Local News

Friday, Sep 07 2012 05:01 PM

Battle for lucrative county health contract begins

BY JAMES BURGER Californian staff writer jburger@bakersfield.com

Kern County opened up a politically charged health care contract to competitive bids this week, triggering what is expected to be a tough fight for an agreement currently worth $5 million a year.

The move comes amid accusations that the current contract holder Managed Care Systems' close ties with three local hospitals that are affiliated with its parent company, Golden Empire Managed Care, conflict with its contracted duty to provide the best care for the county employees it represents.

And it has prompted critics to claim that the bid process is rigged.

Dr. Donald Cornforth, a critic of the MCS contract, said the new "request for proposals" is clearly designed to make it hard for anyone but MCS and GEMCare to win the contract from the county.

"They're just hell-bent on rewarding people they have a relationship with," he said.

Assistant County Administrative Officer Elissa Ladd denied the county is trying to tailor the bid process to favor one bidder.

"We're testing the market. That's what an RFP process is all about -- getting the best value for the county taxpayer and providing quality benefits for our employees," she said.

Supervisor Mike Maggard said he thinks bidders should be focused on what they can offer the county.

They will be challenged, he wrote Friday in a text message, to "manage our medical plan with the best service to our employees at the lowest cost to taxpayers" and limiting costs to the county and to employees who are now all paying a portion of their health care costs.

But the controversy is likely to persist.

GEMCare is a financial partner of Dignity Health, the company that owns or controls Bakersfield Memorial Hospital and both Mercy hospitals in Bakersfield.

Critics, some who have current or past ties to other potential bidders, argue that the fact MCS manages care for county employees but also has a financial interest in hospitals that provide that care represents a conflict of interest for the county.

In other words, the company has financial motivation to steer county employees to its hospitals. Company officials deny that happens.

Cornforth points to the short response period for the RFP -- It was issued Tuesday and proposals are due Oct. 2 -- and the decision by the county to allow bidders to bid separately on the three different contract functions MCS manages as proof that the county favors the current contract holder.

There isn't enough time, he argued, for anyone but MCS to put in a competitive bid.

The three functions of the contract are managing claims, reviewing county use of the system and contracting with health care providers.

Cornforth said that allowing bidders to compete for any or all of the three parts could allow MCS or the county to short-circuit conflict of interest complaints. If MCS were awarded only the right to manage patient accounts and review the internal operations of the health plan, the county could give another bidder control over negotiating contracts for services with doctors and hospitals -- the part of the current contract that has triggered concerns.

"It's the county's way of dealing with an obvious conflict of interest without doing things directly," Cornforth said. "The reason it's a problem, the reason to go to this effort, is so that GEMCare can still be involved."

But Robert Severs, CEO of GEMCare, also criticizes the short time frame of the bid process and opposes the idea of splitting up the various functions in the contract.

"We're a little bit shocked by the time frame. I assume some will think we have an advantage," he said.

He doesn't see it that way. Still, Severs said, his group will be able to respond on time to the RFP request.

As for splitting the three jobs his company currently performs for the county, he said he thinks it's bad business to break things up.

"We brought this under one roof," Severs said. Before the county had been seeing 7 percent increases in its rates. "We kept the county increases under 1 percent."

"The county saved millions and we're sitting here scratching our heads saying what more do they want," he said.

Still, he said he did suggest in talks with the county the idea of splitting off the contracting function -- which involves signing up doctors and hospitals to provide service -- out of frustration over conflict of interest claims.

But, Severs said, "you cannot break up the claims function and the administration."

Ladd said there is a simple reason the bid hasn't gone out before now -- the county was struggling through contract negotiations with all the county's unions and didn't have the staff time needed to launch the bid.

But now the county must move forward on a contract award quickly, hopefully bringing a proposal to the Kern County Board of Supervisors by late October.

"Both contracts expire on Dec. 31. We wanted to have a new contract in place by the end of the year," she said.

But Cornforth still believes there is a conflict of interest for the county and he has taken legal action to try and prove it.

He has filed a lawsuit against the county demanding release of a copy of a report by the Segal company about the current managed care plan and its operator.

County attorneys continue to maintain that the report is simply a draft and not subject, under the law, to public release.

Deputy County Counsel Mark Nations said the report will not be released until a court orders the county to do so.

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