Even as he was tweaking the bid specifications that would qualify Client Network Services, Inc. (CNSI) to submit a proposal for a $185 million contract with the Department of Health and Hospitals (DHH), Bruce Greenstein must surely have known of problems his former employer had experienced in other states.
In a related story, LouisianaVoice has learned that James Gorman, a senior technical advisor for the Center for Medicare & Medicaid Services (CMS) founded a company, HWT, a subsidiary of OptumInsight, a “trading partner” with Bayou Health, the program through which most of Louisiana’s Medicaid recipients receive health care services.
CMS is a federal agency within the U.S. Department of Health and Human Services (DHHS) which is charged with working in partnership with state governments to administer Medicaid. CMS must also give its stamp of approval on state contracts with companies such as OptumInsight and CNSI.
Greenstein worked in Seattle for Microsoft prior to his being named DHH Secretary by Gov. Bobby Jindal in July of 2010. Prior to that he also worked for the U.S. Department of Health and Human Services (DHH) where he oversaw the state Medicaid programs in the Northeast. He led the federal government’s efforts in working with states in reforming state Medicaid programs—a position that would have afforded him intimate knowledge of the workings of companies like CNSI, OptumInsight and others.
Then-DHH Secretary Greenstein awarded but then refused to identify CNSI as the winner of the contract a year ago. His refusal threatened his confirmation by a Senate committee before he finally relented and named CNSI.
Greenstein worked for CNSI in 1995 and 1996. He told the Senate committee that he had constructed a “firewall” between him and CNSI so that he could not influence the awarding of the contract. But emails obtained by the committee revealed that Greenstein and CNSI executives exchanged dozens of emails during the selection process.
Protesting the award at the time were unsuccessful bidders ACS State Healthcare of Atlanta, Ga., and Molina Medicaid Solutions of Long Beach, Calif.
ACS claimed that CNSI deliberately low-balled its cost. CNSI subsequently obtained a $9 million amendment, increasing the cost to $194 million and then requested an additional $40 million immediately prior to word that the FBI had subpoenaed all CNSI records from the Division of Administration.
Had the second amendment been granted, the cost would have been close to the $238 million bid of ACS but the CNSI contract was cancelled by the administration as a federal grand jury investigation got underway. That investigation is still ongoing.
While at CNSI, Greenstein was vice president for Healthcare. While there, he focused on state healthcare systems and claims payments and vital records systems.
Given his experiences with Medicaid systems and given the fact that he resided in Seattle at a time when CNSI was experiencing a multitude of problems with its system in Washington, it’s difficult to imagine that he was unaware of problems the company was having when he “tweaked” the bid specifications to accommodate his former employer.
In 2006, CMS launched an investigation into ongoing problems with the State of Maine’s web-based information management system. CNSI was contracted for that work in 2001 at $14.5 million, but the costs quickly escalated to $70 million as complaints began coming in almost immediately. CNSI had never built a Medicaid billing system before landing the contract with Maine and the company missed its 2002 deadline for completion as well as several subsequent deadlines. Even after the system finally went live in 2005, it malfunctioned and for more than a year the state had to send out estimated payments to Medicaid providers.
After only three days it was learned that the new system had sent 24,000 claims (about 50 percent of all claims) into a “suspended” file.
Normally, suspended claims were those that were either rejected or which contained minor errors. The original system had suspended only about 20 percent of the claims.
Now, instead of payments, doctors were receiving no payments and when they resubmitted the claims, the new system installed by CNSI automatically rejected them again because it was programmed to reject any claim it had already rejected.
Claims had to be processed by hand by state employees but they could process only 1,000 claims per week. Even when the rejection rate was reduced to 20 percent, doctors complained that it was still rejecting legitimate claims.
Doctors, dentists, hospitals, clinics and nursing homes received no payments for services for weeks at a time and some practices were forced to close their businesses or to take out loans to pay their bills.
The experience was much the same in Washington State where hundreds of thousands of claims went unprocessed, causing some doctors and clinics to cease taking new Medicaid patients until they got paid for the ones they’d already treated.
Glitches in the CNSI system resulted in the suspension of thousands of claims which, like those in Maine, had to be processed by hand. By November of 2010, there was a backlog of about 271,000 suspended claims.
One medical center said the state was about $3.8 million behind in payments.
A CNSI spokesperson attributed the problems to managerial mistakes and not deficiencies in the product. “We did not understand the magnitude of such an implementation,” he said. That would seem to be an understatement as the original contract cost of $71 million ballooned to $164 million.
In Michigan, a 2006 three-year, $51.5 million contract was amended no fewer than five times and the contract amount currently is $227.2 million.
And now, the State of Illinois, in an apparent effort to circumvent public bid laws, has entered into an interagency agreement with Michigan to create a shared Medicaid Management Information System (MMIS) to serve both states with CNSI getting the contract for both states.
One of the common threads connecting Illinois and Louisiana is OptumInsight, which reported $1.3 billion in corporate revenues in 2008. OptumInsight has a contract with Illinois to administer its MMIS exchange.
Besides serving as a “trading partner” with Bayou Health, OptumInsight is a wholly-owned subsidiary of UnitedHealth Group. UnitedHealth Group, in turn, offers benefits through two companies, UnitedHealthcare and Optum. UnitedHealthcare has an $83 million consulting contract with DHH to provide enhanced primary care case management. Bringing things full circle, Optum has three operating divisions: OptumHealth, OptumRx and OptumInsight.
If all that is confusing to you, don’t feel bad. The question is how difficult will it be for the federal grand jury to sort all this out so that it can make a determination of whether or not any laws were broken with Louisiana’s contract with CNSI?
A second, even more interesting question is why did the Jindal administration, in cancelling the CNSI contract, issue the self-serving statement that it would not tolerate corruption when there has been no trial or even any formal charges filed?
Third, and most important of all, if Jindal is so intolerant of corruption, why did he allow Greenstein to “resign,” but remain on the job for an entire month before his departure?
It would seem at this point that the answers to all three questions lie with Greenstein and those answers may well rest on what kind of deal he can make with federal prosecutors—depending, of course, on whether the investigation reaches the point of indictments.