00,& · 2013. 7. 26. · arizona case law provides that bidders are only required to protest...

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1 Magellan’s Reply to MMIC’s Opposition

and in Support of the Magellan Bid Protest

This submission is Magellan’s Reply to Mercy Maricopa Integrated Care (“MMIC”)’s Opposition to the Magellan Bid Protest dated April 3, 2013. This Reply demonstrates why the State must overturn its March 25, 2013 award of the RBHA Contract to MMIC.

Magellan’s Bid Protest undeniably established that the Contract Award failed to comply

with the procurement statutes and regulations. A.A.C. R2-7-904(A). Magellan’s Protest, together with its April 12, 2013 Memorandum in Support of Protest, demonstrates that the procurement process was tainted by violations of State law, that such violations were materially prejudicial, and that but for such improprieties, Magellan would have been the recipient of the Contract Award.

Faced with the impossible tasks of (a) explaining that its organizational structure

lawfully qualifies it as a bidder for the RBHA and (b) overcoming Magellan’s other substantive arguments have no merit, MMIC instead settles for a technical attack that Magellan’s complaints are untimely. MMIC’s Opposition further grasps at straws by falsely arguing that Magellan has failed to integrate behavioral and physical health services. Magellan is in fact in a superior position to provide such services under one integrated roof, as outlined in its Proposal. MMIC, however, must draw on the experience of multiple companies in attempt to meet the Solicitation’s integrated services requirement.

Magellan submits this Reply to clarify the law at issue and to highlight MMIC’s curious

inability to answer the substantive issues raised in the Protest, despite the enormous length of its Proposal and its fifty-page Opposition.

Magellan’s Reply concludes: (1) Magellan’s protest was timely; (2) MMIC’s still undisclosed organizational structure disqualifies it for an award

of the RBHA;

(3) Amendments 7 and 9 to the Solicitation demonstrate additional bias in the procurement process;

(4) MMIC was not a qualified bidder; and

(5) Scoring inconsistencies establish that the State’s scoring evaluation was

biased, arbitrary and capricious.

I. ALL ARGUMENTS IN THE MAGELLAN BID PROTEST WERE TIMELY.

In its Opposition, MMIC’s first and primary argument attempts to disqualify Magellan’s Protest as untimely. This argument is an attempt to misdirect the State from questioning MMIC’s transparency and compliance with State law. MMIC misinterprets a one-sentence rule, A.A.C. R2-7-A901(C), in wrongly asserting that a timeliness technicality bars Magellan’s

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Protest. Magellan’s Protest was timely, as filed on April 3, 2013 — just nine days after the procurement file was made available for public inspection.

Arizona Administrative Code R2-7-A901(C) provides “If the protest is based upon

alleged improprieties in a solicitation that are apparent before the offer due date and time, the interested party shall file the protest before the offer due date and time.” Id. (emphasis added). Section D further provides that in all other cases, “. . . the interested party shall file the protest within 10 days after the agency chief procurement officer makes the procurement file available for public inspection.” A.A.C. R2-7-A901(D). In other words, should a bidder’s protest be based on improprieties on the face of the solicitation itself, such protests must be filed before the offer due date. All other protests — such as those protesting improprieties as to bid proposals, a bidder’s organization structure, a bidder’s qualifications, or bias that becomes known after the award of a contract — are timely if filed within 10 days after the procurement file is made available for public inspection.

a. Sections I, II, and III of Magellan’s Protest were timely filed.

MMIC’s Opposition specifically points to the Magellan Protest’s arguments I, II, and III as untimely. See MMIC Opposition at page 4. Sections I, II, and III of the Magellan Protest address improprieties as to MMIC’s Proposal and the organizational structure described therein, and argue that such improprieties create impermissible conflicts of interest, violate State law and violate the terms and conditions of the Solicitation. These sections contain no allegations as to “improprieties in a solicitation” pursuant to A.A.C. R2-7-A901(C). Magellan could not have filed and was under no legal obligation to file a pre-bid protest concerning these sections as the little that has been disclosed about MMIC’s structure and MIHS’ role in MMIC was not known until after the procurement file was made available to Magellan.

b. Arguments in Section VI of the Magellan Protest were not ripe before the Contract Award and, in the alternative, Magellan preserved such arguments in a prior protest.

Arizona case law provides that bidders are only required to protest prior to the offer due date if alleged improprieties are apparent on the face of the solicitation. See Arizona’s Towing Professionals, Inc. v. State, 196 Ariz. 73, 75, 993 P.2d 1037, 1039 (App. 1999). While, Section VI of the Magellan Protest argues Amendments 7 and 9 to the Solicitation evidenced bias in the procurement process, proof of such a conclusion was not wholly apparent on the face of the Solicitation itself. It may have been premature to halt or revise the process under a mere suspicion that the Solicitation was improper. It was only after MMIC won the RBHA Contract that the nature and consequences of the Solicitation’s impropriety became clear.

