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Archive for the ‘RFP, Request for Proposals’ Category

Senate Education Committee vote was a foregone conclusion; charges of DOE test data fraud was huge political bombshell

Posted in BESE, Education, Ethics, House, Senate, Legislature, Legislators, Public Records, Recovery School District, RFP, Request for Proposals, RSD, Transparency, Vouchers on May 1, 2013 | 12 Comments »

The vote was a foregone conclusion; the minds were made up long before the Senate Education Committee members cast their votes to kill SB 41 by Sen. Bob Kostelka (R-Monroe).

The vote that killed the bill was anti-climactic at best. The testimony of a band director and self-proclaimed “highly qualified” math teacher, however, provided the bombshell that Superintendent John White and the Board of Elementary and Secondary Education (BESE) would rather you not know.

His testimony evoked memories of Michelle Rhee’s tumultuous reign in Washington, D.C. and of more recent events in Atlanta.

It was purely academic that only two of the eight committee members would vote in favor of sending the bill to make the Louisiana Superintendent of Education position elective again after nearly two decades of having an appointive superintendent.

And one of those two votes in favor—that of Sen. Mike Walsworth (R-West Monroe) was purely for show because (a) he knew the result well in advance, so his vote would not affect the outcome and (b) about 75 percent of those attending the committee meeting were from Ouachita Parish—and they all supported the bill. Walsworth, if nothing else, is at least capable of reading a room.

Walsworth, you may remember, was the senator who last year made a complete ass of himself during a committee hearing on science vs. creationism. A teacher was testifying about how her science students were growing cultures in her classroom when Walsworth asked the stupefyingly inane question of whether the cultures could produce humans.

This is your senator, Ouachita Parish. Be proud.

But enough of Walworth’s political pandering and asinine questions; Herb Bassett of nearby Grayson was the real story because his testimony placed charges on the table that heretofore have only been whispered about in the halls of the Claiborne Building.

Where others within the Department of Education (DOE) have alluded privately to data suppression and manipulation of school performance scores that artificially inflated graduation rates, Bassett, a band director who said he was “highly qualified” to teach math, publicly charged White, BESE and DOE of misrepresenting test scores and then covering up the lie by removing the data from the Louisiana Believes website. “This is data suppression,” Bassett said.

He said he was asked by his principal last October to look into his school’s score so that it could be improved in the future. “My subsequent research revealed deceit, distortion, manipulation of scores and data suppression,” he said.

“In mid-December, I sent you a report documenting the gross inflation of the high school performance scores. The Department covered up the inflation by intentionally mislabeling an important column of data in the initial public release of the scores.”

Bassett clarified that statement later, saying he sent his findings to all 144 state legislators and every school district superintendent and that he received an acknowledgement from the legislative assistant to Sen. Conrad Appel (R-Metairie), chairman of the committee, that Appel had received his report.

“The data, the Transition Baselines, showed that the GEE (Graduation Exit Exam)—which was being phased out—and the new EOC (End of Course) tests were mis-calibrated by 7.5 points. That’s half a letter grade,” Bassett said. “Had it been correctly labeled, the inflation would have been obvious—at least to me.”

Meanwhile, he said, BESE was given a different version of the scores with the Transition Baselines correctly labeled. “This shows intent to deceive,” he said.

LouisianaVoice has received information from several sources inside DOE that corroborate Bassett’s claim but because of DOE’s refusal to provide requested records, little has been written about the claimed deception.

He later provided LouisianaVoice with a copy of the report that he sent to legislators and local school superintendents. We will be expanding on that report in subsequent posts.

Bassett further cited what he claimed was manipulation of scores.

“At Mr. White’s first BESE meeting as State Superintendent, the department recommended a graduation index formula change. The change ensured that scores would only go up or stay the same. This raised the average score another four points.

“Thanks to the Transition Baselines, the switching to the EOC did not affect the growth scores but this (the graduation index formula change) did. There are at least 20 schools that would not have earned top gains status without it. That’s over $160,000 in those big checks passed out in PR campaigns,” he said in reference to recent teacher bonuses passed out by DOE as performance awards.

“And the graduation rate data set that I used to compute this has been removed from the Louisiana Believes website (the DOE website). That is data suppression.”

Bassett said he made a five-minute video explaining the problems with the 2011 and 2012 DOE reports on the Value Added Model (VAM), also known as COMPASS, the department’s teacher evaluation program. He said the problems he found “clearly contradict DOE’s current claim that VAM is stable. “This inconvenient data have been suppressed,” he said.

He said LEAP and iLEAP data files that contain the actual numbers of students at each achievement level have been removed. “Only percentage data are given,” he said. “Meanwhile, the new School Assessment System will award bonus points based on the number or percent—whichever is greater—of non-proficient students who surpass their VAM targets. This biased system more generously awards points to schools with over 100 non-proficient students. Without the (actual) numbers, we will not know which schools disproportionately benefit from it.

“Most of the data I used are gone from the new website,” he said.

