Ex-lawmaker's role in Iowa Medicaid bidding faces criticism

By Ryan J. Foley, Associated Press | Posted - Aug. 27, 2015 at 3:01 p.m.

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IOWA CITY, Iowa (AP) — A former lawmaker's role is casting doubt on the process used to select companies to manage Iowa Medicaid, with one losing vendor alleging she provided an unfair advantage to a winning bidder after working as a state contractor.

A second losing bidder claims the ex-representative, Renee Schulte, gave its lobbyists inside information that a key official in the selection process had made "derogatory comments" and was biased against the company.

Schulte, a Cedar Rapids Republican who now works as a health care consultant, was prominently mentioned in appeals filed this week by losing bidders Centene Corp. and Aetna, who claim the high-stakes bidding process was flawed and should be reconsidered. Schulte said Thursday that she acted "above board," denying she provided any bidder with confidential information or that she had a conflict of interest.

The Iowa Department of Human Services announced this month the selection of WellCare, AmeriHealth Caritas and subsidiaries of UnitedHealthcare and Anthem to manage the $4.2 billion Medicaid program beginning Jan. 1. The shift is a major change for the government health care program that serves 560,000 low-income and disabled Iowans. Gov. Terry Branstad believes that private management can cut costs while improving health outcomes, but critics are worried services will suffer as companies profit.

The requests for reconsideration by Centene and Aetna focus partly on Schulte's actions before and during the process, when she was a Department of Human Services contractor prior to taking a job as a consultant helping WellCare design its successful bid.

Aetna argues that Schulte's work for WellCare amounts to an "organizational conflict of interest" that should result in WellCare's disqualification.

Schulte and DHS terminated her two-year contract in February after Schulte disclosed that she was interested in working on one of the Medicaid bid proposals, department spokeswoman Amy McCoy said. Days later, she started consulting for WellCare. Aetna questioned whether Schulte gave WellCare an unfair advantage, suggesting she could have passed along confidential information about the bids or given the company access to top DHS officials.

Schulte denied those allegations Thursday. She that she played no role in developing Iowa's Medicaid privatization plans and didn't have access to any confidential information. WellCare also denied wrongdoing, saying Schulte was hired because she "was the right expert" to help design its plan for providing behavioral health services.

Schulte served in the Iowa House until losing re-election in 2012. In January 2013, DHS hired her on a contract worth about $100,000 annually to work on mental health reforms she helped pass as a legislator. For the next two years, Schulte advised Richard Shults, DHS administrator for mental health and disability services.

St. Louis-based Centene alleges Schulte met with its lobbyists in 2013 and 2014, telling them that Shults had been making negative remarks about Centene within DHS.

Shults later served on the four-member committee that evaluated the 10 bidders' proposals and selected the four winners. Shults' evaluation notes contained inaccurate information about Centene's proposal, showing that he "poisoned the well" against the company to ensure it wouldn't win, Centene argues. Taken together, his previous comments and notes amount to strong evidence of bias, Centene argues.

Schulte said she met with Centene representatives to discuss mental health issues, not Medicaid privatization. She said she doesn't recall ever hearing Shults criticize Centene, or telling its lobbyists about such statements.

McCoy said Shults wouldn't comment during the appeal process but that the agency followed appropriate selection procedures.

Centene, which manages Medicaid in several states, made an aggressive push for a piece of Iowa's business and had been considered a favorite. The company's political action committee donated $15,000 to Branstad in 2013 and hired the LS2 Group, a Des Moines lobbying firm with close ties to the administration.

Schulte told Susan Fenton, an LS2 lobbyist working for Centene, that Shults' negative views toward Centene were based on his prior experience working in the Kansas Medicaid program, which contracts with Centene, Fenton wrote in an affidavit.

Fenton informed Centene representative Zane Yates that Schulte "possessed information relevant to Centene's potential involvement in Iowa's managed Medicaid program" and Schulte would be in touch to discuss it, Yates wrote in an affidavit.

Schulte met with Centene at the LS2 office Oct. 30, 2013, disclosing that Shults "was making derogatory comments about Centene," Yates wrote. One year later, Schulte met again at the office with Centene representatives to help them prepare for an upcoming meeting with Shults to discuss the potential shift to managed care, which Branstad hadn't announced yet, Yates wrote.

"It was clear from the conversation in this meeting that (Shults') attitude and comments were not a onetime incident and appeared to be an impression and feelings he harbored," Yates wrote.

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Ryan J. Foley


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