Lawmakers extend Medicaid contract another year, while court dispute rages over cancelled deal

Markets Associated Press

Lawmakers agreed Thursday to continue Louisiana's multimillion-dollar Medicaid claims processing contract for another year, an extension needed after Gov. Bobby Jindal fired the company that had been hired to take over the work.

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Jindal cancelled the state's $200 million contract with Maryland-based Client Network Services Inc., known as CNSI, in 2013 because of concerns the firm was given favorable treatment by his former health secretary, Bruce Greenstein.

A criminal investigation is ongoing into the award of the contract to CNSI, and Greenstein has been indicted on multiple perjury charges. The company is suing the state for wrongful termination.

In the meantime, the Jindal administration has kept Molina Medicaid Solutions on the job, handling the claims for services rendered to Louisiana's Medicaid patients.

The House and Senate health care committees agreed Thursday to the Department of Health and Hospitals' request to extend the company's contract through Dec. 31, 2015. One member objected, Sen. Dan Claitor, R-Baton Rouge, who said he had too little information from the health department.

Molina's current contract with Louisiana began in January 2005. The extension will cost $40 million next year, on top of the $423 million the firm has been paid over the last decade for its work. The contract is paid with a mix of state and federal money.

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House Health and Welfare Committee Chairman Scott Simon, R-Abita Springs, urged approval "to ensure there will be no interruptions in service" if doctors and hospitals can't get paid for taking care of Medicaid patients.

Jeff Reynolds, undersecretary for the health department, said he expects to come before lawmakers again next year seeking another extension of the Molina contract while the state works to find new contractors to do the work.

He said the agency is seeking to break up the work into smaller pieces across multiple contracts as part of a modernization effort. But those new contracts won't be in place until the 2016-17 budget year.

Lawmakers questioned the wisdom of divvying up the work.

Rep. Katrina Jackson, D-Monroe, said she was concerned that Louisiana was taking a different approach from other states.

"Multiple vendors means more staff needed, more cost to the state," she said.

The health department said the current claims processing system is antiquated, based on 1980s technology, and they wanted to upgrade their data collection and analysis. The contract with CNSI had been planned to address some of those concerns.

The Jindal administration voided the contract with CNSI in March 2013 after details emerged about a federal subpoena seeking information about the contract award.

A month later, the Jindal administration accused Greenstein of inappropriate contact with the company throughout the bid process, saying he exchanged hundreds of phone calls and thousands of text messages with CNSI officials.

Greenstein, a former CNSI vice president, resigned but also said he did nothing improper to help his old employer. CNSI says the state was wrong to fire the company. In September, a state grand jury indicted Greenstein on perjury, charging him with lying when questioned about the contract award.