State to give firm $177 million to review, pay Medicaid bills

CARSON CITY -- Despite protests from a losing bidder, state officials decided Tuesday to spend nearly $177 million over the next five years to have HP Enterprise Services review and pay bills incurred by Nevada's 300,000 Medicaid patients.

Gov. Brian Sandoval and other members of the Board of Examiners agreed to the contract for Medicaid, the free health care program for the poor, disabled, blind and some elderly people.

The losing bidder, ACS State Healthcare, complained of a law that does not allow it to file a lawsuit over the awarding of the contract until it posts a $245,000 nonrefundable filing fee.

ACS lawyer Josh Hicks said the company cannot afford to pay such a fee.

ACS made a bid of $179 million for the contract to handle Medicaid services.

HP's original bid for the Medicaid contract last summer had been $140 million, not the $177 million contract approved Tuesday.

The contract was expected to be approved during the usual 30-day period, but negotiations between HP and the Department of Health and Human Services took five months.

Changes in the proposed contract increased HP's bid by more than $30 million.

Hicks complained that those contract changes were illegal.

"The addition of $30 million in costs to a contract in a post-scoring and noncompetitive setting is illegal, unfair and not in the best interests of Nevada," Hicks said.

Hicks, former chief of staff for Gov. Jim Gibbons, called for the board to void the contract. He said the $245,000 fee for a bond was an "effective barrier to judicial review."

"That is not recoverable," Hicks added.

Secretary of State Ross Miller noted it was a "very sizable contract" and suggested the Board of Examiners hold a special meeting to look at the contract in greater detail.

"Some concerns have been raised," Miller said.

"I don't know what (additional) review would get us," Sandoval replied.

He said he doubted the board could change portions of the contract.

The governor questioned whether the state could be sued if it awarded the contract to HP. Deputy attorneys general said ACS could not sue the state unless it posted the $245,000 fee.

Health and Human Services Director Mike Willden said a delay might cost the state $2.7 million in federal funds.

"We are in a tight time constraint to get the conversion (switch to HP) done," Willden said. "I did due diligence. I met with three attorneys general. We have a lawfully bid contract. We have a capable vendor."

Willden said HP does Medicaid review and payment work for 22 states and will start handling Nevada Medicaid claims in the summer.

The company has offices all over the country and will hire Nevadans as some of its workers, he said.