Will the Physical Health MCO Contracts Ever Be Resolved?


Update, September, 2017

The Pennsylvania Department of Human Services (DHS) is currently in a stay regarding the rollout of new Physical HealthChoices contracts scheduled to begin on January 1, 2018. Bidder protests which were denied by DHS are being appealed to Commonwealth Court. Until those appeals are resolved, all existing Physical Health MCOs will continue to operate in their respective zones.

Pennsylvania’s effort to rebid its Physical HealthChoices agreements has hit a number of snags, as bidders who stand to lose market share have lodged protests against the state. The RFP has now been issued twice, each time yielding different contract awards, as well as formal protests from different potential losers.

By rebidding its agreements, DHS hopes to improve coordination of care through increased focus on Accountable Care Organizations (ACOs) and patient-centered medical homes. DHS is also focused on better integration of physical and behavioral health systems, and increased access to care for those in rural areas using telemedicine.

The Department of Human Services (DHS) first issued its RFP in September, 2015 to contract with MCOs to provide physical health care to HealthChoices recipients in all five geographic zones throughout the state:

  1. Lehigh-Capital (L/C): Adams, Berks, Cumberland, Dauphin, Franklin, Fulton, Huntingdon, Lancaster, Lebanon, Lehigh, Northampton, Perry and York Counties
  2. Northeast (NE) (formerly New East): Bradford, Carbon, Centre, Clinton, Columbia, Juniata, Lackawanna, Luzerne, Lycoming, Mifflin, Monroe, Montour, Northumberland, Pike, Schuylkill, Snyder, Sullivan, Susquehanna, Tioga, Union, Wayne and Wyoming Counties
  3. Northwest (NW) (formerly New West): Cameron, Clarion, Clearfield, Crawford, Elk, Erie, Forest, Jefferson, McKean, Mercer, Potter, Venango and Warren Counties
  4. Southeast (SE): Bucks, Chester, Delaware, Montgomery and Philadelphia Counties
  5. Southwest (SW): Allegheny, Armstrong, Beaver, Bedford, Blair, Butler, Cambria, Fayette, Greene, Indiana, Lawrence, Somerset, Washington and Westmoreland Counties

Based on the submissions received, DHS announced contract awards on April 27, 2016, with a program start date of January 1st of this year. Aetna, which stood to lose four of the five zones it contracted with, filed a bid protest letter a week after the announcement. The Opinion rendered by the Commonwealth Court of Pennsylvania recounts that at a May 9, 2016 meeting between Aetna representatives and DHS, Aetna was told it received a score that ranked it in the top five plans in the Lehigh-Capital, Southeast and Southwest zones, and in the top four plans in the Northeast zone. However, DHS bumped Aetna from selection in these zones because of the “heritage factor”.

The heritage factor refers to DHS bypassing the higher scoring Aetna plan in favor of offerors who had at least 25% of the market share in the zone. This resulted in DHS selecting some offerors who scored lower than Aetna on the RFP criteria.

Aetna challenged that the heritage factor constituted a “secret” criterion that favored offerors with larger market shares in the affected zones. DHS maintained that it applied the heritage factor to avoid disruption to HealthChoices enrollees. However, the fact remained that the use of this heritage factor was not disclosed during the RFP process, and on July 19, 2016, the court issued a preliminary injunction against the execution and implementation of any agreements resulting from the RFP, pending further court action. It was back to the drawing board for DHS.

DHS quickly reissued the RFP on July 21, 2016, with a new due date in September. The second round of contract awards were announced on January 5th of this year. The following table indicates the current PH-MCOs in each zone, those who were granted contracts from the initial RFP, and those granted contracts from the reissued RFP. Organizations who remain constant throughout the process are shown in bold.

ZoneCurrent PH-MCOsContracts Awarded 4/27/16Contracts Awarded 1/5/17
Lehigh-CapitalAetna Better Health of Pennsylvania
AmeriHealth Caritas Pennsylvania
Gateway Health
United Healthcare of Pennsylvania, Inc.
UPMC for You
AmeriHealth Caritas Pennsylvania
Centene (PA Health and Wellness)
Gateway Health
United Healthcare of Pennsylvania, Inc.
UPMC for You
Centene (PA Health and Wellness)
Gateway Health
Geisinger Health Plan
Health Partners Plans
Northeast (Formerly New East)Aetna Better Health of Pennsylvania
AmeriHealth Caritas Pennsylvania
Geisinger Health Plan
AmeriHealth Caritas Pennsylvania
Geisinger Health Plan
United Healthcare of Pennsylvania, Inc.
UPMC for You
Vista - AmeriHealth Caritas Health Plan
Gateway Health
Geisinger Health Plan
UPMC for You
Northwest (Formerly New West)Aetna Better Health of Pennsylvania
AmeriHealth Caritas Pennsylvania
Gateway Health Plan
UPMC for You
Aetna Better Health of Pennsylvania
AmeriHealth Caritas Pennsylvania
United Healthcare of Pennsylvania, Inc.
UPMC for You
AmeriHealth Caritas Pennsylvania
Gateway Health
UPMC for You
SoutheastAetna Better Health of Pennsylvania
Health Partners Plans
Keystone First Health Plan
United Healthcare of Pennsylvania, Inc.
Centene (PA Health and Wellness)
Health Partners Plans
Keystone First Health Plan
United Healthcare of Pennsylvania, Inc.
UPMC for You
Centene (PA Health and Wellness)
Gateway Health
Health Partners Plans
Keystone First Health Plan
UPMC for You
SouthwestAetna Better Health of Pennsylvania
Gateway Health
United Healthcare of Pennsylvania, Inc.
UPMC for You
AmeriHealth Caritas Pennsylvania
Centene (PA Health and Wellness)
Gateway Health
United Healthcare of Pennsylvania, Inc.
UPMC for You
AmeriHealth Caritas Pennsylvania
Centene (PA Health and Wellness)
Gateway Health
UPMC for You

Since the announcement of the second round of contract awards, the number of protestors has grown. Aetna, which lost the one zone it had been awarded in the first round, is now joined by United Healthcare, which went from being awarded all five zones to being awarded no zones, and AmeriHealth Caritas Pennsylvania, which was bumped from the Lehigh-Capital zone. If these contract awards hold, approximately 720,000 Medicaid recipients will have to choose a new physical health MCO.

Whether these contract awards will hold, however, remains to be seen. According to a recent article in the Philadelphia Inquirer, the second round of the procurement process was also fraught with issues, ranging from mathematical errors to questionable contact with at least one successful bidder during the blackout period.

The new projected start dates for contracts are January, 2018 in the Southwest, Northwest and Northeast zones; July, 2018 for the Southeast zone; and January, 2019 for the Lehigh-Capital zone. Whether these implementation dates come to fruition, and who the actual MCOs operating in each zone will be, is anybody’s guess.