TennCare bill would give contract to company linked to bid-rigging complaint

House Speaker wants more “openness” in TennCare contract decisions; Hodges calls it “bid-rigging”

By: - March 31, 2022 7:00 am
The Tennessee State Capitol with gates locked.

The Tennessee State Capitol with gates locked. (Photo: John Partipilo)

Lawmakers held up legislation Wednesday that would create an opening for a TennCare contract to be given to a massive company connected to a bid-rigging lawsuit filed against the state.

House Bill 2625, sponsored by Rep. Charlie Baum, was placed “behind the budget” in the House Finance, Ways and Means Subcommittee on Wednesday because it would cost the state $2.8 million next fiscal year and more than $30 million in a third year, according to the fiscal impact document attached to the bill.

But while most legislation given that status dies because of the cost, this bill could be bolstered by the co-sponsorship of House Speaker Cameron Sexton, who contends the change is needed to bolster “openness” in TennCare contract decisions. 

Rep. Charlie Baum, R-Murfreesboro (Photo: Tennessee General Assembly)
Rep. Charlie Baum, R-Murfreesboro (Photo: Tennessee General Assembly)

Once the Legislature approves a budget for fiscal 2022-23, the measure could be taken up.

Baum, a Murfreesboro Republican, told the committee Wednesday the bill is designed to study the impact of another provider and then bring in a fourth managed care organization (MCO) for TennCare, the state’s Medicaid program for the poor. He also noted the bill is set up for Centene Corp., the nation’s largest managed care organization operator.

For years, the state has had only three MCOs, but another one is needed to increase options and competition, Baum explained. 

TennCare spokeswoman Amy Lawrence said Wednesday, “As with any competitive procurement, TennCare ran a fair and open process in its most recent procurement of the managed care contracts. The procurement is currently under an active protest, and so we have no further comment at this time.”

Rhythm Health Tennessee, which is part of Centene Corp., filed the protest, according to Lawrence.

Asked Wednesday if Vanderbilt University Medical Center is partnering with Centene, spokesman Craig Boerner said Rhythm Health Tennessee has agreements with several Tennessee providers, including a preferred agreement with Vanderbilt Health Affiliated Network (VHAN), which includes more than 60 of the state’s top hospitals and more than 6,500 providers.

“By aligning VHAN with many other quality providers throughout the state of Tennessee, Rhythm Health Tennessee can provide TennCare patients with access to care in all 95 counties,” spokesman Craig Boerner said in the statement.

At least one lawmaker questioned the legislation in a previous committee meeting, then doubled down on the statement Wednesday, pointing out the Legislature would be catering to Centene after it failed to win a state contract. 

Rep. Jason Hodges, D-Clarksville, also challenged the company’s record with the state, because its subsidiary, Centurion of Tennessee, was tied up in a bid-rigging lawsuit in 2021. The case against the Tennessee Department of Correction was settled but dismissed with prejudice in early January 2022.

Last May, though, the Department of Correction opted to take new bids on a $123 million contract for inmate mental health services because of the lawsuit, according to an Associated Press report. 

Hodges, who is not planning to seek re-election this year, calls the situation “worrisome.”

If the state believes it needs to add managed care providers, it should request the expansion and also open the bidding process again, Hodges said.

“But it just seems like we’re stacking the deck for this one company, and I think it’s fair to ask why,” Hodges said. 

Hodges added he has heard a large health-care provider could be working with Centene to obtain the contract.

It just seems like we’re stacking the deck for this one company, and I think it’s fair to ask why. . . You handed somebody a bid they didn't win.

– Rep. Jason Hodges, D-Clarksville.

He’s also concerned about Centene’s connection to Centurion and the bid-rigging allegations leveled last year with the legislation making its way through the Legislature. He believes passing legislation to award Centene a contract after it failed to win a bid “is a form of bid-rigging.”

“You handed somebody a bid they didn’t win,” Hodges said.

Responding to questions from Tennessee Lookout, Sexton said in a statement, “We’ve had multiple conversations with TennCare about a lack of openness and transparency in the scoring and awarding of MCO contracts. This bill would not be necessary if Tennessee providers felt the current process was both open and transparent. There appears to be a lack of transparency about how proposals are currently scored internally, as well as limited details on how TennCare arrives at its conclusions.

“Multiple Tennessee providers have raised concerns about this lack of transparency and openness, and what is perceived as a process that is wholly internal within TennCare. MCOs should know details as to why they were selected or were not selected.”

Sexton did not address questions about the lawsuit involving Centurion and Corizon or allegations of bid-rigging.

Filed in April 2021, the lawsuit by prison contractor Corizon argued that Wesley Landers, a former chief financial officer for the department, spoke by email with a Centurion vice president during the contracting process and wound up getting a “cushy” job with a Centurion affiliate, according to the lawsuit. 

As this was happening, the Department of Correction raised the performance bond on mental health services to $118 million from $1 million, making it difficult for Corizon and other smaller companies to win state bids, as the company had done in 2012 and 2016, the lawsuit says.

Corizon also filed a protest in 2021 when the state of Missouri gave a prison health-care contract to Centurion Health after it won a bid over four companies, even though its price was higher than the amount lawmakers appropriated for prison medical services, according to a Tennessee Lookout report.

Centurion was to be paid $174.6 million starting July 2021 for three years plus four optional years, with a total cost of $1.4 billion. The Missouri legislature had approved only $152.8 million last year for prison care, about $3 million more than in fiscal 2020. 

In its complaint, Corizon claimed that Centurion failed to report the situation with the Tennessee contract, including the fact that some of its personnel involved in the Missouri bid, Landers and Jeffrey Wells, were fired over the bid-rigging allegations, according to the report.

 

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Sam Stockard
Sam Stockard

Sam Stockard is a veteran Tennessee reporter and editor, having written for the Daily News Journal in Murfreesboro, where he served as lead editor when the paper won an award for being the state's best Sunday newspaper two years in a row. He has led the Capitol Hill bureau for The Daily Memphian. His awards include Best Single Editorial from the Tennessee Press Association.

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