D.C. leaders clash over best insurer to care for low-income patients



A previous version of this article incorrectly described a lawsuit against insurer CareFirst. The lawsuit concerned gains from the District’s CareFirst insurance plan, not the DC Medicaid contract. The article has been updated.

As DC lawmakers prepare to award some of the city’s most lucrative contracts – paying three insurance companies more than $2 billion to provide health care for about a third of all DC residents – council members engage in a bitter battle over it which insurers should win.

The city’s Medicaid program has been the subject of controversy for years. Following a court ruling against the old contracts with insurers, a threat by a major hospital system to stop treating Medicaid patients, and a lawsuit, Mayor Muriel E. Bowser (D) vowed last year to begin a new procurement to re-select the three insurance companies that the district would pay to care for Medicaid recipients.

DC plans to re-bid its troubled Medicaid contracts

The city’s Bureau of Contracts and Procurement accepted bids, evaluated the proposals, and awarded the contract to two vendors already on the system — MedStar and AmeriHealth — along with a third company. Amerigroup replacing existing provider CareFirst.

Bowser has asked the DC Council to approve the contracts at its legislative session on Tuesday. However, some council members have raised concerns about Amerigroup’s suitability to insure low-income patients.

The company has a troubled track record, as CareFirst lobbyists, including former DC councilman David Catania, have pointed out: More than a decade ago, an audit found that Amerigroup overcharged the district. It has also been criticized for its role in other states’ Medicaid programs, including Florida, where it paid a $2 million fine for denying children speech therapy.

“We are ready to bring one back [insurance plan] with a checkered history in the district and a well-known reputation for denying care to vulnerable Medicaid members,” Councilor Vincent C. Gray (D-Ward 7) wrote in a letter to City Manager Kevin Donahue and council members that he was “ is “strongly considering” urging members to reject all three contracts on the grounds that the process went badly and resulted in a bad winner. “We can’t burden our low-income residents with underperforming health plans for the next five years and act like our hands are tied and we’ve done what’s best for our residents.”

But CareFirst, too, has a history of litigation in the district and recently agreed to pay a $95 million settlement to end a 13-year fight over allegedly over-exploiting its insurance plan to benefit. And Adrian Jordan, president of Amerigroup’s DC plan, said many of the issues Gray alluded to were unrelated to his plan. The Amerigroup brand includes insurance plans that operate entirely separately from state to state, he said, and the company is under separate ownership from the plan that fared poorly in the district in the 2000s.

“The health plans are completely separate and independent,” Jordan said. “Amerigroup DC is a standalone healthcare plan that is owned and managed by me and me alone. I have no insight into other plans in the country.”

Amerigroup proved unpopular in DC the last time it had a Medicaid contract. Twenty percent of its members chose to switch to another Medicaid provider, more than those who switched from other plans.

Jordan – who is himself close to some council members as a former council staffer – said it won’t happen again. MedStar operates both an insurance program and a large hospital system popular with low-income patients in the district, and in the past the company has failed to reach agreement with some other insurers, including Amerigroup. That meant a large number Amerigroup patients who wanted to see a MedStar physician had to switch plans.

MedStar’s dual role became a much bigger issue last year when the company threatened to stop letting its doctors treat patients on another Medicaid plan at the prospect of losing its insurance contract, an ultimatum that the Medicaid system went into chaos, leading to the new procurement the city is now conducting.

Since then, the DC Department of Health Care Finance has been working on rules and agreements designed to force all hospitals in the district to accept all Medicaid patients. When these agreements work, Amerigroup patients do not have the same reason to switch insurers.

Still, in its bid not to lose the high-paying contract, CareFirst has hired lobbyists, including Catania, to try to persuade council members that switching tens of thousands of Medicaid patients from its plan to other plans would be detrimental, particularly if the switch is the case to Amerigroup.

“If the Council approves the contracts, over 70,000 DC Medicaid enrollments would transition from a proven, high-quality plan to one with a proven history of overcharging and denial of care to patients,” said Ieisha Gray, COO of the DC Plans from CareFirst. CareFirst has argued that it lost out to Amerigroup because of small technical details in the way DC evaluates procurement, not because of quality or cost. “Minor typos could cost over 70,000 residents in the district their health care, and I don’t think that point can be overstated.”

In 2017 and 2020, judges on DC’s Contract Appeals Board ruled that the Office of Contracting and Procurement erred in awarding Medicaid contracts. But this time, the Contract Appeals Board heard CareFirst’s protest and ruled that the procurement process had been properly conducted.

Richter says DC erred in awarding lucrative Medicaid contracts

Councilor Robert C. White Jr. (D-At Large) has urged members to vote yes to the three contracts and said they had done so should respect the procurement process. “The size of these contracts is such that they have been scrutinized and more money and lobbying has been put into them. At the end of the day, this is a procurement that the city did, that was appealed, that was finalized, and that the council shouldn’t interfere with,” White said in an interview. “It would be catastrophic for the Council to send the message that we are meddling in procurements. Because every time there is a major procurement, we are inundated with lobbyists.”

White also criticized Amerigroup’s focus on Amerigroup’s suitability to hold the contract, noting that its competitors had also caused major problems in the district’s Medicaid program.

CareFirst will pay DC $95 million, ending 13-year excess funds litigation

“We shouldn’t look for the good actor because we will look for a long time. The city just settled a $95 million lawsuit with CareFirst. MedStar single-handedly destroyed our Medicaid system,” he said. “Everyone has problems here”

Michael Brice-Saddler contributed to this report.