SPO rejects AlohaCare protest of Medicaid contract

The State Procurement Office has rejected a Hawaii nonprofit health insurer's formal bid protest of a $1.5 billion Medicaid contract awarded to two Mainland companies earlier this year. Pacific Business News reported on May 22 that nonprofit AlohaCare claimed it was unfairly shut out of the bidding when the state Department of Human Services awarded the three-year contract to Tampa, Fla.-based WellCare Health Plans Inc. and an affiliate of Minneapolis-based UnitedHealth Group.

AlohaCare’s protest in February said the state's request for proposal "was skewed to benefit large, for-profit, out-of-state health plans at the expense of nonprofit Hawai‘i plans like AlohaCare."

On May 19, Chief Procurement Officer Aaron Fujioka rejected the protest saying the state did not violate any procurement laws. DHS Director Lillian Koller told PBN, "Mr. Fujioka's ruling confirms that we conducted a fair and competitive bidding process and chose the two health plans that scored the highest."

She said, “It's time to end baseless legal challenges so we can focus all our efforts on ensuring that this promising new initiative for our senior and disabled clients can be launched effectively and on time."

AlohaCare said it likely will appeal the state's decision and is proceeding with a federal lawsuit filed May 8 to invalidate the mainland firms’ bid. A hearing on its request for a temporary restraining order is scheduled for a June 16 hearing in Honolulu federal court. PBN reported that AlohaCare’s suit claims the state violated federal law by awarding the contract to the two companies since they had no provider networks already established in Hawaii at the time of the bidding last October.