Big questions remain in huge Medicaid procurement

A Franklin County judge earlier this month dismissed a lawsuit over the largest public procurement in Ohio history. But important questions remain about potential corruption and conflicts of interest among key players who had a say in how the contracts were awarded.

It’s unclear whether those questions will be answered.

In April, the Ohio Department of Medicaid announced that it was awarding a set of contracts worth $22 billion to six managed-care companies. A seventh got a $1 billion contract to set up and manage a program for children with complex behavioral needs.

Somehow, all of the contracts but one went to huge, out-of-state companies — several of which have been accused by the state of fraud, price-gouging or other issues.

Questions about the integrity of the procurement process come as the state government is already mired in scandal.

In July 2020, House Speaker Larry Householder, R-Glenford, and four associates were arrested in what federal authorities called a $61 million bribery scheme to pass $1.3 billion in bailouts for the energy interests who financed it. Two of the associates pleaded guilty and a third died by suicide.

As part of the scandal, Gov. Mike DeWine’s appointee to chair the Public Utilities Commission resigned amid revelations that just before he took his seat on the commission, he took $4.3 million from FirstEnergy, the Akron company that was implicated in the bribery scandal.

Now come questions about whether Maureen Corcoran, DeWine’s appointee to run the Medicaid department, had conflicts of interest as she awarded huge contracts earlier this year. Those contracts were awarded without regard to the fact that the state was suing two of the successful companies for fraud as recently as this year, and a third’s conduct as a drug middleman helped spur the sweeping reforms that led to the $23 billion re-procurement.

Still no answers

Corcoran’s agency continues to ignore questions about her holdings in the giant corporations to which she awarded contracts earlier this year. But it appears that she owned at least something of a stake in two of the companies.

Her disclosures to the Ohio Ethics Commission indicate that she owned at least $1,000 worth of stock in UnitedHealth Group from the time she became Medicaid director in early 2019 at least through the end of 202o. The company’s subsidiary, United Healthcare Community Plan of Ohio, was one of six companies to which Corcoran awarded a share of $22 billion in managed-care business over the next five years.

The selection caused consternation for at least one disappointed bidder because Attorney General Dave Yost is suing another UnitedHealth subsidiary, OptumRx. Yost claims the drug middleman — which is also a big player in Ohio Medicaid — ripped off the Bureau of Worker’s Compensation to the tune of $16 million.

Also causing consternation was that Centene was among the companies that won managed-care contracts.

Corcoran hasn’t listed stock in the St. Louis-based company in her ethics disclosures. But some questioned why she decided to award it a contract after A.G. Yost in March accused that company and its drug middleman of fraud against the Medicaid department. By June, Centene had settled with Ohio for $88 million, part of more than $1 billion that it agreed to pay out nationally to settles similar claims.

In addition to UnitedHealth, Corcoran owned at least a nominal amount of stock in CVS Health from early 2019 through the end of 2020. A subsidiary of that company, Aetna Better Health of Ohio, in early April won the $1 billion contract to reshape services for Ohio kids with complex behavioral needs.

The CVS subsidiary won the business even though its drug middleman was the dominant player in 2017 when its drug middleman and UnitedHealth’s OptumRx upcharged the Medicaid department by $224 million for prescription drugs — an amount that the state’s outside analyst said was at least three times the going rate.

Contradictory claims

Corcoran not only has refused to say just how much stock she owns in UnitedHealth and CVS.

During a trial earlier this month, she and her lawyers claimed she was unaware that she owned any when she awarded their subsidiaries giant contracts earlier this year.

“The possibility of her owning such stock had not occurred to her,” one filing said. “It is not unusual for someone investing retirement funds to focus on risk and return rather than on individual investments. There is no evidence Director Corcoran had any reason to believe she owned stock in any of the corporate entities to whom contracts were awarded.”

Corcoran made similar denials in a sworn affidavit of her own.

“I did not knowingly have any conflict of interest related to the Medicaid managed-care contracts,” Corcoran said in the affidavit, later adding, “I am not aware of the holdings in my or my husband’s accounts, including but not limited to stocks, bonds, mutual funds, on any particular day or during any particular month.”

But just over a month after she awarded business to the companies’ subsidiaries, she filed a document with the Ethics Commission swearing that she knew she owned stock in the parent companies on Nov. 20, 2020 — the deadline for bidders to file applications — and through the end of the year. Corcoran’s disclosures also show ownership of the stocks each month since 2018, and every year since she signed a statement swearing that the lists of stocks and mutual funds “have been prepared or carefully reviewed by me.”

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