He said that White is asking “that we believe that VAM has miraculously become stable since the reports by its creators have disappeared.”

Though Bassett did not elaborate on the latter point, LouisianaVoice also has received information that the creators of VAM later became concerned at the direction the program was taking and sent several emails expressing that apprehension to superiors who ignored the messages.

BESE president Chas Roemer (R-Baton Rouge) was called to the witness table and asked about Bassett’s charges. Roemer said he had heard nothing about Bassett’s claims, but that he would “look into it.”

It would difficult to imagine that the president of BESE would know nothing of claims of manipulation of data by White and DOE in light of cheating scandals in Atlanta and Washington, D.C. In Atlanta, former superintendent Beverly Hall and several public school staff members were recently indicted in an alleged scheme to cheat on Georgia state tests, including the erasure of students’ incorrect answers and replacing them with correct answers.

A similar scandal brought down the administration of former Washington, D.C. superintendent Michelle Rhee, once the national poster child of school reform.

With the negative publicity those two cheating scandals have received, one would think that the president of a state education board would be aware of any hint of a similar event on his watch.

Roemer was asked to look into Bassett’s allegations and to report back to the committee.

If anyone reading this cares to wager that Roemer will ever report back to the committee members, that the committee will ever follow up on Bassett’s embarrassing charges, or that White or BESE will ever take corrective measures, we know several skeptics who will cover the bet—and give you odds.

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Notable Quotables (in their own words)

Posted in Contract, Contracts, Governor's Office, Health Care, Notable Quotables, Public Records, RFP, Request for Proposals on March 21, 2013 | 7 Comments »

“Are you refusing to tell this committee who is going to be recommended by DHH to receive the award? Yes or no.”

—Former Sen. Rob Marionneaux (D-Livonia) in June of 2011, to DHH Secretary Bruce Greenstein in efforts to learn if Greenstein’s former employer CNSI won a $184 million, 10-year contract.

“I’m not going to be able to say today.”

—Greenstein, responding to Marionneaux.

“You are the department. Who is the person above you? Who is your boss?”

—Sen. Jody amedee (R-Gonzales), during the same hearing to confirm Greenstein’s appointment as DHH Secretary as he attempted to learn the name of the contractor.

“The Governor.”

—Greenstein, in response to Amedee.

“We have zero tolerance for wrongdoing.”

—Commissioner of Administration Kristy Nichols on Thursday, in announcing the cancellation of the CNSI contract hours after her office was served with a subpoena by the FBI in its investigation of the CNSI contract.

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Letter to U.S. Attorney, LouisianaVoice claims continuing pattern of RFP bid rigging, vendor favortism at OGB, DOA

Posted in Attorney General, Ethics, Governor's Office, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, RFP, Request for Proposals on March 9, 2013 | 20 Comments »

New claims of possible bid rigging and unfair trade practices within the Office of Group Benefits (OGB) and the Division of Administration (DOA), have surfaced in a two-page letter sent to the U.S. Attorney’s office and to LouisianaVoice this week.

OGB is a multi-billion dollar agency which administers health benefit claims for state employees, retirees and their dependents.

If true, it would be the third time in less than two years that insider negotiations have been conducted between a potential bidder, OGB and DOA preparatory to DOA’s issuing a request for proposals (RFP).

A copy of the unsigned, undated letter also was addressed to State Rep. Katrina Jackson (D-Monroe) and to Louisiana Inspector General (IG) Stephen Street, though the writer expressed skepticism over any anticipated action by the IG’s office.

“I am writing as a concerned citizen who has had enough,” the letter said. “I write out of concern that there is something fundamentally wrong with the operations of the Division of Administration. I included the Inspector General out of protocol, but not with the expectation that he will act.”

The letter accused DOA, through OGB of engaging “in a pattern of behavior that has to be, at the very least, unethical” in its dealings with a South Carolina company.

“Within the past few months, the staff of the Office of Group Benefits has been instructed to conduct multiple meetings with a business called BenefitFocus (which is in the business of group health eligibility activity).

“The problem with these meetings is that the blatantly expressed reason for the meetings is the preparation of an RFP on which the company will then bid.

“In fact, in the last meeting,” the writer said, “there was an open discussion on how to either construct an RFP that will yield the company an insurmountable advantage or (that would) make the company a ‘sole source’ vendor that will eliminate competition.”

BenefitFocus is headquartered in Charleston, S.C. and its web page describes it as “the country’s leading provider of benefits technology.” It claims more than 18 million members and 300,000 employers who manage “all types of benefits” through the company which “provides employers, insurance carriers, consumers and government entities with cloud-based technology to shop, enroll, manage and exchange benefits information.

“BenefitFocus clients include small, medium and large employers from all industries, as well as the nation’s top insurance companies,” the website says.

Among the clients listed were Blue Cross/Blue Shield in several states, including Louisiana.
The anonymous writer described the activity between OGB and BenefitFocus as a “pattern,” saying such events have occurred at least twice before.

