Texas health agency cancels contract procurements after problems identified

Texas Health and Human Services Commission officials announced Monday that they have canceled three solicitations for contracts after finding problems with almost two dozen bids.

Monday’s revelation is the latest in a series of contract woes that have beset the agency, which has led to several high-profile departures this year.

The latest contracts would have provided services under the Medicaid program and the Children’s Health Insurance Program. Agency officials, with the help of the state comptroller’s office, found problems with prospective vendors’ plans to subcontract with businesses owned by women or minorities, known as historically underutilized businesses. The problems caused them to disqualify 22 of the 46 bids, delaying the procurement process by a month to nine months. The cancellations will not have an effect on patient care because current contracts will be extended, according to a statement by the agency.

“With nearly half of the bids disqualified, we’ve determined that continuing with the procurements could prevent HHSC from ensuring there is a statewide network that will provide the best quality of care for Texans and deliver the best value for taxpayers,” said agency spokeswoman Christine Mann.

In some cases, the agency found that prospective vendors did not list a historically underutilized consultant in their plans. In other cases, vendors did not show a good-faith effort to identify historically utilized business providers for subcontract work, as required in the bidding process, Mann said.

The agency is restarting the bidding process immediately and will be holding informational sessions to help prospective vendors avoid errors.

Mann said the agency could not provide a value of the contracts because they had not been awarded yet. The contracts would deal with the Medicaid managed care dental program (STAR Dental), the Medicaid managed care program for disabled adults and adults over the age of 65 (STAR+Plus), and the Children’s Health Insurance Program, which covers low-income children and pregnant women.

The state outsources the delivery of most Medicaid and all CHIP services through private insurance companies and hospital systems called managed care organizations.

In April, agency officials announced they had canceled five other managed care contracts worth $580 million after they discovered a staff member had evaluated interested vendors with a tool that contained errors. The contractors were to provide health care for low-income children in rural areas and in Hidalgo County in the Children’s Health Insurance Program.

A few weeks later, the state auditor’s office released a report highlighting a series of problems with how the agency awarded a $17.5 million contract in 2016 to develop and maintain a database to track birth and death statistics across the state. Auditing officials said the agency inaccurately scored the five interested vendors and used the wrong information to award the bid to Genesis Systems Inc.

In a broader analysis of 69 percent of the agency’s procurements between Jan. 1, 2015 and March 31, 2018, the auditor’s office found problems with all of the procurements, which were valued at an estimated $4.6 billion, according to a report released in July.

Shortly after the procurement problems were made public in April, Charles Smith, executive commissioner at the time, apologized for the mistakes and announced his retirement soon after.

Five other employees also left. The purchaser responsible for the incorrect scoring and her two superiors were fired. Ron Pigott, the agency’s head of procurement, and his boss, Chief Operating Officer Heather Griffith Peterson, resigned.