Even if the State determines that arguments in Section VI of the Magellan Protest fall under A.A.C. R2-7-A901(C) as Solicitation improprieties apparent before the offer due date, Magellan asserts that it timely protested such arguments by submitting the November 16, 2012 letter from Magellan CEO, Dr. Richard T. Clarke, to Deputy Chief Procurement Officer, Rebecca O’Brien (the “Pre-Bid Amendment Protest Letter”). That letter, attached hereto as Exhibit 1, argued that certain amendments to the Solicitation contained alleged improprieties, and in so doing, served as a formal pre-bid protest and preserved Magellan’s right to argue the

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same in subsequent protests. No Arizona law barred Magellan from reasserting such preserved arguments in its post-Award Protest on April 3, 2013.

Although MMIC’s Opposition relies upon case law from the United States Court of Appeals in and for the Ninth Circuit, only an absence of controlling Arizona state authority which would require such far-reaching analysis. See MMIC Opposition at page 4. The Arizona rule on point is clear. No argument contained in Magellan’s Protest is untimely.

However, even if certain arguments were untimely, “[i]f the interested party shows good

cause, the agency chief procurement officer may consider a protest that is not timely filed.” A.A.C. R2-7-A901. Surely, the serious allegations of impropriety and abuse of taxpayer dollars merit a close review of the following: the Solicitation amendments; the subsequent Contract Award; and whether the successful bidder violated State law.

II. MMIC’S VEILED ORGANIZATIONAL STRUCTURE IS A VIOLATION OF

BOTH ARIZONA LAW AND THE PROVISIONS OF THE SOLICITATION.

MMIC’s organizational structure and relationship with “sponsor” MIHS remain unknown to all interested parties and to Arizona taxpayers. In both its Proposal and its Opposition, MMIC consistently avoids providing a description of its exact structure.

To date, it has failed to disclose its board of directors, voting and capital structure, its organizational makeup, and its contractual relationship — if any — with MIHS, other than to state that MIHS “has an interest” in MMIC. See MMIC Opposition at page 8. Their audacious argument that they are a more “integrated” entity than Magellan might have been intended to conceal their lack of definition, but it surely fails. This shell game is a clear effort to mask the truth; that MIHS’ interest in MMIC creates an unwaivable and impermissible conflict of interest and violates Arizona law.

a. MMIC admits conflicts of interest; conflicts of interest cannot be waived by “disclosure.”

In its bid, MMIC admitted that it has a conflict of interest. Conflicts of interest in the bidding process cannot be resolved by mere “disclosure.” While MMIC is required to disclose any conflict of interest, such disclosure alone does not cure impermissible conduct. Section M of the special terms and conditions of the Solicitation expressly precludes the RBHA from “knowningly engag[ing] in any actions or estabish[ing] any relationships, arrangements, contracts or subcontracted provisions that would create a potential or actual conflict of interest (COI) regarding the performance of this Contract.” There is no exception for disclosed conflicts. Rather, Section M is an absolute prohibition. Moreover, Section M further requires: “If the Contractor discovers a [conflict of interest] and does not immediately . . . discontinue any related activities or relationships, ADHS may consider the Contractor to be in breach of this Contract.” (emphasis added).

Each page of MMIC’s Proposal includes a lengthy footnote, which MMIC’s Opposition argues is a sufficient disclosure of conflict, “even if ADHS had considered that there was a potential conflict, the issue was fully disclosed to ADHS…” See MMIC Opposition at page 15. This “disclosure” provided by MMIC is as follows:

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Mercy Maricopa Integrated Care (MMIC) is sponsored by Mercy Care Plan and Maricopa Integrated Health System. Mercy Care Plan is sponsored by Dignity Health, d.b.a. St. Joseph’s Hospital and Medical Center, and Carondelet Health Network, a ministry of Ascension Health. Maricopa Integrated Health System is the Special Health Care District in Maricopa County. Mercy Maricopa Integrated Care will subcontract the management of all administrative services to Schaller Anderson, LLC, an Aetna company. Throughout our proposal, we draw upon Schaller Anderson’s experience with like populations.

While MMIC’s “disclosure” intends to create a false sense of transparency and compliance, Arizona law requires ADHS to disqualify MMIC.

What are MIHS’ obligations and benefits as a “sponsor” of MMIC? Arizona law does not define the type of “sponsorship” relationship outlined in MMIC’s Proposal. MMIC’s blind assurances that MIHS’ “sponsorship” will not interfere with MIHS’ direct provision of behavioral health services to clients is far from compliant with A.R.S. § 36-3410.

MMIC’s Opposition only further misleads its readers and the public as to its actual structure and formation. MMIC spends much of its argument outlining MMIC’s powers and stating the things that MMIC is not. Despite MMIC’s extensive opposition argument, it has never disclosed MIHS’ exact relationship with MMIC.

b. MIHS’ “sponsoring” of MMIC and participation in the RBHA Contract award process violates State law.