“The first instance was when OGB (by order of DOA) was looking for a financial advisor. The eventual successful vendor was Goldman Sachs, who had participated in multiple OGB meetings before the bid process and who even had the audacity to help write the RFP,” the letter said.

On April 13, 2011, CNS learned that Goldman Sachs had been active in discussions about the planned privatization of OGB as far back as October or November of 2010. That was about the same time that the idea of privatizing OGB was first floated to then-OGB CEO Tommy Teague in a meeting between then-Deputy Commissioner of Administration Mark Brady, Teague and four representatives of Goldman Sachs.

Teague was fired two days after LouisianaVoice published that story.

When it came time to open the proposals for the project, Goldman Sachs was the only bidder and stood to receive $6 million in fees for its services, whether it was successful in finding a buyer for OGB or not.

Gov. Bobby Jindal eventually rejected the Goldman Sachs bid after details of the Wall Street banking firm’s involvement were made public and Blue Cross/Blue Shield of Louisiana was ultimately awarded the contract to serve as a third party administrator over OGB’s preferred provider (PPO) organization. BCBS also administers other claims for OGB under a separate contract.

“Earlier in 2012, the letter said, “OGB staff was directed to have multiple meetings with Extend Health, a company in the Medicare Advantage exchange business. The staff attended the meetings and helped answer background questions.

“In later activity with the company, an RFP was drafted (a very narrow drafting) that gave Extend Health a nearly sickening advantage in the bidding,” the writer said. “Of course, Extend Health won.”

Extend Health, the largest private Medicare exchange in the U.S., offers access to multiple Medicare plans for 2013. Retirees who enroll in a Medicare plan through the Extend Health exchange are enrolled in a health reimbursement arrangement (HRA) and received HRA credits of $200 to $300 per month from the state up to a maximum of $2,400 per year for single coverage and $3,600 for family coverage.

The credits may be used to pay premiums for Medicare Advantage plans, Medicare Part B. Medicare Part D prescription drug plans, Medigap plans and dental and vision plans.

LouisianaVoice has made public records requests for copies of all correspondence between OGB, DOA and BenefitFocus.

Let’s see how long it takes DOA to invoke the ol’ “deliberative process” exemption.

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Attorney General opinion accuses π-yush of parliamentary chicanery in Office of Group Benefits privatization contract

Posted in ALEC, American Legislative Exchange Council, Attorney General, Campaign Contributions, Civil Service, Contract, Contracts, Ethics, Governor's Office, Health Care, Jobs, Layoffs, Legislature, Legislators, OGB, Office of Group Benefits, ORM, Office of Risk Management, Prison, Privatization, RFP, Request for Proposals, Transparency on September 15, 2012 | 5 Comments »

A Louisiana Attorney General’s opinion released Friday has accused the administration of Gov. Piyush Jindal of attempting an end run around the legislature in its efforts to privatize the Office of Group Benefits (OGB).

Meanwhile, another state prison is abruptly closed by Jindal.

The eight-page opinion, written by Assistant Attorney General Michael J. Vallan, says that the proposed privatization of the Office of Group Benefits and the ensuing contract with Blue Cross/Blue Shield of Louisiana must be approved by the House Appropriations Committee and the Senate Finance Committee, as well as the Office of Contractual Review.

But don’t expect Jindal to capitulate too easily, for while the opinion, which boiled down to a interpretation of under which state statute the privatization action was taken, is just that—an opinion. It has no force of law and the likely action to be taken by Jindal and the Division of Administration (DOA) is to simply ignore it and proceed as planned.

The only recourse in such a scenario, would be for the legislature to file suit against Jindal to get a determination of which statute should apply in the privatization process—one which effective bypasses legislative authority or one which specifically requires approval of the two committees.

The requirement for approval of the Office of Contractual Review may as well have been deleted from the opinion since the office is a part of DOA and answers directly to Commissioner of Administration Paul Rainwater, making that agency’s approval a virtual given.

The Division of Administration, through OGB issued a request for proposals (RFP) earlier this year and on April 30 issued a Notice of Intent to Contract (NIC) for Administrative Services Only (ASO), meaning for the awarding of a contract to a third party administrator (TPA) to take over the administrative duties for the state’s Preferred Provider Organization (PPO) plan, the High Deductible Health Plan (HDHP) with Health Savings Account (HAS), and the LaChip Affordable Health Plan (LaCHIP).

Blue Cross Blue Shield of Louisiana (BCBS) was already serving as third party administrator for the state’s HMO coverage for state employees and their dependents through OGB and on July 20, OGB issued a report and recommendation to the Evaluation Committee in which it proposed awarding the PPO, HDHP, HAS and LaCHIP business to BCBS as well.

That recommendation was approved by the State Civil Service Commission on Aug. 1.

State Rep. Katrina Jackson (D-Monroe) two days later requested an expedited legal opinion from the attorney general’s office based on her belief that the legislature had to sign off on the awarding of such contracts.

