xxAACP Newsletter, Volume 11, Number 3, Summer 1997
"Mangled Medicaid" Ohio Plan Bites the Dust
As reported in the Spring 1997 issue of Community Psychiatrist, ODMH selected OBHP as the sole Medicaid "transfer services" vendor on February 4th, following a November 1996 RFP. The transfer services, previously administered by the Ohio Department of Human Services on a fee-for-service basis, provide for mental health services in physicians' offices, clinics and non-state hospitals (as opposed to CMHCs and other Community Medicaid providers). The long-range goal of this interim contract was to integrate these services with locally managed community service systems, while maintaining service levels and controlling costs. Ohio has been moving in this direction since obtaining its Medicaid 111 5(a) waiver in 1995.
Three national managed behavioral health care firms submitted proposals in response to the RFP: Options, Value Behavioral Health and GreenSpring. The voided contract was unique in its efforts to minimize risk of "cherry picking" by limiting profits and maximizing clinical service requirements. The OBHP contract allowed for a $1.5 million incentive pool "up front" (on a $178 million contract!) and required at least 96% of the remaining funds to be utilized for clinical services.
Value Behavioral Health initiated a lawsuit against ODMH on April 15th, alleging that ODMH and ODADAS (Ohio Department of Alcohol and Drug Abuse Services) unfairly disclosed details of Value's bid to Options and allowed Options to reduce its bid by $3.7 million in order to gain the contract. The state maintains that it selected Options' bid on a number of merits beyond its fee structure, and only after its selection negotiated a reduction in costs. The facts appear to be that Options was notified of the state's selection at 4:30 p.m. on February 3rd, and in a second call at 6:00 p.m. advised that the administrative cost component was "too high." A revised fee schedule was submitted at 1:30 p.m. on February 4th, only after which the plaintiff was notified that another bidder had been successful.
In a 41-page opinion, Judge Sargus found ODMH had repeatedly violated state and federal procurement procedures, and cited several concerns, focusing on the original proposal's potential for a $5.4 million "windfall profit" in violation of the state's contract specifications; the failure of the state to obtain written confirmation of OBHP's promise to forego excess profits; and its allowing Options to modify its proposal without providing an equivalent opportunity to other bidders.
Whether the state will appeal the decision or rebid the contract remains in question at the time of this writing: Speculation suggests that with Governor Voinovich's term of office soon to expire, the department may choose to do nothing. Regrettably, there are no "winners" in this story, but clearly the "losers" are Ohio's more than 1.5 million Medicaid recipients, who remain captive to a split service system.
Robert J. Ronis, MD, MPH
Cleveland, OH
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