MMIC is in violation of State law under A.R.S. §§ 36-3410(C), 41-2752, 48-5501, et seq. MMIC’s Proposal makes clear that the “organization” bidding on and performing the Contract is MMIC — comprised of the collective experience of Mercy Care Plan, MIHS, and Schaller Anderson, an Aetna company. Thus, the RBHA, by and through its sponsor entities, intends to manage providers and deliver behavioral health care services directly to clients in violation of A.R.S. § 36-3410(C). MMIC’s Proposal establishes that MMIC is nothing more than a shell entity through which its sponsors will carry out the functions of the RBHA.

MMIC relies upon Paragraph L of the Special Terms and Conditions in the Solicitation to interpret the application of A.R.S. § 36-3410. However, while Paragraph L provides guidance, it is not exclusively interpretive of the statute, which speaks for itself. Paragraph L cannot limit statutory authority. A.R.S. § 36-3410 expressly prohibits “an organization under contract with the department…” from delivering behavioral health services directly to clients. The purpose is clear: to prevent the RBHA organization from directly providing services to clients.

Likewise, even if Arizona law permitted a parent company to create a new company such as MMIC to bid for the Contract, there is no authority for MIHS to form a private entity such as MMIC. MIHS’ powers, as a political subdivision of the State of Arizona, are limited by enabling statutes. Arizona law does not permit a special health care district, such as MIHS, to “sponsor” or invest in a private entity. In fact, it strictly prohibits such investment.

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Yet, MIHS’ Board voted to potentially invest $10 million of taxpayer money in MMIC in violation of A.R.S. § 48-55611. See December 17, 2012 Maricopa County Special Health Care District Board of Directors Meeting Minutes attached to Magellan’s Protest as Exhibit C. A.R.S. § 48-5561 specifically prohibits MIHS’ contemplated investment and thus its “decision to be a MMIC sponsor” as outlined on page 18 of MMIC’s Opposition.

c. The Chief Procurement Officer has jurisdiction to find that MMIC and MIHS are in violation of State law.

In response to Magellan’s assertion that the MMIC Contract was awarded in violation of A.R.S. § 41-2752, MMIC argues that ADHS does not have jurisdiction to review the relationship between MMIC and MIHS. See MMIC Opposition at page 16. Such argument is contrary to law. Ariz. Admin. Code R2-7-A901 et seq. specifically provides the chief procurement officer and agency director with the authority to resolve protests by interpreting the language of the solicitation and Arizona law.

Mercy Care and MIHS’ “sponsorship” of MMIC are clear conflicts of interest as outlined in both Arizona law and the Solicitation. MIHS currently provides health care services to the Arizona Medicaid program and will continue to do so through MMIC. Additionally, MMIC relies upon MIHS’ experience in its Proposal. MMIC directly benefits from MIHS’ experience while MIHS will directly benefit from its “sponsorship” of MMIC (and its $10 million investment) in the form of increased service contracts and funding.2

Consistent with the shell game that is MMIC’s structure, its Opposition dances around the actual issues and attempts to create a diversion for its reader. Unlike MMIC and its “sponsors,” Magellan remains a direct care provider-independent RBHA, in accordance with the requirements to serve as an RBHA under Arizona law and the terms of the Solicitation.3

Without MIHS and the other “sponsors,” MMIC has no qualifications, independent knowledge, or expertise. MMIC is a shell entity created to allow MIHS to control RBHA, provide direct care services, and receive direct profit. MMIC’s structure is in violation of both Arizona law and the Solicitation. Accordingly, the award of the Contract to MMIC is inappropriate. The State should disqualify MMIC and award the Contact to Magellan.

1 A.R.S. § 48-5561 provides that “. . . all private investment of the district's monies is prohibited,” and that “[w]arrants may be issued only to pay for necessary operational expenses, including, but not limited to, lawful claims against the district, district employee payroll, and contractual obligations of the district.” This statute is an express limitation on a special health care districts generally described powers to “invest monies” under A.R.S § 48-5541.01(K)(1). 2 In its proposal, MMIC states that it will reduce funding to the current crisis system provider and that the shift will “result in an increase in funding for direct crisis services” to MIHS. See MMIC Proposal, Attachment 6, Section 4.13, page 22. 3 Contrary to MMIC’s argument at footnote 3 of its Opposition, A.R.S. §§ 36-3410(C) does not apply to Magellan because neither Vanguard nor Abrazo contracts with the RBHA to provide behavioral health services to clients.

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III. AMENDMENTS 7 AND 9 DEMONSTRATE BIAS IN THE PROCUREMENT PROCESS.

a. Amendments 7 and 9 did not clarify the Solicitation; they changed a fundamental tenet of it to the advantage of MMIC.