Vallan, in his opinion, said that Louisiana Revised Statute 42:802(B)(8)(b) “clearly provides that any such contract shall be subject to review and final approval by the appropriate standing committees of the Legislature having jurisdiction over review of agency rules by OGB as designated by (statute), or the subcommittees on oversight of such standing committees, and the Office of Contractual Review of the Division of Administration.”

“It is our understanding that the House Appropriations Committee and the Senate Finance Committee are the appropriate standing committees having jurisdiction over OGB rules.

“Therefore, pursuant to the plain language of …42:802, it is the opinion of this office that any contract negotiated by OGB pursuant to the authority granted by …42:802(B)(8) shall be subject to review and final approval by the House Appropriations Committee and the Senate Finance Committee.”

The entire issue hangs on which statute was used in the issuance of the NIC and the subsequent awarding of the contract to BCBS.

“According to OGB,” Vallan said, “the contract at issue was not negotiated pursuant to the provisions of …42:802(B), but was instead negotiated pursuant to the authority provided by Louisiana Revised Statute 42:851.”

While acknowledging that 42:851 does not require legislative approval of contracts, Vallan said, “Our reading of …42:851 is that it applies to situations where a particular state governmental or administrative subdivision, department, agency, school system, etc., intends to procure private contracts of insurance for its respective subdivision, department or agency.

“We do not believe that …42:851 provides OGB with the authority to enter into the proposed contract with BCBS. We are of the opinion that such authority is clearly granted by …42:802. An interpretation of both …42:802 and 42:851 authorize OGB to execute the proposed contract with BCBS would render the provisions of (the two statutes) duplicates of each other and their provisions superfluous and/or meaningless. Such an interpretation should be avoided.”

Vallan said that by enacting 42:802, it was clear that the legislature “has expressed its desire that contracts governing the provision of basic health care services, as well as certain other related contracts be subject to review and final approval by the legislature.

“To interpret …42:851 as offering some sort of alternative route to execute such contracts, thereby escaping legislative oversight, appears to be contrary to the logic and presumed fair purpose the legislature had in enacting …42:802.

“In summary, it is the opinion of this office that the proposed contract between OGB and BCBS is a contract negotiated pursuant to the provisions of …42:802. As such, the contract is subject to review and final approval by the appropriate standing committees of the legislature having jurisdiction over review of agency rules by the Office of Group Benefits.”

Almost lost in all the legalese is the fact that if Jindal’s privatization plan is ultimately approved—by the legislature or by the courts—121 state employees who show up each day to see to it that the medical claims of more than 100,000 state employees, retirees and their dependents are paid in a timely fashion will see their jobs vanish.

Jindal sees privatization through rose-colored glasses—provided him, no doubt, by generous corporate campaign contributors—despite the obvious pitfalls.

Take the Office of Risk Management (ORM), for example. It was the first state agency to be privatized and the company that the state paid $68 million to take over the TPA functions. The takeover was to occur in phases, with the worker’s compensation section one of the first to go and the road hazard section scheduled later this year as the last section to go over.

One of the conditions of the privatization contract was that the TPA absorb displaced ORM employees for a minimum of one year.

In only about eight months after taking over ORM in September of 2010, the contractor, F.A. Richard and Associates (FARA) of Mandeville, was back, asking for an amendment of a tad over $6.8 million to its contract, bring the total to just under $75 million.

Because the request was for an additional 10 percent, legislative approval was not necessary; there is a provision that contractors may get a one-time bump of 10 percent without legislative concurrence.

Legislators were not too happy to learn of that provision but in less than a month, FARA sold out to a company in Ohio which in a matter of only a few more months, sold out to a company in New York.

But here’s the clincher: the contract with FARA contains a clause which specifically says that its contract with ORM may not be transferred or reassigned without prior written approval. When DOA was asked for a copy of the written approval to transfer the contract to each of the out-of-state companies, the response was no such document existed.

So, because of not one, but two flagrant violations of its contract for privatization, ORM is being run by an out-of-state corporation even before all the ORM sections were phased into the contract.

And where are those former ORM employees today? Well, it seems, only a handful of former ORM employees remain there.

OGB remains on the privatization chopping block despite the encouraging legal opinion of the state’s highest legal office. It remains to be seen how it all will play out.

Meanwhile, Jindal, having failed to privatize state prisons as he wished, is simply closing facilities. J. Levy Dabadie Correctional Center was closed earlier this year with nary a word to area legislators of his intent.

On Friday, September 14, Jindal dropped another bombshell.

C. Paul Phelps Correctional Center in DeQuincy is being closed with its 700 medium security prisoners to be transferred to Angola State Penitentiary.

Again, state employees, about 150 of them, have had their livelihoods jerked from under them with no prior warning. About 70 of those will be given the opportunity to transfer to Angola. As for the rest?

Apparently they’re not Jindal’s problem. After all, he likes to say do more with less.

And now, with such a stellar record to back him up, Jindal is turning his attention to the privatization of the LSU Health System and its 10 affiliated hospitals statewide that treat the state’s poor and which train medical students.

Does anyone see a trend?

