Louisiana lawmakers want say over Medicaid contract worth hundreds of millions of dollars

Louisiana legislators want the state to revisit — or at very least delay —  the award of a Medicaid technology contract worth hundreds of millions of dollars after hearing complaints from one company not selected to do the work. 

Republican lawmakers criticized Gov. John Bel Edwards’ administration for excluding Gainwell Technologies from a final round of bidding for a Medicaid agreement that could last 10 years and be worth at least $245 million.

Their reproach came less than a month after Gainwell filed a lawsuit against the state, alleging Louisiana violated its own contracting procedures when it picked another vendor, Conduent Inc.

Judge Ronald Johnson from the 19th Judicial District in Baton Rouge issued a temporary restraining order in Gainwell’s favor Sept. 5. It blocks the state from moving forward with the Conduent agreement until Oct. 27, when an initial court hearing on the matter is scheduled.

Meanwhile, legislators expressed a desire to reevaluate Conduent’s selection at a state budget meeting Friday. Rep. Daryl Deshotel, R-Marksville, even suggested legislators try to claw back money given to the Louisiana Department of Health to pay for the agreement. 

“We didn’t even have an opportunity to look at this,” Deshotel said. “This is a serious investment — a quarter of a billion dollars of our taxpayer money for 10 years.” 

The federal government is requiring Louisiana to overhaul its Medicaid processing services. The state’s current system is nearly four decades old and doesn’t meet current federal standards.

Gainwell oversees all of Louisiana’s current Medicaid management information systems. As they get replaced, the state will have to work with more than one vendor to satisfy new federal guidelines, according to documents made public as part of the lawsuit.

The Edwards administration didn’t use a traditional competitive bid process for the contract in question. Instead, it relied on a cooperative method, wherein states share the responsibility of vetting potential Medicaid vendors. In this case, Montana approved Gainwell, Conduent and three other companies to do this type of work for several states, and Louisiana piggybacked on those selections. 

Gainwell asserts Louisiana should have included the company as one of its finalists because Montana ranked Gainwell first overall when it came to affordability and technology. Conduent ranked fourth, according to court documents. 

Emails between state officials included in court documents show discussion between health department staff and the contracts office about the extent to which legislators should be involved in approving the vendor.

In the end, state officials determined they were not required to seek lawmakers’ approval earlier in the selection process. But Gainwell alleges the Edwards administration violated state law when it didn’t get permission from the Joint Legislative Committee on the Budget — and legislators on that committee agreed. 

“I’m just floored that we are even talking about a quarter of a billion dollar contract that we didn’t vet,” Deshotel said. 

Lawmakers said their criticisms shouldn’t be interpreted as allegiance to Gainwell, though they referenced the company several times during their hearing.

Many of the lawmakers’ talking points mirrored arguments Gainwell made in its petition to the court. None of them brought up the three other companies — CNSI, Infocrossing and OptumInsight — that also lost out to Conduent. 

“Every vendor who met the criteria besides Gainwell was allowed to make a demonstration or presentation,” said Rep. Tony Bacala, R-Prairieville, who later added, “I don’t have a dog in the hunt as far as who is awarded this contract. I really don’t.”

Gainwell has made just two political donations during the current election cycle.

After filing its lawsuit on Aug. 23, the company gave Attorney General Jeff Landry’s campaign for governor $5,000 on Aug. 30 and a political action committee run by Senate President Page Cortez $1,000 a day later, according to campaign finance records.

Landry is considered the frontrunner to be Louisiana’s next governor and could be in office by the time this Medicaid contract starts moving forward again.

Cortez is a leader on the joint budget committee but was not present for the discussion about the contract Friday. He is also term-limited and will be leaving his job at the beginning of next year. 

Gainwell and Conduent supported Edwards’ re-election efforts in 2019. Gainwell donated $3,000 to Gumbo PAC, which helped the governor’s campaign, and Conduent gave $2,500 to the John Bel Edwards for Louisiana Leadership PAC. 

By far the most prolific donor of the five potential Medicaid vendors is CNSI, which didn’t get picked for the contract. It gave Landry and one of his PACs $52,500 in 2015 when he first ran for attorney general against incumbent Buddy Caldwell.

At the time, Caldwell was pursuing criminal charges against Bruce Greenstein, a former state health secretary for Gov. Bobby Jindal who had also worked for CNSI.

Greenstein was accused of lying about communicating with his former employer, CNSI, while leading the health department during a previous round of Medicaid contract bidding. Landry beat Caldwell in the 2015 race and ended up dropping the charges against Greenstein shortly after he took office.