MMIC attempts to downplay the fundamental changes Amendments 7 and 9 made to the

parameters of the Solicitation and instead characterizes them as simply a clarification of the RFP to “eliminate uncertainty that might have prevented a potentially competitive bid.” See MMIC Opposition at page 22. Any quick read of Amendments 7 and 9, however, reveals they did more than merely clarify the Solicitation. There is absolutely no uncertainty that without the amendments MMIC would not have been qualified to bid for the RBHA Contract.

Multiple communications from Mercy Care Plan — one of MMIC’s “sponsor”

organizations — during the proposal period prove it was acutely aware the organizational structure of MMIC did not fit within the single-entity requirement of the Solicitation and that an amendment would be necessary in order to allow it to enter the race as a qualified bidder. During the bidders’ conference, Mark Fisher, CEO of Mercy Care Plan expressly voiced the concern it would not meet the single-entity organizational structure requirement of the Solicitation.

Thereafter, Colleen Alexander, a representative of Southwest Catholic Health Network

Corporation, d/b/a Mercy Care Plan, reiterated such when she formally requested a deviation from the requirement, stating that otherwise, “Mercy Care Plan would be excluded as a qualified Offeror due to our management services agreement with Schaller Anderson, LLC…” See Exhibit K to Magellan’s Bid Protest. Such comments unmistakably demonstrate that MMIC and its sponsoring entities were seeking a fundamental change to the terms of the Solicitation rather than a mere “clarification” of such as they argue now.

b. The late implementation of Amendments 7 and 9 benefited MMIC while

prejudicing its competition. The fact that ADHS abruptly abandoned the single-entity requirement of the Solicitation,

despite two years of advertising the importance of such, at the simple request of MMIC’s sponsoring entity (and in clear favor of MMIC) provides just one example of how the procurement process was skewed in favor of MMIC. While MMIC argues in its Opposition that the amendments “make sense and fall within the discretion of ADHS,” neither lessens the fact that their last minute implementation provided MMIC a decided advantage in the bid process while prejudicing its competing offerors.

Essentially, the amendments allowed MMIC to play by a different set of rules that were

not shared with the rest of its competition until the final minutes of the game. MMIC was the sole offeror that benefited from the amendments; none of its competitors had a meaningful opportunity to explore and take advantage of them. Instead, MMIC’s competitors fell to a disadvantage simply because they built their bids around the single-entity structure ADHS had — for two years — advertised would be a primary tenet of the Solicitation.

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Magellan is not arguing the amendments do not make sense or fall outside ADHS’s

discretion. It argues that such demonstrate a bias in favor of MMIC since Magellan and the other offerors did not have the opportunity to consider the amendments in creating their bids as MMIC did.

IV. MMIC WAS NOT A QUALIFIED BIDDER.

The RFP explicitly provided: “The Contractor is required to be licensed through The Arizona Department of Insurance (ADOI) before February 2013 to apply as a Medicare Advantage Special Needs Plan and/or a Medicare-Medicaid Plan under the Capital Financial Alignment Demonstration.” (emphasis in original). MMIC failed to meet specific basic requirements of the RFP and cannot cure such failure

after the proposal submission date. There would have been no reason to have underlined the deadline for emphasis otherwise.

MMIC argues it has now obtained the Arizona HCSO license that was the subject of its

CMS deficiency and there is no indication its MA application will be delayed and negatively affect its ability to comply with the requirements to operate as a Medicare Advantage D-SNP. While MMIC cites case law holding that, for purposes of meeting the RFP Contract requirements, licenses needed to perform the work need only be in place at the time of performance and not at the time of the submission of a bid for such work, ADHS was within its discretion to impose a higher standard and require that it be in place at the time of offerors’ submission of bids.

MMIC has repeatedly recognized its failure to comply with these requirements. See

MMIC Proposal, Attachment 6, page 174; MMIC Opposition at page 21. Finally, while MMIC lumps together its argument concerning its failure to timely receive its Department of Insurance Certificate and CMS approval, importantly the two are mutually exclusive from a procurement standpoint. At present, MMIC jeopardizes the public’s health and safety by not having its MA Application in place as it can make no guaranty such will be in place on October 1, 2013.

V. THE SCORING INCONSISTENCIES DEMONSTRATE THE STATE’S ARBITRARY AND CAPRICIOUS EVALUATION AND ITS BIAS.

Magellan is unaware of an Arizona law that provides MMIC with an opportunity to

oppose the Magellan Protest. The MMIC Opposition contains a twenty-seven page analysis in support of the procurement officer’s initial scoring and in response to the Magellan Protest. See MMIC Opposition at pages 23-50. Such lengthy and inconsistent argument makes a strong case that there was no rational and objective process of evaluating each item. In turn, the scoring was arbitrary and capricious at best, and intentionally biased at worst. While Magellan has extensively briefed its scoring arguments in its Protest, a rebuttal to specific scoring items cited

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on pages 23-50 of the MMIC Opposition is attached hereto as Exhibit 2, in the event the information is helpful to Department review.