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Notable Quotables (in their own words)

Posted in Boards, Ethics, Governor's Office, Higher Education, Jobs, Layoffs, LSU, Privatization, RFP, Request for Proposals, State Agencies, Transparency on September 9, 2012 | Leave a Comment »

“Every hospital that is within the LSU System is now on the table for privatization.”

–Observer commenting on amendment to resolution passed by the Piyush Jindal-dominated LSU Board of Supervisors authorizing the issuance of a Request for Proposals (RFP) for public-private partnerships for the operation of LSU System hospital. (The amendment was worded to include “each of the hospitals in the Health Care Services Division.”)

“That’s a decision for the board and the LSU System president.”

–Piyush Jindal mouthpiece Kyle Plotkin, trying to convince someone (perhaps himself) that the firing of Fred Cerise as head of the 10-hospital LSU Health System was not orchestrated by Jindal.

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π-yush ‘slash and burn’ tactics reminiscent of first LSU Pres. Gen. Sherman’s March to the Sea–but without the charisma; 600 jobs, 50 beds to be cut at Interim LSU Hospital in N.O.

Posted in Boards, Budget, Governor's Office, Health Care, Higher Education, Jobs, Layoffs, Legislature, Legislators, LSU, Privatization, Public Records, RFP, Request for Proposals, State Agencies, Teague, Transparency on September 9, 2012 | 4 Comments »

LouisianaVoice has learned that Gov. Piyush Jindal, through the LSU Board of Supervisors, is planning to lay off up to 600 people at the Interim LSU Public Hospital in New Orleans within the next few weeks in a move that will further reduce access to health care for Louisiana’s indigent population.

The action also would mean the loss of about 50 of the facility’s 201 beds.

The layoffs were mentioned by Dr. Frank Opelka, recently appointed to replace Dr. Fred Cerise as head of LSU’s health care system, during last week’s meeting of the Board of Supervisors. Though he said he would be accelerating the cuts that Dr. Cerise and Dr. Roxane Townsend had developed in an effort to mitigate negative impacts, Opelka never mentioned any numbers and apparently no one on the Jindal-dominated board, thought, or wanted to ask.

Nor did any board members inquire as to the impact the cutbacks would have on the ability to continue to provide health care to indigent residents and neither was the question raised as to how the action might affect some 300 residents who train at the facility.

The Interim LSU Public Hospital presently employs about 2100 persons, meaning that about 24 percent of the facility’s personnel and 25 percent of its beds will be lost.

Last Friday, Robert Barish, chancellor of LSU Health Shreveport, notified his faculty and staff that the LSU Board had approved a resolution authorizing the LSU Health Sciences Center in Shreveport and the Health Care Service Division to issue a request for proposals (RFP) “for the purpose of exploring public-private partnerships for the LSUGSC-S affiliated hospitals, namely the LSU Medical Center in Shreveport, the E.A. Conway Medical Center in Monroe and the Huey P. Long Medical Center in Pineville/Alexandria.”

Consideration of that resolution was not added to the board’s agenda until late Thursday and the board subsequently amended the wording to include “each of the hospitals in Health Care Services Division.”

That amendment to include “each of the hospitals in Health Care Services Division,” while largely ignored and not discussed at all, is key in that it means that “every hospital within the LSU System is now on the table for privatization,” as one observer put it.

“Shreveport is moving faster but they are just the first,” he said. “The dismantling of indigent care will now occur much more quickly and more broadly.”

The resolution says, “The President shall have the discretion to authorize the release of the Request for Proposal and to accept the proposal that he deems in the best interest of the university.”

It did not specify if that would be current Interim President William Jenkins or his successor, recently rumored to be Steve Moret, current Secretary of the Louisiana Department of Economic Development.

Administration officials and LSU Board members have denied that the fix is in for Moret to become the next president. Jenkins said it would be ridiculous to hire a consultant to conduct a national search if the decision had already been made.

The layoff plan is the latest example of the slash and burn tactics employed by Piyush in his zeal to cut health care services to the poor while at the same time dismantling the teaching hospitals that currently serve about 200 LSU and 100 Tulane University medical students.

Beginning with the firing of LSU President John Lombardi last April, Jindal, through his hand-picked Board of Supervisors, has fired or reassigned Drs. Cerise and Townsend and LSU System General Counsel Ray Lamonica.

At the same time, he has implemented severe cutbacks at Lallie Kemp Regional Medical Center in Tangipahoa Parish and at LSU Hospital in Bogalusa—cutbacks that have adversely affected the availability to provide care in the areas of oncology, gynecology, disease management and pediatrics and the loss of up to 150 jobs at Lallie Kemp. Jindal also announced the closure of Southeast Louisiana Hospital in Mandeville, beginning next month, a move that will leave the entire southeastern section of Louisiana without state mental health treatment centers.

The most incredulous statement to come out of all this is that of Jindal spokesman Kyle Plotkin who, when asked whether Piyush was involved in Cerise’s firing, said, “That’s a decision for the board and the LSU System president.”

