Optum named BH-ASO winner; Beacon files protest

The State of Alaska has named Optum as its “apparently successful bidder” in its recent behavioral health ASO RFP.  However, the award, which has not yet been publicly announced, was immediately protested by a second respondent, Beacon Health Options.

The BH-ASO RFP implements a centrally important piece of Alaska’s 1115 waiver.  That waiver, which was approved on March 20th, 2019, followed a year of review and negotiation by CMS.  It focuses on substance use and related behavioral health.

The protest follows a controversial award, one ultimately reversed, to Wellpath to operate Alaska Psychiatric Institute.

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In the protest letter, Beacon says the State erred by awarding Optum an “Alaska bidder preference.”  This is a procurement tool to give local, in-state vendors additional points to compete against bidders from the Lower 48.  As part of awarding this preference, a bidder must have “maintained a place of business within the state staffed by the bidder or an employee of the bidder for a period of six months immediately preceding the bid date.”

Beacon contends that “There is no evidence that Optum… maintained a place of business or an employee in Alaska for six months.”

An internet search came up one existing Optum presence in the state.  OptumRx, the PBM arm of Optum, is managing pharmacy benefits for state of Alaska employees. This service began on January 1st.  According to the OptumRx site, correspondence from state employees should be sent to locations in Arkansas and Kansas.

Beacon also asserts that the DHSS provided inflated scoring to Optum, allowed Optum to use experience from a sister company, United Healthcare, in its proposal, and that it arbitrarily marked down Beacon for use of language.  From the letter:

“The Department… inappropriately reduced Beacon’s score… ‘due to concern that the proposal includes frequent language reflecting managed care…’

Beacon then points out that the State’s RFP includes a summary of intent that says:

“DHSS, DBH is soliciting proposals from Administrative Services Organizations with demonstrated specialized expertise in behavioral health systems management…” (Emph. Beacon)

Beacon summarizes this element by saying:

“The intent of this procurement, clearly stated in the first paragraph of the RFP, was for the selection of a managed behavioral health organization that could apply industry standard managed care tools to the current Alaska Fee for Service System. For this reason, Beacon’s experience as both a non-risk ASO and as a capitated managed behavioral health organization is completely relevant to the procurement and should not have been scored down.”

The protest appears to make meaningful and reasonable claims on its face.

Within the context of API, this protest also highlights the difficulty the Department appears to be having implementing the Medicaid reforms envisioned by SB 74. This is not a problem new to this administration as the Walker administration struggled with similar, if different, challenges in procurement.

DHSS has until Wednesday to determine its next steps in this appeal process.