Magellan, again, respectfully asks for an immediate stay and the following relief — in priority order: the disqualification of MMIC, the Award to MMIC be rescinded and the Award of the Contract to Magellan as the next qualified bidder; or the re-scoring of the entire bid, the Award to MMIC being rescinded and the Award of the Contract to Magellan as the next qualified bidder; or that the Award to MMIC being rescinded and the Contract/Solicitation be rebid.

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Exhibit 1

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Exhibit 2

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Magellan Bid Protest (Original) MMIC Counter-argument(s) Magellan Counter-argument(s) Scoring Item 1 - EPSDT and Medical Administrator • Med Mgmt Administrator Celeste Lippy, MA,

brings 17 years’ experience and met/exceeded the RFP qualification requirements.

• Maternal Health/EPSDT Coord Judy Venezia brings 19 years’ acute healthcare experience & 8 years’ pediatric population and met/exceeded the RFP qualification requirements.

• Lippy requires AZ licensure, if required to make medical necessity determinations, or master’s in health services, health care administration or business administration if not required.

• Venezia resume shows only 2 years pediatric acute care experience (1992-1994).

• Lippy maintains an AZ licensure as Arizona Licensed Associate Substance Abuse Counselor (LASAC).

• Venezia in fact has the 8 years’ experience reported as an AZ licensed nurse, with experience as an RN ER staff nurse who “maintained wellness of …Pediatrics…Patients” (Resume, pg 2, heading 2), “incorporated nursing knowledge into care for children ages newborn to 10” (heading 4) and “Pediatric Care Coordinator” (heading 6).

Scoring Item 2 - Organizational staff under represented with Acute Care Experience • Magellan submitted names and resumes for all

36 required positions in the RFP including the positions with specific acute care expertise.

• Combined acute care experience represents 162 years.

• MMIC states that Magellan does not name the individuals with acute care experience and asserts that 10 of the 36 staff have acute care experience (28%).

• Magellan did in fact name all 36 positions and references the resumes of staff as part of the protest.

• Resumes do in fact demonstrate 162 years of acute care experience with 20 staff having physical health/acute care experience (56%). • Ironically, MMIC names numerous

positions for required positions with no intent for those indivduals filling said positions. In fact, the career link to Aetna’s website shows numerous RBHA positions including those falsely filled by staff not intending to occupy the position for MMIC. See screenshots of job descriptions, attached hereto as Attachment A.

Scoring Item 3 – Experience and Expertise of the Offer – past Medicare Experience • Magellan provided information as outlined in the

RFP for the Company applying for the Medicare • MMIC states that Magellan switches the

experiences and expertise of the joint venture • MMIC used the same approach to leverage

experiences of its “sponsor” and delegated

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Dual Demonstration and DSNP application through CMS. The RFP specifically asks for the “Company” in these questions including CMS identification number.

• Magellan maintains that the Arizona audited financials were included as part of the parents Magellan Health Services.

companies and this lead to confusion of the evaluation team.

• Further MMIC states that Magellan utilized Abrazo to answer question 1.87.

organizations to meet the needs of the RFP. The lack of detail on the nature of the arrangement was never full defined and so confusing MMIC felt the need to put footer on each page to try and explain the ambiguous relationship.

• Magellan answer each of the Medicare questions as MCCAZ and only references Abrazo’s experience as experience that will be leverage in the new company.

Scoring Item 4 – Care Coordination • Magellan cites numerous and specific examples

of care coordination provided across all population including coordination with Primary Care and PCPs.

• MMIC states Magellan failed to demonstrate Physical Health Care Coordination.

• MMIC states that the evaluation committee scores certain items as they are not relevant in a given section.

• MMICs response on these items is odd and demonstrates the lack of understanding of key elements of Physical Health Care Coordination including a comprehensive Health Risk Assessment (HRA), connect technology solutions to coordinate and develop integrated treatment plans and leveraging community reinvestment funds to develop integrated solutions at no cost to the state or providers.

• The evaluation committee received no specific guidelines or instruction on how to score the proposal out side of three overly general criteria. There was no template or criteria by question to determine what was an appropriate, weak or superior score for a given area. Therefore, the evaluation committee would need to evaluate each of the core areas in totality in order to have any chance at an objective approach.

Scoring Item 5 – Care Management Program - Goals • Magellan presented SOW language and

demonstration that the Integrated Care Coordinator position does not provide direct care services and therefore points should not have been deducted.

• MMIC argues that if there is any contact with the individual it should be considered a billable service.

• MMIC’s argument on this item is absurd and fails to correctly interpret the SOW definitions. If that narrow definition is applied in totality across the program all interactions with the members would/could be consider direct service. For example, If a member calls the customer service line for assistance with a community resource referral or support, should the customer service staff bill case

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management? • The ICC staff is providing enhanced Physical

Health Care Coordination that takes place at health plans across the nation and are administrative in nature not provision of direct service.