But almost as puzzling is the deafening quiet from members of the legislature whose constituents—both health care providers and their patients—stand to be negatively impacted by the recent chain of events.

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Administration said in secret negotiations for Southeast Louisiana Hospital takeover by Magellan Health Services

Posted in Governor's Office, Health Care, Layoffs, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, RFP, Request for Proposals, Transparency on July 25, 2012 | 13 Comments »

LouisianaVoice has learned that the recent $651 million cut to the state’s healthcare system may have had nothing to do with the decision by Gov. Bobby Jindal to close down Southeast Louisiana Hospital in Mandeville and in fact the move may have been in the works for months.

In fact, secret negotiations have apparently been ongoing for some time between the state and Magellan Health Services of Avon, Connecticut, to take over the hospital after the hospital is closed and subsequently privatized.

Department of Health and Hospitals Secretary Bruce Greenstein announced late last Friday that the 348-bed hospital would be closed down beginning Oct. 1, putting about 300 employees out of work.

Southeast Louisiana Hospital is one of three state hospitals offering treatment for mental illness, including depression and attempted suicide. Early word is Southeast Louisiana Hospital’s patients will be transferred to the remaining two facilities—Central Louisiana State Hospital in Pineville and East Louisiana State Hospital in Jackson.

Only last month, the state sold 1,442 acres of hospital property to St. Tammany Parish for $6.45 million, far below the $14.7 million the property (including $200,000 in timber assessed valuation) was appraised for in February 2011.

The total 1,900-acre tract, including the remaining area of approximately 500 acres on which the hospital is situated and a park area leased to St. Tammany Parish, was appraised at $67.865 million only last week, according to the web page of the Office of State Lands.

LouisianaVoice has also learned from DHH sources that Greenstein is prepared to sign forms to officially declare the hospital as surplus property preparatory to its being put up for auction.

Early speculation had the hospital property being sold for the development of a high-end residential subdivision.

But LouisianaVoice learned that Greenstein had recently confided in Reps. Paul Hollis (R-Covington) and Tim Burns (R-Mandeville) that he had been in negotiations with Magellan about taking over the operation of the hospital once it is privatized.

Moreover, a New Orleans doctor reportedly was approached several weeks ago—before news of the loss of the $651 million in Medicaid funds by the state—about becoming the chief of staff of the Mandeville facility.

The unidentified doctor initially thought he was being recruited for an existing private hospital or for a private hospital’s expansion into the Northshore area because nothing had been said at that point about Southeast Louisiana’s closure. “It all makes sense now,” he told a colleague after learning of the impending closure of East Louisiana Hospital.

Once the hospital is declared surplus property and the facility closed, a request for proposals would have to be issued by DHH and private companies would be required to bid on contracting for either purchasing the hospital or running it as a contractor.

Magellan already has a connection with the state and Jindal, including three lucrative contracts.

The company, in addition to contributing $5,000 to Jindal’s campaign in 2008 and another $5,000 to the Louisiana Republican Party last September, currently has separate multi-million dollar contracts with three separate state agencies totaling more than $392 million. All three contracts run for two years, from March 1, 2012 through Feb. 28, 2014, records show.

The first contract, for $357.6 million, is with DHH through the Office of Behavioral Health. That contract calls for the firm to run a statewide management organization for a prepaid inpatient health plan for behavioral health services.

A $22.4 million contract with the Department of children and Family Services calls for Magellan to provide an array of coordinated community based services and support for children and youth with behavioral health disorders.

The third contract, for $12 million, is with the Department of Public Safety and Corrections and calls for Magellan to provide coordinated community-based services and supports for incarcerated youths with serious behavioral health disorders.

The larger, $357.6 million contract was approved in January but the two smaller ones were each approved in April, retroactive to March 1.

The recent appearance at the Capitol of former DHH Secretary Alan Levine only serves to fuel speculation swirling around the Mandeville hospital.

Levine, who came to DHH from Florida in January 2008, resigned in August 2010 to return to Florida where he currently serves as the Division 3 President of Health Management Associates where he is responsible for the administration of for-profit hospitals in Florida, Georgia, Oklahoma, Kentucky and West Virginia.

Greenstein to a legislative committee last week that Levine was in town to discuss Florida’s setup. He said Florida is one of several models for ways in which to increase revenues for state hospitals.

All the latest developments—Greenstein’s meeting with the legislators, the informal recruitment of the New Orleans doctor, last month’s sale of 1900 acres of adjoining hospital property and the impending declaration of the remainder of the property, including the hospital itself, as surplus, and the administrations reported secret negotiations with Magellan—all point to a covert plan by Jindal and Greenstein to close the hospital that dates back well beyond the news of the loss of the Medicaid funds.

All of which leaves unanswered the question of how indigent patients needing mental health treatment will be able to afford that treatment when the state hospital in Mandeville becomes a private, for-profit facility.

Besides the question of continued treatment for patients, employees of the hospital, like the 177 employees of the Office of Group Benefits, will lose retirement and medical benefits when the hospital makes the transition from public to private provider.

