This story was originally published on June 18, 2024 on IdahoCapitalSun.com.
Editor’s Note: This is the second story in a two-part series on the Idaho Behavioral Health Plan contract. The first story focused on concerns that the new contractor, Idaho-based Magellan, could delay payments to mental health providers.
A company seeking to take over Idaho’s largest state government contract has hired three former state government employees, including one who reviewed companies’ contract bids.
Idaho-based Magellan — which was awarded the $1.2 billion Idaho Behavioral Health Plan contract to administer Idaho Medicaid mental health benefits — has hired three former Idaho Department of Health and Welfare employees.
That includes Magellan of Idaho’s new CEO David Welsh, former deputy administrator of the Idaho Department of Health and Human Services for Medicaid benefits. Welsh evaluated the bids for the contract, giving Magellan’s bid the second-highest score, said Kim Rau, spokesperson for the Idaho Department of Administration, which handles government contracts.
But even without Welsh’s scores, the contract outcome would not have changed, she said.
“The Department of Administration is confident that no laws were violated in the request for the Idaho Behavioral Health Plan,” Rau told the Idaho Capital Sun in an April 29 email.
There is no law or regulation that prohibits state employees from later working on a contract, said Idaho Department of Health and Welfare spokesman AJ McWhorter. Allowing Idaho government employees to leave for private sector jobs makes sense given Idaho’s limited expertise, according to an Idaho health care lobbyist and McWhorter.
Magellan did not respond directly to questions about government hiring in Idaho. Spokesperson Kristen Durocher said Magellan has built its team “through a hiring process that meets all applicable requirements.”
“Magellan Healthcare is committed to providing eligible Idahoans with a system of behavioral health care to maintain healthy and active lives within their communities,” she said in an April 29 statement. “We have assembled a knowledgeable and dedicated professional team to carry out that mission through a recruitment process that meets all applicable requirements.”
Magellan also hired David Tovar, former bureau chief of the Idaho Behavioral Health Plan Governance Bureau of the Idaho Department of Health and Welfare, and Mallory Kotze, a former contract manager of the Idaho Department of Health and Welfare.
Tovar and Kotze had no role in negotiating or evaluating the contract, state officials told the Sun.
Idaho employees who leave for private jobs are helpful, public servants and lobbyists
Because Idaho has a small health care market, with few people with the knowledge to implement these programs, “it is common to see staff moving to pursue new opportunities for professional growth,” McWhorter told the Sun. That includes moving between positions with the state, suppliers and contractors or consultants, he said.
And it happens outside of major contract transitions, he said.
“This has been especially true as (the Idaho Department of Health and Welfare) has recently experienced a workforce reduction as part of the transition of this contract, where we have seen state employees now seeking new opportunities outside of state work , after previously managing behavioral health services or administering programs as a state workforce,” McWhorter said. “We see this as a positive for Idaho as individuals gain new experiences and knowledge that further supports programs that rely on expertise in both government and private sectors.”
Lobbyist David Lehman of the Idaho Association of Community Providers said expertise in Idaho is finite. He called companies’ recruitment of state experts “the nature of the free market.”
He said the Legislature could pass legislation in this area — commonly called revolving door legislation. But “the alternative is that we have less qualified people trying to implement really complicated systems,” he said.
“I’d rather have the smartest people working on the implementation than someone who wasn’t involved in any way,” Lehman told the Sun.
Magellan would have had a top contract without the incoming CEO’s evaluations, the official said
The Idaho Division of Purchasing, within the state Department of Administration, told all potential contract evaluators that they would be disqualified from reviewing bids in the contract application “if at the time of their involvement in the evaluation process they are currently seeking employment or from plan to seek employment with a bidder in the interview process,” Rau told the Sun.
“We are not aware of any information indicating that any of the evaluators in the (Idaho Behavioral Health Plan) solicitation were actively seeking employment or planning to seek employment with any of the bidders at the time of the evaluation,” she said.
Even if the Idaho Division of Purchasing were to disqualify Welsh and ignore his scores, Rau said, Magellan’s bid would still have had the highest rating and the outcome of the request would not have changed.
Another bidding company, Beacon, had the highest score, Rau said, but was disqualified because of previous work that officials said was related to the contract. None of the nine state evaluators ranked Optum — the company that held the contract for 10 years — first, Rau said.
The evaluator who scored Magellan’s highest bid is still a state official, Rau said.
How legal issues that could impact the contract have unfolded
As the Idaho Legislature prepared to adjourn this year in April, Governor Brad Little warned that a new law requiring legislative approval of Medicaid waivers could disrupt health care, including changes to the state’s transition plan Idaho Behavioral Health Plan Contract. The legislature was suspended without new legislation.
The Idaho Department of Health and Welfare had stopped submitting state plan changes related to some enhanced services for the Idaho Behavioral Health Plan while it sought legal guidance, agency spokesman McWhorter told the Sun in April.
But new analysis from Idaho’s attorney general allowed the state health department to move forward with submitting those changes to the state plan, McWhorter told the Sun in June. The agency is working with legal counsel to review other work to be included in state plan amendments and waivers, he said.
Idaho’s decision in June 2023 to award Magellan the contract led to lawsuits from two losing bidders. District court judges ruled last year that they had no authority to review the state’s contract award decision, citing limitations on judicial review in Idaho government contract law, the Sun previously reported.
Both companies suing – Optum, which has held the contract since 2013, and Beacon – appealed to the Idaho Supreme Court.
The Idaho Supreme Court in April denied Optum’s request to legally block execution of the new contract. After a legal agreement in May, Optum’s lawsuit was dismissed in the Idaho Supreme Court.
Beacon’s lawsuit is awaiting legal briefs from defendants in the Idaho Supreme Court.
Optum’s contract to administer the Idaho Behavioral Health Plan expires June 30, spokesman Chris Smith told the Sun in a statement.
“…(W)e remain committed to providing high-quality behavioral health care services to the state and the providers and members we serve,” Smith said. “We are currently working through all transition activities related to the (Idaho Behavioral Health Plan) contract.”