Scoring Item 6 – Administrative Requirements – Training of Contractor Personnel, Subcontractor and Providers; Integrated Health Care Development and Governance Board • As noted above Magellan provided a

comprehensive and robust leadership team with 20 of the36 staff having physical/acute care experience totaling 162 years.

• Magellan provided concrete and specific examples of a comprehensive and innovative Training solutions that meet if not exceeded the RFP requirements include multiple training modalities for all providers, specific course offerings all ready being used with PH/BH providers and national technical assistance with transformation agents to further support integration.

• Magellan’s proposal and description of the Governance Board not only meets the RFP requirements it exceeds them including having 4 staff with Acute Care experience (evaluators stated 1) and an entire PCP workgroup that reports directly to the GB.

• MMIC asserts that Magellan personnel lack overall acute care experience, a view that fails to include acute care experience of ½ of the submitted resumes.

• MMIC states that the review committee was well within its rights to deduct points based on the general nature of the trainings offered.

• MMIC does not provide dispute of the GB description.

• As noted above Magellan had extensive physical/acute care experience totaling 162 years and leveraged qualified and allowable vendors such as DentaQuest to augment this experience for key areas such as Oral Health.

• Magellan training program was referenced very specifically in the RFP response and the detailed course content, objectives and goals were provided in the applicable attachments. This information was redacted based on the confidential nature of the material.

Scoring Item 7 – Behavioral Health Service Delivery Approach • Magellan’s proposal called for the elimination of

the duplicative layer of the PNOs and received zero points while MMIC and Cenpatico received 5 points for the same approach.

• MMIC states the evaluation committee has “broad discretion to interpret” sections of the response. They follow this by stating that evaluation committee cannot search and consider other areas of the response when considering scoring.

• MMIC states that they will eliminate all PNO’s not just the children’s and contract directly with the providers.

• MMICs description and defense seems to conflict with one another and is being applied as to best serve MMIC – broad interpretation yet can review the RFP broadly. As noted above the evaluation committee received no detailed scoring for each specific section of the RFP only three broad categories to consider. Magellan’s response was specific and comprehensive.

• MMIC fails to understand the current structure of the system and the fact that Magellan

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petitioned ADHS several years ago to eliminate the Adult PNO and currently contract directly with the SMI clinics. The term PNO in the adult system is a legacy term based on the states 2007 solicitation. Furthermore, Magellan proposed the elimination of the children’s PNOs and explains the approach to contract directly with the children providers.

Scoring Item 8 – Experience and Expertise – Performance Deficiencies • Magellan received a deduction of 20 points for

what the evaluation committed called “significant repetitive history of contract non-compliance.” Magellan pointed out that the contract history does not evidence such a description nor the submitted materials in the RFP including admin review findings for the past several years.

• MMIC states that referencing the current contract performance with ADHS is baseless.

• MMIC states that Magellan should not get preferential treatment based on the current ADHS contract.

• Finally, MMIC states that their sanctions were for Medicare and therefore is comparing apples to oranges.

• The evaluation committee cites as examples of the significant and repetitive history ADHS related items and therefore the contract is not baseless. Further, performance on ADHS administrative review, which was cited in Magellan’s response, is very relevant as over 80% of the program is directly applicable to this very solicitation.

• It is quite clear Magellan is not getting preferential treatment for the ADHS contract, in fact, Magellan is being in appropriately penalized on items related to the ADHS contract and not being adequately awarded points for value add/innovations developed and being applied to the new RFP.

• If in fact each item 1.22 and 1.23 were looked at separately this it is even more daunting that Magellan receives a 20 point deduction for our response and MMIC cited 4 volumes of corrective action, sanction, etc and received zero points deducted for 1.22.

Scoring Item 9 – Experience and Expertise – Financial Reporting • Magellan should not have been deducted 5 points

for its credit rating. According to the evaluation criteria a deduction of points if for a weakness or deficiency of the offeror in meeting the SOW requirements – these criteria is never defined and a BB rating is very strong.

• MMIC states Magellan is trying to be treated differently based on current contract with ADHS.

• MMICs notion is meaningless as our core concerned raised was the fact the RFP did not define a minimum standard of credit rating, Magellan credit rating is above industry average and meets all contact requirements – thus, not warranting a weakness or deficiency deduction. The information on the current contract is

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specific evidence to support the rating noted above.

Scoring Item 10 – Experience and Expertise – Disclosure of Legal Proceedings • Magellan should not have been deducted 20

points as it provided a full summary of legal proceedings, lawsuits or regulatory actions. Criteria for more specifics about these issues is never defined and Magellan provided a strong overview.

• MMIC states that Magellan does not provide the evidence to support its “blanket assertion.” MMIC focuses on “any” and “last seven years.”

• MMIC attempts to distract from the issue by subtly suggesting the real issue was lack of disclosure. Magellan disclosed a full and complete summary.

