AlohaCare seeking appeal for $1.5B contract

AlohaCare yesterday appealed to the state's chief procurement officer to reverse a decision to award a $1.5 billion Medicaid contract to two, for-profit mainland firms.

The state's non-profit health plan, which lost the bid for a three-year contract to provide services to 37,000 aged, blind and disabled Medicaid beneficiaries, said the procurement system is flawed and is asking Chief Procurement Officer Aaron Fujioka to redo the bidding process or eliminate a tax benefit in the contract for the for-profit companies. Fujioka has 15 days to decide on the appeal.

AlohaCare is alleging that the state Department of Human Services, which administers the Medicaid program, created an illegal rebate of a 4.265 percent premium tax that for-profit health plans are required to pay under state law. The company claims reimbursements by the state to the for-profit health plans will add more than $65 million to Medicaid costs over three years.

"We believe the bid process was intentionally skewed to introduce large, mainland health plans into our island communities at all costs," said Ed Kemper, AlohaCare's attorney.

The state on Feb. 1 awarded the contract to Tampa, Fla.-based Wellcare Healthplans Inc. and UnitedHealth Group Inc. of Minnetonka, Minn. AlohaCare filed a notice of bid protest on Feb. 8, which was rejected by DHS director Lillian Koller. She declined comment because the procurement process is ongoing.