COLUMBUS — Paramount Advantage, the insurance arm of ProMedica, on Tuesday filed suit in an attempt to force the Ohio Department of Medicaid to cancel and rebid recently awarded managed-care contracts after the Maumee-based company was left in the cold.
The suit was filed in Franklin County Common Pleas Court after the company was unsuccessful in enacting language in the state budget to get the state to redo the process that led to the selection of six managed-care organizations.
Paramount was the sole current provider that did not get a new contract. In the suit, the company calls the procurement process “fundamentally flawed and irrational, arbitrary, and capricious.”
The court has tentatively set a trial date for July 25, 2022.
The Ohio Senate had initially added language to the state budget to redo the procurement process next year, this time giving preferences to Ohio-based companies already doing the job.
A six-member budget conference committee specifically removed the retroactive language but kept the new criteria to be considered when it comes to awarding future contracts. Gov. Mike DeWine then struck the remaining language before signing the budget into law early in the morning of July 1.
Paramount claims the state created a “black box” that conceals the department's methodology for scoring the applications for what are the largest public contracts awarded in state history. The MCOs will oversee services for 3 million Ohioans over five years, contracts totaling more than $22 billion.
The lawsuit contends the Department of Administrative Services, not Medicaid, has the authority to design and carry out contract procurement processes. It claims Medicaid “arbitrarily scored [applicants'] responses based on Defendants’ own biases” and then delayed release of the contract awards and details on the scoring results in order to hamper Paramount's ability to protest.
It contends the department held “implicit negative biases” against the company because it previously exposed errors in algorithms used to assign Medicaid participants to MCOs and set reimbursement rates, errors that it said set Paramount on course to lose more than $100 million.
“Despite Paramount’s efforts to resolve the 2019 issue directly with ODM, because ODM refused to address or fully resolve its mistakes, Paramount ultimately had no choice but to seek the intervention of the governor and lieutenant governor of Ohio, which culminated in ODM returning tens of millions of dollars to Paramount,” the lawsuit reads.
When he struck what was left of the Paramount language in the budget, Mr. DeWine said allowing the language to stand would have upended a carefully crafted process that ultimately had winners and losers.
“We put together a new procurement protocol where we were going to hire companies, and those companies needed to buy into our vision," he said. "And not only did they need to buy into our vision, they needed to have the ability to carry it out."
In a statement, Paramount said, “We remain disappointed that Governor DeWine vetoed the language that would have addressed the issues with the Medicaid procurement process, requiring those executing the process to give appropriate consideration to high-performing, Ohio-based MCOs and the impact on Ohio jobs and our state’s economy.
“We continue to review and pursue all legal and strategic options that would allow Paramount to continue providing high-quality managed care, and save 600 Ohio jobs,” it said.
First Published July 13, 2021, 9:06 p.m.