Scoring Item 11 – Crisis Services – General Requirements • Magellan should have received the same five

point bonus weight for a strength on “exceptional crisis response approach.”

• MMIC asserts that the protest is inaccurate and misleading. They state the findings are not the same and cite the “alternative administrative approaches and cost saving opportunities.”

• An objective review of the two crisis service sections (Magellan versus MMIC) will demonstrate dramatic differences in the quality and quantity of approach.

• Magellan has some of the top crisis services leaders in the country while MMIC has no experience outside Desert Vista’s COE and COT.

• MMIC does not even reference MIHS competitors for Acute Care Level I services, including Aurora, St. Luke’s and Banner (references the crisis stabilization for Banner but not its Level 1 Acute Care).

• Magellan offered an “air-traffic control” electronic member coordination system that was prioritized by the county’s executive leadership for the top seven crisis service agencies as the top need, but this was not even referenced by the reviewers.

• Magellan laid out a track record of strong outcomes and effective community. collaboration and responsiveness, and a rich array of planned improvements, two C&A 24/7 outpatient clinics, expansion of the UPC, improved response times for Mobile Crisis, etc.

• MMIC’s sections are sparse by comparison, with the only differentiation being an unknown

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savings by contracting directly with mobile crisis and crisis transport.

• This is one of the most blatant areas of bias, and impossible to imagine that independent reviewers would score these in the same fashion.

Scoring Item 12 - Experience and Expertise – Audited Financial Statements • Magellan should not have been deducted five

points for not submitting one document as MMIC was deducted only seven points for not submitting two documents.

• Evaluation Committee has the discretion to determine the number of points that should be deducted for each response. Reasonable to assume that the Evaluation Committee implemented a step deduction for a bidder’s failure to submit statements.

• The MMIC argument might be appropriate if there were one such discrepancy, but the repeated inconsistencies described in this document reveal a clear bias towards MMIC.

Scoring Item 13 - Experience and Expertise – Performance Deficiencies • Magellan should not have been deducted 20

points for contract deficiencies when MMIC was only deducted 15 points for similar CMS issues.

• MMIC claims this is “not a true comparison” (Section 1.22 for Magellan and Section 1.23 for MMIC).

• This is strong example of the bias in scoring. • The overall results of the RFP do not align with

the prior ADHS/DBHS statements that the RFP would be primarily behavioral health, and primary care and Medicare were the heavy focus (for example, Magellan received zero points for experience despite running the system for the prior 5 years).

• Yet, the scoring gave preference to MMIC on deficiency score despite the MMIC performance issues being with CMS.

Scoring Item 14 – Administrative Requirements – Training of Contractor Personnel; Subcontractors and Providers; Integrated Health Care Development Program; Governance Board • Magellan should not have been deducted 50

points for the lack of a “balanced, integrated care approach.”

• The Governance Board members have four with physical health experience not one.

• Magellan is using national expert DentaQuest to provide dental services, and the Oral Health Liaison will oversee this relationship.

• Magellan resumes reveal a cumulative 162 years of relevant experience serving within an acute organization or for acute focused services, and

• MMIC states that Magellan fails to address the Evaluation Committee’s criticism and that the reference to a 100% score from CMS on Model of Care is irrelevant.

• MMIC does not address at all the points made by Magellan about true composition of the Governance Board, DentaQuest or resume experience.

• They did no homework on this question, or found that the Magellan facts presented were accurate, because they simply distract by referencing that an unheard of !00% score by CMS and NCQA on model of care does not indicate the Evaluation Committee’s deduction was improper.

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452 years of relevant experience for behavioral health.

Scoring Item 15 – Behavioral Health Service Delivery for Adult Members • MMIC received bonus points for a relationship

with ASU, but Magellan received no bonus points for a relationship with U of A.

• MMIC states that these partnerships were in different sections and that their approach was much more defined with specific milestones and deliverables, and they cite 20 bullets of detail

• MMIC alleges it is clear a bonus point was based on a “better and more detailed response and not any unfair bias.”

• Pages 38 – 45 of Section 4.17 on Prevention give significantly more detail than included from the MMIC vague bullet points (e.g., affiliation agreements between provider agencies and ASU will be established).

• By contrast, the approach described by Magellan received extremely high scores from the CMS Healthcare Innovations grants in early 2012.

• We expanded on this approach with a partnership with the University of Arizona Mel and Enid Zuckerman College of Public Health and the Maricopa County Public Health Department.

• Will Humble made public statements that he wanted to see a bid that focused on the “community as the patient” and not a typical “acute care” approach that missed the broader social and ecological determinants.

• Magellan presented an outstanding approach that incorporated a relationship with the University of Arizona and this partnership was ignored.