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Appropriations Chairman Jim Fannin deflects administration effort to cut 149 OGB positions

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, Public Records, RFP, Request for Proposals, Transparency on May 23, 2011 | 4 Comments »

The Jindal administration suffered a legislative setback in its efforts to privatize the Office of Group Benefits (OGB) Monday when the House Appropriations Committee voted unanimously to reinstate 149 positions the administration had cut from the OGB budget.

The move came as an amendment to HB 32 by bill author and Appropriations Committee Chairman Rep. Jim Fannin (D-Jonesboro).

At the same time the committee further amended the bill by deleting five lines that would have directed the state treasurer to transfer a portion of the OGB $500 million surplus into the general fund, thus guaranteeing that the administration may not use part of the surplus to help plug the $1.6 hole in the state budget.

In asking the committee to amend the bill to restore the jobs and to protect the agency surplus, Fannin said, “I have had no communication (from the administration) about any savings to be realized by eliminating these positions.”

Communication has become something of a problem lately as administration officials have refused to attend meetings of the Senate Retirement Committee. Retirement Committee Chairman Sen. Butch Gautreaux (D-Houma) has made no secret of his opposition to efforts to privatize OGB.

Gov. Bobby Jindal has run into considerable opposition to his efforts to privatize OGB although the administration has issued a request for proposals (RFP) for a financial adviser to evaluate the agency and to seek a third party administrator (TPA).

It is the second RFP issued by the administration after Wall Street banking firm Goldman Sachs was the lone bidder on the first and then only after taking part in drafting that RFP.

DOA representatives say that the current RFP was drafted completely in-house.

Former OGB CEO Tommy Teague, who was fired on April 15 after leading OGB from a $60 million deficit when he took over five years ago to its current $500 million surplus, testified before the Senate Retirement Committee that he could not understand the need for a financial adviser if the intent of the administration was only to obtain a TPA.

“It’s not necessary to know the financial situation of the agency just for a TPA,” he said. “The only rationale for a financial assessment would be that the administration plans to sell OGB.”

The original RFP did indeed make repeated references to the sale of the agency and Commissioner of Administration Paul Rainwater has consistently given conflicting testimony about whether the administration’s intent was to sell the agency or obtain a TPA for OGB’s Preferred Provider Organization (PPO).

Approval of Fannin’s amendment does not necessarily mean that Jindal has failed in his efforts toward privatization of the agency. It does mean, however, that he would have to come back before the legislature to obtain approval for cutting the positions, a move Rainwater claims would save the state $10 million a year.

Even that claim, however, is somewhat vague since the $10 million does not come from the state’s general fund. OGB is completely self-funded, deriving its revenue from premiums charged state employees for health care coverage.

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First, help us with the RFP, then you can bid on the project

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, RFP, Request for Proposals on March 17, 2011 | 3 Comments »

A major global investment banking firm that spent several weeks with state officials assisting in the writing of a request for proposals (RFP) from “qualified financial advisors” to assess the market value of the Office of Group Benefits (OGB) preparatory to privatizing the agency turned out to be the only one to submit a proposal, according to sources within the Louisiana Division of Administration (DOA).

Goldman Sachs, which helped write the specifications of the RFP, submitted the lone proposal that calls for the Wall Street firm to assess the market value of all tangible and intangible assets of OGB and to seek a buyer for the agency that oversees benefits for 78,000 people, including state employees and their dependants.

Under terms of its proposal, presented on Monday, Goldman Sachs would receive $6 million for its services whether or not it is successful in securing a buyer for the agency, one source said. “Even if they are unable to find a buyer, they still get the $6 million,” he said.

In another development that could raise eyebrows among members of the Joint Legislative Committee on the Budget, the Division of Administration, realizing it was short of time, retained the services of a New Orleans firm to work up an evaluation in time for Gov. Bobby Jindal to submit his proposed budget last Friday.

The firm, Chaffe and Associates of New Orleans, was awarded a contract for $49,999–one dollar less than the $50,000 amount that would have required the approval of the Office of Contractual Review. Moreover, when the contract was initially drafted, it was for $44,000 but was quickly amended to $49,999.

It is considered unusual, if not illegal, for a firm to assist in drawing up specifications for a bid proposal and subsequently bidding on—and winning—the contract for the work.

Gov. Jindal has indicated he feels he can use $150 million to $200 million of OGB’s current surplus of more than $500 million to help plug the state’s looming $1.6 billion budget deficit.

The way it would work, said the DOA source who asked not to be identified, the purchaser would discount OGB’s assets, giving the state $150 million to $200 million with the remaining $300 million to $350 million being passed on to the purchaser.

Jindal, in his budget proposal last week, called for the elimination of 149 positions at OGB, saying the layoffs would save the state $10.3 million, a figure disputed by Capitol News Service’s DOA source.

“The privatization of Group Benefits, if it goes through, will destroy health benefits for state employees,” he said.

Those sentiments have been echoed by State Sen. Butch Gautreaux of Morgan City.

