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Health Contract Documents Sought

By Mike Gallagher
Journal Staff Writer
       A federal grand jury has subpoenaed state procurement documents for a $1 billion behavioral health services contract that has been challenged by the losing company.
    ValueOptions New Mexico is protesting the award of the state's behavioral health contract to OptumHealth of New Mexico, a subsidiary of UnitedHealth Care Inc.
    Both companies retained consultants with close ties to Gov. Bill Richardson. ValueOptions hired Richardson's former chief of staff and campaign manager, Dave Contarino, and OptumHealth brought on Michael Stratton, a Denver political adviser to the governor during his presidential bid.
    Contarino and Stratton were not paid to lobby state officials, only to advise their clients as they went through the procurement process. State officials involved have said they had little or no contact with either Contarino or Stratton.
    ValueOptions has held the contract for the past four years, administering Medicaid for mental health providers and more than 60,000 people with a wide range of disabilities. It has employed 180 people to administer the program.
    There are 16 state departments and agencies that are part of the state collaborative that awards the contract.
    The grand jury is seeking all documents, including the specifications for the Request for Proposal, score sheets and cost proposals.
    ValueOptions CEO Barbara Hill claimed earlier this year that the state's scoring system was changed to favor OptumHealth and penalize her company.
    Hill said records obtained from the state show that the scores of individual evaluators were changed to increase OptumHealth's scores and lower ValueOptions' scores.
    State officials have said the scoring was fair and OptumHealth's proposal to the state was far superior.
    OptumHealth scored more than 150 points higher than ValueOptions. The third bidder, Magellan, trailed ValueOptions.
    The subpoena was issued in April, and the state has until next week to respond.
    Federal law enforcement officials had no comment.
    Human Services Department spokeswoman Betina Gonzales McCracken said the department was responding to the request and was working with federal law enforcement to make sure the response is complete.
    "I am not going to jeopardize any federal processes by commenting on a federal request for records," Gonzales McCracken said.
    ValueOptions claimed that a series of decisions made the bid scoring unfair. Among them:
    n The state decided at the last minute not to score the bidders' "qualifications and experience" as originally outlined in the Request for Proposal.
    n The state did not follow the evaluation criteria laid out in the Request for Proposal.
    n The state did not score the best and final offers from the companies as the Request for Proposal required.
    The failure to score the cost proposals from OptumHealth's competitors bothered legislators because the state's budget shortfall was going to require cuts by all state agencies.
    According to an internal HSD memo, members of the committee scoring OptumHealth's cost proposal were disturbed that it was higher than staff expected.
    Ultimately, the staff decided to take OptumHealth to negotiations over costs.
    The state never evaluated the ValueOptions cost proposal because OptumHealth had such a wide advantage on its proposal to administer services.
    HSD Secretary Pamela Hyde and Department of Health Secretary Dr. Alfredo Vigil have said there was no impropriety in the scoring process. The state is planning for OptumHealth to take over administration of the behavioral health program on July 1, but there doesn't appear to be a timetable for ValueOptions' protest.



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