reduced Molina’s score by 32 points and United’s by 11.5.

It asks that if the state doesn’t set aside the contract awards, that it “hold the contract award process and the protest process until Anthem has received and had the opportunity to review and consider the numerous additional requested records that have not yet been produced,” including the scorers’ notes and score sheets, which is says a crucial because the scoring was done by consensus of the scorers, not individually.

The appeals from Anthem and Passport are normal when insurers lose out on health insurance contracts. The appeals sometimes result in lawsuits that can go through the court system for years. For now, Anthem and Passport will continue offering benefits until the end of 2020.