COUNCIL OF THE DISTRICT OF COLUMBIA

THE JOHN A. WILSON BUILDING

1350 PENNSYLVANIA AVENUE, NW
WASHINGTON, D.C. 20004

VINCENT C. GRAY Committee Member:

Ward 7 Councilmember Business and Economic Development
Chair, Committee on Health Judiciary and Public Safety

October 17, 2022

Dear colleagues,

In my letter dated October 3rd, I shared with you my concerns regarding the Managed Care
Organization (MCO) contracts. My sole focus on these contracts as Chair of the Committee on
Health has been to ensure that the thousands of District residents and their families who will depend
on Medicaid have access to reliable, high-quality health care. These residents depend on us to make
the difficult choices. Their concern is not how the District may look to outsiders or some perceived
embarrassment the District could face should the contracts be disapproved. Their concern is health
and well-being of their families. That, too, is my concern.

The Council can’t throw its hands up in the air and say it does not matter who is awarded the
MCO contracts. We have a responsibility that supersedes politics and perception. It is clear to me
that the facts have been masterfully muddled by lobbyists. With this in mind, there are several points
I wish to make clear.

There Is No Evidence Amerigroup Scored Higher

Lobbyists for Amerigroup contend that their health plan was ranked higher at the conclusion
of the first solicitation and that they scored higher than CareFirst. That is demonstratively false. We
have not had a head-to-head ranking of all four bidders in which a contracting officer for the Office
of Contracting and Procurement (OCP) determined the final ranking of all four plans. The OCP
process took a detour from normal procurement practices when three plans – CareFirst, MedStar
Family Choice, and Amerigroup – were disqualified from the first procurement for minor, easily
curable typographical errors in their CBE subcontracting plans. All three plans protested to the
Contract Appeals Board (CAB).

OCP then opened a second procurement with the three disqualified plans (leaving
AmeriHealth in the first procurement). Next, two different CAB judges issued diametrically opposed
opinions in the three protests, even though the facts of the case were effectively the same. As a result,
Amerigroup was put back into the first procurement and awarded a contract, while CareFirst and
MedStar were kept in the second procurement to compete for the third contract. This meant
Amerigroup, like AmeriHealth, was automatically awarded a contract. This was not a decision based
on the merits of their bid. We do not have any information that suggests that Amerigroup scored
higher than Medstar or CareFirst. Any assertion to the contrary is misleading and false. If that
were so, this information would have been made public by the District’s Chief Procurement Officer.

This Procurement Failed to Follow the Law

As I noted in my letter to the City Administrator, it does not appear that the District’s
Responsible Contractor statute was implemented with any rigor whatsoever. D.C. Code § 2-
353.01(a) states that “[t]he CPO shall establish a process to certify, on a solicitation-by-solicitation
basis, the responsibility of prospective contractors.” Among other requirements, the law requires that
“[t]he process shall ensure that the prospective contractor:”
 “(3) Has a satisfactory performance record;”
“(4) Has a satisfactory record of integrity and business ethics;” and
“(8) Has not exhibited a pattern of overcharging the District;”

The requirements of the District’s Responsible Contractor statute simply cannot be

reconciled with Amerigroup’s well-documented history, both in the District and throughout the
country. Amerigroup massively overcharged the District on two separate occasions: the most recent
occasion occurring just three years ago.

Amerigroup argues that its Medicaid transgressions were in the past and under different
ownership. This is easily contradicted by the facts. Below is a timeline, which demonstrates a steady
record of denying care, including in the District of Columbia, under both
Amerigroup’s former and current ownership:

• 2006 Illinois jury finds Amerigroup liable for $334 million in damages for denying care to
pregnant women
Source: U.S. Judge Raises Total Damages to More Than $334 Million Against Amerigroup
HMO in Pregnancy Discrimination Case, U.S. Attorney, Northern District of Illinois, March
12, 2007

• 2007 D.C. Inspector General audit shows Amerigroup overcharged the District by $74
million.
Source: Associated Press, “D.C. overpaid $97 Million for Medicaid Services,” 7/20/2007

• 2008 D.C. Medicaid Director asks U.S. Attorney to investigate Amerigroup in the District of
Columbia.
Source: Kaiser Health News, Morning Briefing, 6/11/2009

• 2008 D.C. Attorney General sues Amerigroup for fraud.

Source: D.C. Superior Court, Case 2008 CA 002547 B District of Columbia vs. Amerigroup
of Maryland Inc NCG

• 2011 Florida sanctions Amerigroup $2.7 million for denying care and reducing services to
children enrolled in Medicaid.
Source: Fierce Healthcare, 1/12/2011 Originally reported by Miami Herald

• 2012 WellPoint (since renamed Anthem Inc. and then renamed Elevance Health) Acquires
Amerigroup Corporation

Source: WellPoint Completes Acquisition of Amerigroup, Business Wire, December 24, 2019.