• The MMIC ASU partnership to create a Technical Assistance Collaborative around an area in which the system already receives significant resources and innovative. programming was highlighted (18-25 year olds were also a focus of the Magellan bid and part of the past five year’s innovation. implementation with Transition Age Youth programming and the Dr. Rusty Clark TIP model (Transitioning to Independence Program)

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• Either the reviewers overlooked the Magellan application or had a clear bias for MMIC.

Scoring Item 16 - Experience and Expertise – Experience of Services in RFP • Magellan should have received points for its six

years of experience in providing BH services to the state of Arizona. Instead, this experience was entirely overlooked and no credit was awarded.

• MMIC states that this assertion “evidences Magellan’s lack of understanding that this RFP is distinct from its current contract with ADHS”

• MMIC states that the current contract is an “integrated care contract that requires acute care experience.”

• Magellan did not include specific integrated health experience in its response to Section 1.3.

• For two years, Will Humble stated that the new contract would be behavioral health led, and that the change in the new contract would be for “a small but important population” and that even for the 14,000 TXIX SMI, it would be “a smaller but important part of their service delivery.”

• 80% or greater of the revenues associated with the new RFP will be for behavioral health services currently provided in the existing contract.

• These BH services include many niche services that have not been provided by MMIC or other acute care health plans, including homeless outreach, the management of Court-Ordered Evaluation and Treatment, jail diversion, court advocacy and post-incarceration care coordination, peer warm lines, crisis safety net, hospital based rapid response, community-based mobile crisis, collaborative inter-agency protocols, best for babies, cradles to crayons, employment and housing, etc.

• However, despite the clear ignorance of MMIC of the depth and breadth of the RBHA responsibilities, it is also true that Magellan presented in great detail integrated care experience in Maricopa County and GSA 6 going back two years, with specific care coordination and integrated care planning for the exact population that is the focus of the RFP, with a practice level integrated care pilot with MIHS and the Adult PNOs and a plan level integrated care approach covering 1,700 of the

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14,000 TXIX SMI with Phoenix Health Plan. • Again, either there was significant and repeated

bias or the reviewers only gave a cursory scan to Magellan’s application.

Scoring Item 17 – Enrollment and Eligibility Data Exchange • Magellan was deducted two points for a single

error on the correct processing of enrollment and eligibility data exchange test files, but MMIC was only docked 10 points when they showed a clear inability to make the most important transactions with the state.

• MMIC states that this shows Magellan attempting to substitute its judgment for that of the State and they include a grid that demonstrates the state clearly used a 2 points for each infraction approach.

• Magellan scored 92% with a single date of birth error.

• MMIC was correct slightly better than chance on the key area of data exchange. Yet, the state did not weight a penalty accordingly as they purportedly did in every other area of review. This does not make sense, except if there was a bias against Magellan which scored the top in this area.

Scoring Item 18 - – Administrative Requirements – Training of Contractor Personnel; Subcontractors and Providers; Integrated Health Care Development Program; Governance Board • Magellan should not have had points deducted in

several different areas for the same reported deficiencies. This resulted in 100 points of “piling on”, 50 points for lack of balanced, integrated care, 25 for care coordination, 15 for care coordination with a PCP, and 10 for physical health experience.

• “Not surprisingly, a careful review of the scoring process establishes that ADHS did not deduct points for the same items multiple times.”

• MMIC states that Magellan seeks preferential treatment by asking that the Evaluation Committee overlook multiple insufficiencies and only deduct points once.

• “In short, each bidder, including Magellan, was required to provide the necessary information in each SOW section. Magellan’s failure to do so resulted in the appropriate decision to deduct points each time.”

• Magellan failed to present a “truly integrated approach.”

• The United Healthcare protest expresses outrage that the scoring approach in fact does not relate to specific sections of SOW at all, so the assertion that SOW sections were scored is false and misleading. They were not.

• As a result, Magellan was in fact hit with four different deductions for similar themes, and ones that reflected a lack of reviewing the details of the Magellan proposal.

• The Magellan and MMIC approaches to integrated care were not dissimilar, in that both laid out a plan to have the option of co-located primary care in the 20 SMI clinics, both laid out a plan to provide BH services in the FQHCs and both used the same exact phraseology around an “Integrated Health Home Network.”

• Magellan led the development of these approaches, in the identification of practice level partners, model of approach, IT bridge, etc. and this was clear in the initial ADHS/DBHS PowerPoint that included a picture of Magellan CEO Dr. Rene Lerer and Magellan of Arizona

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CEO Dr. Richard Clarke alongside Governor Brewer at the official launch of IHH in August 2011, and the same map that Magellan had used when approaching MIHS in 2010.

• The scoring does not differentiate that Magellan proposed expanding the model to include the other three FQHCs in the county, Adelante, Mountain Park, Native Health and Wesley while the MMIC exclusively focused on MIHS, which is part of the same organization that will be the RBHA.

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Attachment A to Exhibit 2

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00,& · 2013. 7. 26. · arizona case law provides that bidders are only required to protest...

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