Idaho Medicaid mental health contractor hires three state government employees

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Editor’s note: This is the second story in a two-part series on the Idaho Behavioral Health Plan contract. The first story focused on concerns that the new contractor, Magellan of Idaho, could delay payments to mental health providers.

A company set to take over Idaho state government’s largest contract has hired three former state government employees, including one who judged companies’ contract bids.

Magellan of Idaho — awarded the $1.2 billion Idaho Behavioral Health Plan contract to manage Idaho Medicaid mental health benefits — has hired three former Idaho Department of Health and Welfare employees. 

That includes Magellan of Idaho’s new CEO David Welsh, former Idaho Department of Health and Welfare deputy administrator for Medicaid benefits. Welsh evaluated bids for the contract, giving Magellan’s bid the second highest score, said Kim Rau, spokesperson for the Idaho Department of Administration, which handles government contracts. 

But even without Welsh’s scores, the contract outcome wouldn’t have changed, she said.

“The Department of Administration is confident no laws were broken in the (Idaho Behavioral Health Plan) solicitation,” agency spokesperson Kim Rau told the Idaho Capital Sun in an April 29 email.

There is no law or regulation barring state employees from later working on a contract, said Idaho Department of Health and Welfare spokesperson AJ McWhorter. Idaho government employees leaving for private sector jobs is helpful, given limited expertise in Idaho, according to an Idaho health care lobbyist and McWhorter.

Magellan did not directly respond to questions about its hiring of Idaho government employees. Spokesperson Kristen Durocher said Magellan built its team “through a recruitment process that adheres to all applicable requirements.”

“Magellan Healthcare is committed to providing eligible Idahoans with a system of behavioral health care to maintain healthy and active lives within their communities,” she said in an April 29 statement. “We have assembled an expert and dedicated professional team to carry out that mission through a recruitment process that adheres to all applicable requirements.”

Magellan also hired David Tovar, former bureau chief for the Idaho Behavioral Health Plan Governance Bureau in the Idaho Department of Health and Welfare, and Mallory Kotze, a former Idaho Department of Health and Welfare plan contract manager.

Tovar and Kotze had no role negotiating or evaluating the contract, state officials told the Sun.

Since Idaho has a small health care market, with few people with knowledge to run these programs, “it is common to see movement of staff to pursue new opportunities for professional growth,” McWhorter told the Sun. That includes shifting between positions with the state, providers and contractors or consultants, he said. 

And it happens outside of large contract transitions, he said.

Idaho mental health providers worry pay could lapse amid Medicaid contractor change

“This has been particularly true as (the Idaho Department of Health and Welfare) has gone through a recent reduction in workforce as part of the transition of this contract where we have seen state staff who are now seeking new opportunities outside of state employment after previously administering behavioral health services or managing programs as state staff,” McWhorter said. “We see this as a positive for Idaho as individuals gain new experience and knowledge which further supports programs that rely on expertise in both government and the private sector.”

Idaho Association of Community Providers lobbyist David Lehman said there’s finite expertise in Idaho. He called recruitment by businesses of state experts “the nature of the free market.” 

He said the Legislature could take up legislation in this area – commonly called revolving-door legislation. But “the alternative is that we have less qualified people trying to implement really complicated systems,” he said.

“I’d rather have the smartest people working on the implementation, than the guy who wasn’t involved in any way, shape or form,” Lehman told the Sun.

The Idaho Division of Purchasing, within the state Department of Administration, told all potential evaluators on the contract that they’d be disqualified from evaluating bids in the contract solicitation “if at the time of their involvement in the evaluation process they are currently seeking employment or intending to seek employment with any bidder in the solicitation process,” Rau told the Sun.

“We are not aware of any information to suggest that any of the evaluators in the (Idaho Behavioral Health Plan) solicitation were actively seeking employment or intending to seek employment with any of the bidders at the time of the evaluation,” she said.

Even if the Idaho Division of Purchasing disqualified Welsh and disregarded his scores, Rau said, Magellan’s bid still would’ve had the highest rating and the outcome of the solicitation wouldn’t have changed. 

Another bidding company, Beacon, had the highest score, Rau said, but was disqualified due to past work that officials said was related to the contract. None of the nine state evaluators ranked Optum — the company that held the contract for a decade — in first place, Rau said. 

The evaluator who scored Magellan’s bid highest is still a state employee, Rau said.

As the Idaho Legislature prepared to adjourn for the year in April, Gov. Brad Little warned that a new law requiring legislative approval of Medicaid waivers could disrupt health care services, including state plan amendments for the Idaho Behavioral Health Plan Contract transition. The Legislature adjourned without new legislation.

The Idaho Department of Health and Welfare had paused submitting state plan amendments related to some enhanced services for the Idaho Behavioral Health Plan while it sought legal guidance, agency spokesperson McWhorter told the Sun in April. 

But new analysis from the Idaho Attorney General’s Office let the state health department move forward with submitting those state plan amendments, McWhorter told the Sun in June. The agency is working with legal counsel to review other work that needs to be included in state plan amendments and waivers, he said.

Idaho’s decision in June 2023 to award Magellan the contract sparked lawsuits from two losing bidders. District court judges last year ruled they didn’t have jurisdiction to review the state’s contract award decision, citing limits on judicial review in Idaho’s government contracting law, the Sun previously reported. 

Both suing companies — Optum, which has held the contract since 2013, and Beacon — appealed to the Idaho Supreme Court.

The Idaho Supreme Court in April denied Optum’s request to legally block the new contract’s implementation. Following a legal agreement in May, Optum’s lawsuit was dismissed in the Idaho Supreme Court.

Beacon’s lawsuit awaits legal briefs by defendants in the Idaho Supreme Court.

Optum’s contract to run the Idaho Behavioral Health Plan is set to end June 30, spokesperson Chris Smith told the Sun in a statement. 

“… (W)e remain committed to providing high quality behavioral health treatment services to the state and the providers and members we serve,” Smith said. “We are currently in the process of working through all transition activities related to the (Idaho Behavioral Health Plan) contract.”

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