Attorneys blast Maine’s review of $1B Medicaid contract

By Erin Rhoda, Bangor Daily News Staff

State evaluators failed to carefully review bids by two local organizations competing against an out-of-state company for a massive contract to arrange transportation for Medicaid patients who have no other ride to medical appointments, the nonprofits’ attorneys argued before an appeal panel last week.

In reviewing the bids from Penquis Community Action Agency and Waldo Community Action Partners, which serve low-income residents in much of eastern and midcoast Maine, state scorers valued the formatting of the agencies’ written proposals over the substance of their plans, dinged them for not providing key information when they actually had, and failed to recognize the shortcomings of the ultimate winner, their attorneys said in their opening statements. 

State workers who evaluated the bids gave hours of testimony during the administrative hearing on Wednesday, Thursday and Friday about how they came to drop Penquis and Waldo CAP and award a potentially $1 billion, 10-year contract to Modivcare Solutions LLC, the nation’s largest broker of non-emergency medical transportation services. Appeal committee members will decide in the coming weeks whether there are grounds to invalidate the state’s award.

Transportation to medical appointments is a covered service under Medicaid for those who have no other way to get to and from check-ups, scheduled surgeries and medication pick-ups. Modivcare, Penquis and Waldo CAP currently arrange rides in select regions of Maine, and, in addition to other companies, they all competed for the next round of contracts, slated to begin July 1.

Bidders submitted separate, lengthy proposals last summer to the Maine Department of Health and Human Services for each of Maine’s eight transportation regions that they wanted to cover and, in their bids, were required to describe their organization’s qualifications and experience, proposed services and planned cost structure. Modivcare bid for every region; Penquis bid for four regions; and Waldo CAP bid for one.

DHHS announced in October it had picked Modivcare to provide services across the whole state, effectively ending Penquis’ and Waldo CAP’s roles and eliminating revenue that they use to pay for the infrastructure for their wider range of transportation services, such as to get people not on Medicaid to dialysis or cancer treatments, and to bring people who are housebound to the grocery store. Penquis and Waldo CAP appealed the decision, prompting last week’s hearing.

It currently costs an estimated $75 million annually to provide non-emergency transportation services statewide. The state has not finalized a contract with Modivcare because of the appeal, but it is set to be for two years, with renewals for up to 10 years, prompting observers to estimate its worth at potentially $1 billion.

The point of the appeal hearing was not to determine whether Modivcare was the right broker for the job or the effect that the contract might have on Penquis’ or Waldo CAP’s finances, said Robert Ruesch, an attorney for Modivcare. Its purpose was to decide whether the award to Modivcare was in violation of the law, contained irregularities that created a fundamental unfairness, or was arbitrary or capricious. 

“Neither Waldo CAP nor Penquis CAP can show by clear and convincing evidence that the statutory criteria for invalidating the awards are met,” he said in his opening statement. Scoring notes reveal they likely fell behind because they failed to follow the instructions in the state’s request for proposals, he said. 

Alfred Falzone III, an attorney for Penquis, disagreed, describing the state’s evaluation of bids as “an irregular process” that “led to a fundamentally unfair, arbitrary, and illegal result.” 

For instance, state evaluators gave Penquis and Modivcare the same full score on the “qualifications and experience” section of their proposals for regions encompassing Penobscot, Piscataquis, Somerset and Kennebec counties, even though Modivcare has never operated as a transportation broker there and Penquis has. 

Under questioning, Roger Bondeson, who oversees the non-emergency transportation program as director of operations for the Office of MaineCare Services, said he believed the scoring was appropriate. MaineCare is the state’s Medicaid program.

“We didn’t get into geographical coverage within the state. This was about overall experience, overall qualifications, past performance,” he said.

As part of their proposals, bidders were required to submit details about their litigation history, including current and closed cases over the last five years, the outcome of all lawsuits and how much they paid as a result. 

Falzone showed that Modivcare listed 374 cases totalling 43 pages but failed to disclose any amount it had to pay. Despite not including the amounts, the state’s review found Modivcare had met requirements and gave it a perfect score on the qualifications section. Meanwhile Penquis provided all required details for three lawsuits and also received a full score. 

“With any national corporation, I think a number of us who have done this a few times are not surprised by a litigation list like that,” Bondeson said.

Falzone’s questioning showed Modivcare had failed to meet some contractual reporting requirements as a transportation broker in the past, such as to share statistics with the state about late and missed trips. It appears state reviewers did not take that information — or past complaints made directly to Bondeson about Modivcare not picking up patients as scheduled — into consideration when making their contract decision. 

“I don’t recall that we used any documents for assessing past performance,” Bondeson said when asked whether reviewers relied on internal information about incumbent bidders. Each organization has faced times with a high number of missed rides, he added.

Penquis’ attorney highlighted how reviewers mixed up information in Penquis’ different bids and sometimes offered vague and general reasons for their scoring.

At other times reviewers appeared to dock Penquis’ proposals for not describing plans for a central business office or not addressing its procedures for late-running vehicles, even though the nonprofit did include those details, just not always in the correct format.

“In the instructions of the RFP, it makes it very clear. If a respondent doesn’t follow the sequence of the requirements as laid out in the RFP, we can either disqualify or reduce score,” Bondeson said.

Reviewers also marked down Waldo CAP for layout issues with its proposal.

Waldo CAP, which has provided transit services since 1970, was the only bidder to have operated in the region encompassing Waldo, Lincoln, Knox and Sagadahoc counties, and the towns of Brunswick and Harpswell. It has never been placed on a corrective action plan to improve deficiencies. 

But it lost seven points in the “qualifications and experience” category because the state said it didn’t format its proposal correctly when discussing its stand-out projects. Waldo CAP only put a description of a past project in one templated box, not the required three boxes, though it noted other projects elsewhere in its proposal.

When Waldo CAP’s attorney, F. David Walker IV, asked whether the sole reason the organization lost seven points — costing it the contract — was because of two boxes left empty, Bondeson said, “I believe that’s correct.”

The state needs bidders “to follow the script and the instructions, so we’re not searching for things and trying to figure out if it’s someplace else or whatever. I don’t believe any other respondent missed this part,” Bondeson said. 

Walker pointed out that, though there were three boxes for the organization’s exemplar projects, instructions directly above the fields stated that only one was required. What’s more, he said, Waldo CAP received the highest score for proposed transportation services.

“Would you agree with me that the quality of the service to be provided to the folks in Region 5 is more important than the box in which certain content falls?” Waldo CAP’s attorney said.

“Yes,” Bondeson said.

“No further questions, thank you,” Walker concluded.

Maine Focus Editor Erin Rhoda may be reached at erhoda@bangordailynews.com.