“I am very concerned about the governor’s efforts to sell off OGB,” said Gautreaux, a member of the OGB board, in a recent email. “I sit on the board and attend the meetings. We’ve developed a reserve of over $500 million and again, the governor is looking at raiding those funds for short term and recurring expenses.”

He said OGB, with administrative costs of only 4 percent, is financially stable. Privatization, he said, “will be a catastrophic move.”

“The governor is getting some very bad advice,” said the DOA source. “He’s listening to people who have no insurance background whatsoever.”

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Administration takes first steps to privatize another agency (and maybe pick up a spare $500 million in the process)

Posted in Budget, Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, ORM, Office of Risk Management, Privatization, RFP, Request for Proposals, Transparency on March 3, 2011 | 4 Comments »

Gov. Bobby Jindal’s Privatization Express keeps rolling along. This time he has set his sights on one of the most financially stable state agencies, the Office of Group Benefits (OGB).

One has to wonder however, if his motivation is really in a more efficient, more streamlined state government or does he perhaps have an eye on OGB’s $552 million surplus as a means of making himself look like a financial genius by using the money to plug one-third of the looming $1.6 billion deficit.

A couple of coups like that, coupled with the recent dramatic upturn in the price of a barrel of oil, which always enriches the State Treasury, and Jindal the Boy Wonder would take on the aura of financial wizard and (he hopes) give his presidential aspirations a needed boost with the national media other than Fox, Rush Limbaugh, and the Washington Times, who already adore him to the point of nausea.

The deadline to respond to a Request for Proposals (RFP) for the services of “a qualified financial adviser” preparatory to the private takeover of OGB is Monday with finalist interviews scheduled to take place a week later, on March 14, according to DOA’s Feb. 4 RFP.

The financial adviser to be selected will be charged with assessing the market value of the tangible and/or intangible assets of OBG and to negotiate for and on behalf of OGB to help the agency “explore alternative methods of providing health coverage through contracts” with a private administrator, the RFP said.

In March of 2010, it was announced that the Office of Risk Management would be taken over in phases by F.A. Richard and Associates (FARA) of Mandeville at a cost to the state of $68 million. The Worker’s Compensation section was transferred to FARA last July and the last sections are scheduled for transfer by July of 2013.

Proposals were received for the privatization of the state’s Buildings and Grounds Department but each of those proposals were ultimately rejected.

There appears to be more opposition to the privatization of OGB because of its financial stability and its low (4 percent) administrative costs. State Sen. Butch Gautreaux (D-Morgan City) has gone on record as opposing the privatization of OGB.

“I am very concerned about the governor’s efforts to sell off OGB,” Gautreaux said. “I sit on the (OGB) board and attend the meetings. We’ve developed a reserve of over $500 million and again the governor is looking at raiding those funds for short term and recurring expenses. This will be a catastrophic move,” he said.

OGB presently maintains a self-insured and self-administered health and accident benefit plan (PPO plan) with its own network of contracted providers. OGB also has a contract with Blue Cross/Blue Shield of Louisiana to administer a self-insured HMO plan and United HealthCare administers a self-insured consumer-directed (high deductible) health plan with a health savings account. Vantage Health Plan is also contracted with OGB for a pilot program to provide a fully-insured medical home HMO plan in the northeast region of the state, the RFP says.

In addition, the LSU System, through an interagency agreement with OGB, administers a separate consumer-directed health plan with a health reimbursement account available to employees and retirees of LSU and the Louisiana Legislature.

The RFP also stipulates that the financial adviser provide recommendations to OGB for contracting in light of the assessment and negotiations and will also assist in the drafting and final execution of any contract resulting from the assessment and negotiations. The financial adviser who is ultimately chosen will also be called upon to provide testimony before any committee of the legislature conducting hearings on the proposed privatization.

Those submitting proposals will be required to have a minimum of 10 years experience in the valuation and sale of entities in the health insurance market with enterprise values exceeding $150 million, the RFP said.

OGB ended Fiscal Year 2009-2010 with total assets of $552 million, including $529.5 million in cash and $22.5 million in premium receivables, according to the RFP. Such a financial windfall would be tantamount to a Jindal slush fund.

If OGB is ultimately privatized, the state would enter into a contract with an administrator much as it did with FARA for the ORM privatization. The state would pay the amount stipulated in the winning proposal and in return the administration would have access to the $552 million surplus, ostensibly to help plug an anticipated $1.6 billion budget deficit.

Like the proposals for privatization, when that RFP is issued, the proposals by financial advisers submitting proposals would be graded on a point basis. In the case of the financial advisers, a 1,000-point system will be employed with service approach and coordination strategy having a potential maximum of 350 points. The highest possible score for qualifications and experience of the proposer will be 300. The qualifications and experience of assigned staff carries a maximum possible score of 200 and cost of services 150 points.

No timetable has been set for the issuance of an RFP for the actual privatization of OGB.

The agency has more than 450 employees who could be affected by the privatization through the loss or interruption of retirement and their own health benefits.

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