BATON ROUGE, La. — Gov. John Bel Edwards intends to sidestep lawmakers to enact $15.4 billion in Medicaid managed-care deals using an emergency contracting process, after House Republicans voted twice to block deals to provide services to 1.5 million people.
The Democratic governor started the process Monday evening for entering into 23-month emergency contracts that will keep five managed-care companies overseeing services for 90 percent of Louisiana’s Medicaid patients.
The current managed-care contracts, negotiated by former Gov. Bobby Jindal’s administration, expire Jan. 31. House Republicans on the Legislature’s joint budget committee have refused to approve contract extensions across multiple hearings, raising concerns about the cost of the deals, the process for developing them and oversight of the spending.
Rather than do contract extensions, the Louisiana Department of Health plans to do new contracts with the companies that don’t need approval from the joint budget committee.
To avoid a competitive bid process for the multibillion-dollar deals, the Edwards administration is relying on a state law that allows for emergency contracting when an imminent threat to public health, welfare or safety exists.
Edwards’ chief lawyer Matthew Block said if the Medicaid contracts expire, there would be no way to deliver services to patients who make up nearly one-third of the state’s population, about half of them children.
“If these contracts expire and there is no managed care system in place in February, starting Feb. 1, the entire Medicaid program will be in chaos. There will be services that start getting denied immediately to Medicaid beneficiaries, so we think that clearly meets the requirement established in law,” Block said Tuesday.
The emergency contracts require approval from the Office of State Procurement, a contracting office in the Edwards administration. The health department made the formal request Monday. Block notified House Appropriations Chairman Cameron Henry of the plans in a letter.
Henry said the contracts spend “an astonishing amount of money to put in the hands of the governor alone.”
“It’s not in the public’s best interest to circumvent Joint Legislative Committee on the Budget approval for a contract of that value,” he said Tuesday.
Henry has led GOP opposition to the contracts. He and other Republicans have questioned whether the health department is doing enough to monitor and squeeze savings out of deals that annually account for one-quarter of the state’s operating budget.
They point to audits suggesting the agency isn’t properly supervising the managed-care companies and to comments that the health department has too few staff for the oversight. They’ve sought changes, mostly to give the legislative auditor’s office more explicit authority to review managed-care records.
Edwards accused House Republicans of being obstructionists, and the administration refused to change the extensions brought before the budget committee. In the emergency contracts, Block said language was added to spell out the legislative auditor “currently has the authority” to dig into the records.
Henry and other lawmakers have said they don’t want to abandon the insurance-based model enacted by Jindal in 2012 and return to the previous system of directly reimbursing doctors and hospitals with a fee paid for each service rendered. They haven’t offered a backup plan if the current contracts expire.
The intention wasn’t to let the deals lapse, Henry said.
“Our thought process was never to stop the contracts from being signed. The strategy was to make sure we were being prudent with taxpayer dollars,” he said.
Block said Louisiana couldn’t revert to the prior model if the managed-care deals lapsed because the health department doesn’t have the needed staff, federal approvals or agreements with health providers.
Also, the Medicaid program uses millions from a tax paid by managed-care organizations to draw down additional federal cash. If the contracts aren’t in place, those dollars disappear, and the Medicaid program would run out of money in April in a budget year that runs through June, Block said.
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