Troubles plague West Virginia’s Medicaid management information system

Published: January 15, 2013

Contract AwardsHealth CareHealth IT

It appears that the West Virginia Medicaid management information system (MMIS) has hit yet another snag in what has been a two-year procurement process. As Deltek reported in late December, the West Virginia Department of Health and Human Resources (DHHR) finally awarded its $248 million contract to Molina Healthcare. That contract, the largest in state history, was awarded as a result of a 2012 RFP released by an already beleaguered state agency. In fact, it was the third MMIS RFP released by West Virginia in as many years. Moreover, until now, DHHR would not confirm why the previous two had been canceled.
As the Charleston Daily Mail reports, the first MMIS RFP (released in January 2011) was canceled because DHHR “inadvertently” sent Xerox’s trade secrets, in the form of documents, to the other bidders, Molina and HP. Apparently, HP returned the documents unopened, but Molina opened them. After much drama, DHHR pulled the RFP and rereleased it later that year. The second RFP was also withdrawn due to a conflict of interest between DHHR and another bidder, HP.
Now, a year later, DHHR released a third RFP, concluded the procurement process, and awarded a contract to Molina, only to have the final bidder, Xerox, file a challenge to the outcome. In its challenge, Xerox alleges that the Molina contract is a result of a series of missteps combined with an unfair “side deal” from 2011. That deal, perhaps the most interesting twist in this convoluted procurement drama, supposedly shaved $10.5 million from Molina’s final proposal and allowed the company to come in as the lowest bidder. Xerox contends that the deal between Molina and DHHR allowed Molina to upgrade the MMIS prior to bidding on it. Those upgrades, Xerox alleges, would have been a part of Molina’s final proposal, which would have been considerably more expensive than the other proposals.
It is still unclear how this saga will be resolved and which company will ultimately be responsible for the state’s MMIS. However, it is clear that the drama within DHHR has exposed a flawed procurement system in one of the state’s most critical agencies. As the Daily Mail predicts, DHHR will lose the special purchasing power it currently enjoys during the 2013 legislative session. That consolidation move, popular in most states, will allow the more-experienced purchasing division to conduct procurements in the future.
GovWin IQ subscribers can read further about the project here. Non-subscribers can gain access with a GovWin IQ free trial.