A company that was chosen over 11 other companies for a state contract worth nearly $1 billion may have violated a state law in 2011 when it submitted a sworn affidavit that no other entities owned more than 5 percent of its company.
When Michael Rashid, president and CEO of the AmeriHealth Mercy Family of Companies (AMFC) signed off on a three-year, $926 million contract with the Department of Health and Hospitals (DHH) in September of 2011, he submitted a required disclosure of ownership dated Oct. 7, 2010 and signed by AMFC Senior Vice President of Legal Affairs and General Counsel Robert Gilman.
The contract calls for AmeriHealth Mercy to provide “a broad range of services necessary for the delivery of healthcare services to Medicaid enrollees participating in the Medicaid Coordinated Care Network (CCN) Program.”
Services include developing and maintaining an adequate provider network, access standards, utilization management, quality management, prior authorization, provider monitoring, member and provider services, primary care management, fraud and abuse monitoring and compliance, case management, chronic care management and account management.
The contract includes 24/7 access to a health care professional, service authorization, provider payments, claims management, marketing and member education, according to the contract document.
Such disclosures of ownership are standard with state contracts to ensure that there are no conflicts of interest or ethics violations that would occur if a state employee or immediate family member held an interest in a company contracting with the state.
Gilman signed the notarized disclosure form which identified AmeriHealth Mercy Health Plan of Philadelphia, PA., as the only entity having more than a 5% ownership of AmeriHealth Mercy of Louisiana.
The only problem with that was that AmeriHealth was jointly owned by Mercy Health System and Independence Blue Cross (IBC) with each owning 50 percent of AmeriHealth.
That arrangement had been in existence since 1996 but in August of 2011, two months before Gilman’s affidavit and a month before Rashid signed the contract with the state, IBC purchased an additional 10 percent and Blue Cross Blue Shield (BCBS) of Michigan bought the remaining 40 percent, giving the two Blue Cross entities 100 percent ownership of AmeriHealth.
http://www.crainsdetroit.com/article/20110809/FREE/110809869/blue-cross-buys-40-stake-in-national-medicaid-company
Bruce Greenstein was appointed Secretary of DHH by Gov. Bobby Jindal in July of 2010 and he was confirmed by the Louisiana Legislature in June of 2011 after a contentious standoff with the Senate and Governmental Affairs Committee over Greenstein’s refusal to identify the winner of a $185 million Medicaid contract with DHH. http://www.gov.state.la.us/index.cfm?md=pagebuilder&tmp=home&cpid=27
He finally relented and admitted that the winning contractor was his former employer, CNSI of Gaithersburg, MD. Circumstances of that contract have prompted a federal investigation by the U.S. Attorney’s office and Greenstein has announced he will resign in May.
In early August of 2011, barely a month after Greenstein was officially confirmed, IBC and BCBS of Michigan announced that they would partner to expand services to Medicaid beneficiaries nationally through the AmeriHealth Mercy Family of Companies. http://www.ibx.com/company_info/news/press_releases/2011/08_09_IBC_and_BCBS_of_Michigan.html
The joint announcement noted that a 2010 report from the National Association of State Budget Offices indicated that Medicaid represented states’ second largest budget obligation after education, averaging 22 percent of total state spending.
The announcement then gave a hint of what states might expect.
“AmeriHealth Mercy provides Medicaid managed care services directly to Pennsylvania, Indiana and South Carolina and has subcontracts to provide these services in Kentucky and New Jersey,” it said, adding that AmeriHealth Mercy was chosen to provide Medicaid managed care coverage in Louisiana.
While BCBS companies are supposedly separate and independent in each state and though BCBS of Louisiana currently does not participate in a state Medicaid contract (its contract is with the Office of Group Benefits to administer claims of state employees, retirees and dependents), BCBS has been moving in partnership with AmeriHealth Mercy into other states, including Florida.
The AmeriHealth Mercy contract signing coincided with Greenstein’s appointment and his wife’s employment by BCBS of Louisiana but there is nothing to indicate a connection.
Still, the association between two separate Blue Cross companies and the winner of a state contract worth nearly $1 billion coupled with the curious failure of the winning bidder to list both its owners on the disclosure of ownership form could raise a few eyebrows.

