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With a piece of a five-year, $8.8 billion contract on the line, why not throw a few hundred thousand bucks to lobbyists and advertising firms to try and sway the outcome?
That’s a very timely rhetorical question about the messy fight over D.C.’s Medicaid contracts that came to a head before the Council Tuesday. But it’s not Loose Lips asking such a thing, nor a typical critic of money in politics like At-Large Councilmember Elissa Silverman. Instead, it was Council Chairman Phil Mendelson, hardly an enemy of D.C.’s moneyed interests, who made a strikingly good point about the forces operating behind the scenes at the Wilson Building with this particularly lucrative bit of business up for grabs.
“Often the losing bidder fights and screams and throws all kinds of dirt up on these big contracts,” Mendelson said during the Council’s Tuesday morning breakfast meeting. “There’s nothing for them to lose…But they can sow the seeds of doubt and make it seem like it’s not been a transparent process.”
The details are exceedingly complex, but some of the core issues in this fight are quite simple. Essentially, four huge health insurance companies have spent the past few years vying for the chance to manage coverage and services for the roughly 250,000 D.C. residents on Medicaid. The fighting got particularly ugly over the past two years, with a variety of allegations of problems flying back and forth. The Council ultimately forced Mayor Muriel Bowser to re-compete the deal for a contract to run through 2028. When one of the companies currently running the city’s Medicaid program, CareFirst, was knocked out of contention, it started doing some of the screaming and dirt-throwing that Mendelson alluded to.
CareFirst filed procurement protests with the city’s Contract Appeals Board, followed up with a lawsuit when those protests failed, and hired some of the District’s most prominent lobbyists (former Councilmember David Catania and Mendelson campaign chair Ben Young) to press its case among lawmakers. A pack of Facebook ads and even a mobile billboard promoting CareFirst’s services followed over the ensuing months, all in a bid to box out Amerigroup, the insurer to win out over CareFirst.
Catania and Young seem to have thoroughly earned their $10,000 monthly retainer, with lobbying records showing no less than a full-court press on CareFirst’s behalf. Their activity reports show meetings with 12 different councilmembers over the past few months (every lawmaker but Silverman, a frequent Catania critic) and constant contact with Bowser’s administration. City Administrator Kevin Donahue, Deputy Mayor for Health and Human Services Wayne Turnage, and Chief of Staff (and Deputy Mayor for Planning and Economic Development) John Falcicchio all got texts and calls from the lobbyists on CareFirst’s behalf. Bowser herself got a text about the issue in June, the records show.
Amerigroup had a bit less firepower, but didn’t exactly sit on its hands. Its top local executive, Adrian Jordan, has a history in the Wilson Building (as a staffer for Ward 5 Councilmember Kenyan McDuffie) and communicated with lawmakers about the contracts too. LL remembers hearing frequently from his PR firm offering spin on the issue at his former reporting job. Jordan himself gave a combined $1,200 to McDuffie’s at-large and attorney general campaigns, $1,500 to Mendelson, $200 to At-Large Councilmember Robert White, and $100 to At-Large Councilmember Anita Bonds in this election cycle alone. AmeriHealth and MedStar both sent lobbyists to meet with councilmembers on the issue over the last few months too, records show.
Bowser’s team missed some key deadlines as they waited for the various contract disputes to play out in court, but they ultimately spurned CareFirst. Bowser sent contracts with Amerigroup and the two other existing Medicaid operators, MedStar and AmeriHealth Caritas, to the Council for emergency approval Tuesday to finally resolve the drama.
Ward 7 Councilmember Vince Gray began sounding the alarm earlier this month, echoing CareFirst talking points about alleged irregularities in the procurement process and slamming Amerigroup’s “checkered history in the District.” The company faced allegations that it overcharged the city for services by $74 million a decade ago, and underperformed substantially when it last held a Medicaid contract in 2018. Amerigroup has pushed back against both of those claims, citing an ownership change since those struggles emerged.
White, whose government operations committee oversees procurement matters, took up the other side of the argument, claiming in an Oct. 14 letter to his colleagues that it would “be embarrassing to the city and further open the door to lobbying on every major procurement” if the Council voted down these contracts. He noted that procurement officials have repeatedly reviewed the matter and ruled against CareFirst, so the Council would effectively be substituting its judgment for that of the city’s experts.
“CareFirst doesn’t like the result, so they are throwing the kitchen sink at us with every argument they can muster,” White said Tuesday. “But I’d ask my colleagues to consider where they’re getting this information and not just be giving credence to multimillion-dollar lobbying campaigns.”
Despite a coterie of people wearing matching, pro-CareFirst t-shirts looking on in the Wilson Building Tuesday afternoon (surely there because of their passion about Medicaid contracting rules and not any other reason), White laid out the details of CareFirst’s own 13-year-long legal battle with the District over a separate healthcare matter. MedStar, too, has a rocky track record in the city after nearly provoking a crisis last year by threatening to bar Medicaid patients from accessing its doctors, all because it stood to lose out on the same Medicaid management contract the companies are fighting over now.
“My point isn’t that CareFirst is bad,” White said. “My point is that all contractors have issues in their records that we can’t sort through.”
But some of White’s traditional allies saw the flip side of that argument. Gray and Ward 2 Councilmember Brooke Pinto both seemed to buy CareFirst’s claims about problems with this specific procurement (which are quite complex and involve errors with subcontracting plans submitted by the insurers), but others expressed unease with the contracts because of broader concerns. If White is correct and all of these companies have problems, some wondered why the city should choose from among four bad options.
“I need to know why any one of these providers is the best option for residents, given the history of lawsuits here,” said Ward 4 Councilmember Janeese Lewis George.
Ultimately, there was more debate than there was drama. The contracts passed, 10-2, with only Pinto and Ward 1 Councilmember Brianne Nadeau opposing them. (Gray, despite being one of the most vocal lawmakers on the issue, ended up missing the meeting to attend a physical therapy session, he said in a statement.)
LL comes away from this whole episode feeling a bit icky. Despite all the mudslinging, there doesn’t appear to be all that much daylight between CareFirst and Amerigroup. Procurement officials testified during the Council meeting that they essentially tied in the scoring process to win this contract.
The main reason CareFirst was knocked out of the running was because it listed a nonprofit instead of a private business in trying to satisfy requirements for subcontracting with local businesses. That’s hardly an insubstantial issue, given the way the city’s certified business enterprise program has been abused in the past, but also a very technical one. None of these firms are exactly mom-and-pop shops—concerns over CBE compliance likely just affect which (and how many) local firms get a tiny piece of this massive deal, not the quality of coverage for Medicaid recipients.
So all this money gets spent and all these favors get traded to determine which big insurer gets richer. LL doesn’t have a great answer here, since all this lobbying feels impossible to cut out of the process so long as healthcare remains privatized in the U.S. But perhaps there is merit to White’s idea that the Council shouldn’t be in the business of fussing with the nitty gritty of contracts once the experts have had their say.
“I can vote against a contract when it’s a question on policy,” said Ward 6 Councilmember Charles Allen. “But I think this is a process question, and we want to keep the Council out of the process.”