• 2016 Tennessee fines Amerigroup $575,000 for failing to meet minimum benchmarks.
Source: TN Chief Financial Officer letter to Fiscal Review Committee, April 30, 2019

• 2017 Tennessee fines Amerigroup $50,000 for failing to meet a minimum 80% Medical Loss
Ratio (MLR).

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Source: TN Chief Financial Officer letter to Fiscal Review Committee, April 30, 2019

• 2017 20% of Amerigroup enrollees leave the plan in the 9 months between October 2017 and
June 2018.
Source: D.C. Council Committee on Health Hearing, July 29, 2020 at 13:40

• 2018 Amerigroup ends calendar year 2018 in the District of Columbia with a 30% profit
margin and Medical Loss Ratio of 64%, well under the contractual requirement of an 85%
MLR.
Source: D.C. Council Committee on Health Hearing, July 29, 2020 at 13:40

• 2018 Report shows Texas has fined Amerigroup $20 million over two years for improper
denials of care to Medicaid beneficiaries.
Source: Houston Chronicle, “Health care flaws aired; Legislatures hear of denial of aid by
insurers in Medicaid plan,” 6/28/2018

• 2019 District of Columbia forced to cancel and reprocure all Medicaid MCO contracts based
due to the creaming of enrollees by Amerigroup.
Source: D.C. Council Committee on Health Hearing, July 29, 2020 at 5:00

• 2021 Iowa State Auditor releases audit showing “massive increases in illegal denials” of care
by Amerigroup.
Source: Associated Press, “Auditor: Iowa’s Privatized Medicaid Illegally Denies Care,”
10/20/2021

• 2021 Washington fines Amerigroup $130,750 for providing inaccurate and untruthful
encounter data to the state’s Health Care Authority.
Source: State of Washington Health Care Authority, Letter to Anthony Wood, 7/7/2021

Amerigroup’s Performance in the District

In 2017-18, Amerigroup violated its contract and Federal Regulations requiring it to spend at
least 85 percent of its payments from the District on medical care for District residents. Incredibly,
before the District cancelled Amerigroup’s contract in 2019, the plan spent just 64 cents of every
dollar it was paid by the District on healthcare for District residents, in direct violation of its contract
with the District which required a MLR of at least 85 percent. Their profit margin was 30 percent,
propelling them to make over $80 million in profit in 18 months.

To make matters worse, this was the second such occasion that the plan overcharged the
District; the first being Amerigroup’s initial tenure in D.C. Medicaid during the mid-2000s. While
Federal Law permits states to seek the remittance of funds, when a plan fails to meet the 85 percent
minimum expenditure on medical care, it appears – incredibly – that OCP’s punishment is to instead
award Amerigroup an MCO contract for a third time. OCP never shared this pattern of overcharging
with the Technical Review Committee and there is nowhere in its evaluation process for this
information to be considered.

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Consent Order
Amerigroup has claimed they are not the same Amerigroup that was referred to the U.S.
Attorney General in 2008 for overbilling the District, citing a consent order which was signed
without prejudice. There is nothing to indicate that Amerigroup received a consent order to dismiss
the case because the Attorney General agreed that there was no longer enough evidence to bring a
case against them. A consent order signed without prejudice means that should the U.S. Attorney
wish, it could refile fraud charges against Amerigroup. What we do know is that Amerigroup did
not operate in the District following that order until 2017.

A New Bid Is Required

The reason we cannot know definitively if this Amerigroup is the same as the other bad
actor who was also named Amerigroup is because there has not been an investigation by OCP in this
matter. That is troubling and a failure of OCP’s charge.

In my letter to the City Administrator, I never named Amerigroup because regardless of

which bidder was the bad actor, OCP never took the steps to investigate as the Responsible
Contractor statute requires and in fact was explicitly prohibiting evaluators from doing so.
Regardless of which bidder it is, we should all be able to rely on OCP performing their due diligence
to shield us from doing business with deficient or potentially harmful contractors. Healthcare
workers are carefully vetted before being licensed or hired to care for patients – we should expect no
less for contracts of this nature and magnitude.

In 2015, the Council rejected the Corizon Health’s healthcare contract for D.C. Jail inmates
following a contested 18-month bidding process. OCP had judged Corizon as the most qualified
bidder despite a checkered past in other states. It was a close vote, but one that was the right choice
for the people counting on the Council to get it right.

I appreciate any concern that this has been a prolonged process. It was difficult for all
involved parties. I was there for several exhausting emergency measures last year aimed at
overthrowing the last MCO contract procurements because the OCP did not follow the laws in
counting CBE points. I would hope that we are just as fervent in enforcing District laws designed to
ensure that we do not contract with bad actors. We must remember who we are fighting for: not
simply a transparent contracting process, but for better health outcomes for District residents who
rely on Medicaid for themselves and their families.

I urge you to not approve these contracts. OCP can go back to the drawing board with
instructions to follow all the laws governing this process.

Sincerely,

Vincent C. Gray