Which company will run mental health care for Idaho Medicaid?

After months of legal battles, Idaho is still planning to change which company runs mental health services for approximately one in five Idahoans.

The state’s decision over which private company to pay $1.2 billion over four years to run Medicaid mental health services has been in the courts for months. That’s after two other companies sued, arguing they wrongfully lost the contract to administer the Idaho Behavioral Health Plan. But Idaho is still planning to start the revamped contract next year with the same company it picked last year.

Two Idaho district court judges recently agreed in rulings that they don’t have the power to review how the state awarded the contract. Optum Health, the company that has the contract now, and Beacon Health, a company that tried to get the contract, disagreed, appealing its suit to the Idaho Supreme Court.

Last week, the Idaho state health department announced in a news release that Magellan Health would oversee the contract starting July 1, 2024 — four months past the original start date.

In the meantime, Optum is still running mental health benefits, state health department spokesperson AJ McWhorter told the Idaho Capital Sun.

“Doing this right so Idahoans get the behavioral health and substance use disorder services and support they need is our top priority,” Idaho Department of Health and Welfare Director Dave Jeppesen said in the news release.

The contract would affect how mental health benefits are managed for about 331,549 Idahoans on Medicaid and 2,090 not on Medicaid, according to estimates provided by the Idaho Department of Health and Welfare.

Asked why the contract’s service date was delayed, state health department spokesperson AJ McWhorter said the contract launching in July reflects a 12-month implementation period, which he said was industry standard.

“Stakeholders collaborated on the July 1 go-live date to prioritize doing this right over doing this fast,” McWhorter said.

Contract dispute is part of Idaho’s possible move to managed care

As the legal dispute over the contract is unfolding, Idaho lawmakers on a task force just wrapped up a close look at how Medicaid funding is structured.

Private companies manage Medicaid benefits in 40 states. That structure is commonly called managed care. Managed care organizations deliver care to over two-thirds of everyone on Medicaid in America, KFF reports.

Some of Idaho’s Medicaid benefits are managed that way, such as mental health care, dental care and non-emergency medical transportation. But inpatient and outpatient hospital services are run by medical providers through a model that Idaho policymakers call “value-based care.”

A panel of Idaho lawmakers late this year studied how to save money on Medicaid, possibly through switching Idaho’s Medicaid programs to managed care. That group concluded its work last month without deciding whether Idaho’s Medicaid program should be restructured.

The contract with Magellan is one of the largest issued by the Division of Purchasing, part of the Idaho Department of Administration, said agency spokesperson Kim Rau.

Optum Health, whose parent company is United Behavioral Health, has run the Idaho Behavioral Health Plan contract since 2013. Previous reporting by the Idaho Statesman found complaints that the company had violated some patients’ privacy.

In its lawsuit, Optum argued it saved Idaho taxpayers around $400 million compared to projected Medicaid spending.

Optum only managed outpatient mental health care, like therapy visits. But under the new contract awarded to Magellan, an outside company would also run inpatient mental health care, like hospitalizations. Ryan Langrill, an analyst for the Idaho Office of Performance Evaluations, previously called that contract structure change promising.

Judges say they don’t have jurisdiction to review contract, company appeals

Lawsuits by two companies that lost the Idaho Behavioral Health Plan contract went to separate judges in the courts, who agreed in separate recent rulings that they don’t have jurisdiction to review the state’s contract award decision, citing limits on judicial review in the State Procurement Act, Idaho’s government contracting law.

The judges dismissed the lawsuits, denying requests by the suing companies to stop Idaho from executing its new contract with Magellan Health.

Beacon Health, under its national affiliate Carelon Behavioral Health, argued that it wrongfully lost out on the contract, which it was excluded from because the state said work the company previously did helped shape the contract’s terms.

“Beacon cannot avoid the Legislature’s decision to prohibit the Court from exercising jurisdiction here …,” Fourth Judicial District Judge Nancy Baskin wrote in an Oct. 27 decision.

State Procurement Law only allows judicial review on contract award decisions when the director of the agency executing the contract deems the contract award decision as a contested case. That didn’t happen in this case, Fourth District Judge James Cawthon noted in his ruling in another lawsuit brought by Optum Health, under its national affiliate United Behavioral Health.

“Even taking the allegations in the Complaint as true, the Court finds that the Court lacks subject matter jurisdiction in this case to issue a declaratory judgment …,” Cawthon concluded.

Optum Health, which argued in its lawsuit that the state’s process to award the contract was flawed, appealed the Idaho judge’s decision to the Idaho Supreme Court. Appeals to the Idaho Supreme Court mostly advance unless the case is, for instance, found not timely, said court spokesperson Nate Poppino. Optum’s appeal is being processed, Poppino said.

“Optum has filed a notice of appeal asking the Idaho Supreme Court to determine whether the State can choose to insulate its procurement decisions from judicial review. We believe the district court decision is wrong, and that courts in Idaho have jurisdiction to consider Optum’s challenges to the legality of the Idaho Behavioral Health Plan procurement and contract award on the merits,” Optum spokesperson Christopher Smith told the Idaho Capital Sun.

It’s unclear how often contract award decisions in Idaho are deemed contested cases. The Department of Administration doesn’t know of any contested cases in the past decade, spokesperson Kim Rau told the Idaho Capital Sun. The agency does not keep a database of appeals to its contracting decisions, Rau said.