In a memorandum to the Board of Commissioners, attorney Annette Chancy Starling addressed Medicaid transportation contract issues, expressing concerns over a possible “bidding war” that would ignite between current providers Enroute Transportation Services and Van-Go Transportation Inc. and laid out possible options for the board.
The memo came in light of the county receiving yet another Medicaid transportation bid from Enroute, currently the secondary provider to primary provider Van-Go. Enroute has proposed a rate of $1.54 per mile, which would undercut Van-Go.
The Board of Commissioners was presented the bid at its September meeting. There were a number of legal issues raised and the board decided to table the request until this week, directing staff to provide information regarding the legal consequences of any action.
“I’ve discussed this matter with the Department of Medicaid Transportation Compliance and they’ve referred it to the Attorney General’s Office for their opinion on the matter,” Starling said this week. “The board can consider not doing anything until we get their opinion. It is up to the board. The reason we’re looking for their opinion is to see if we’re required to amend the contract. There is a policy that could be interpreted as requirements to amend the contract.”
“I have no problem waiting to see what the Attorney General says because it might have an affect on any action,” said Commissioner Albert Kirby.
“We do want to do the right thing,” interjected board chairman Billy Lockamy.
Dual contracts, — a primary contract for Van-Go Transportation Inc. and a secondary contract for Enroute — were officially approved by the board in August, with a stipulation the secondary contract be “operable only in the event that Van-Go is unable to fulfill its obligations.” All transportation referrals would be routed to the lowest cost provider meeting all N.C. Medicaid Transportation policy requirements.
The contracts were signed after weeks of discussions, most of them contentious.
A unanimous vote by the board in June awarded equal contracts at $2.10 per mile, splitting the difference between Van-Go’s original low bid of $1.65 per mile and Enroute’s bid of $2.55. That was to be in place until fledgling Van-Go could shoulder the entire load, at which point it would do so as the primary provider at its initial $1.65 rate. When Enroute did not agree to those terms, the board rejected both bids in favor of rebidding the contract.
In July, Van-Go again submitted the lowest bid, at $1.85 per mile with no fuel surcharge, and Enroute submitted a bid of $1.95 per mile with fuel surcharges of 1 cent per mile for each 5 cents increase in pump price over $2.95. Those contracts were inked in August.
However, just weeks after that final approval, Enroute president Ricky Moore on Aug. 21 submitted his reduced bid of $1.54, which would be approximately $1.62 with fuel surcharges factored in, undercutting even Van-Go’s original bid of $1.65 and a full $1 lower than Enroute’s original bid of $2.55.
Starling’s legal opinion, submitted to the board and county staff, noted that the county may terminate the contracts without cause by giving 30 days written notice to the contractor.
“This contractual provision allows the county to terminate its agreement with Van-Go at any time without any reason, so long as it provides Van-Go with sufficient notice of its intention to do so,” Starling stated in her memo. “In other words, so long as the county was acting in good faith, it could elect to terminate its contract with Van-Go tomorrow, if it chose to do so. The fact that bids were solicited does not change the fact that the express terms of the contract allow the county to opt-out of the agreement…”
Starling stated that allowing competing providers to amend contract rates could cause disruptions in service.
“Such a practice would set off a bidding war between Van-Go and Enroute, with each provider submitting progressively lower per mile contract rates in attempts to regain its primary service provider status,” the attorney said.
She said there were at least three possible courses of action the board could take.
“If the commissioners want to always go with the cheapest rate and are not concerned about a disruption in service from allowing the parties to lower their rates when they desire, the board can go ahead and approve the amendment to Enroute’s contract allowing for the lower rate,” said Starling, stating the first option. “In doing so, the commissioners should make it known that the county will, likewise, accept an amended rate from Van-Go. This course of action will eliminate the possibility of charge-backs.”
On the other hand, if the board is not concerned about the possibility of charge-backs by Medicaid, they may elect to deny Enroute’s request to amend their contract and continue utilizing Van-Go as primary provider at the previously-negotiated rate.
“I would advise against this course of action until the county receives a response from the Attorney General’s Office,” said Chancy of the second option, leading into the board’s third option. “Commissioners may delay action on Enroute’s request until they receive a response from the Attorney General’s Office.”
The board unanimously voted to await the Attorney General’s opinion. Starling said there was not a timetable as to when it might be received, but the board may be able to consider the matter further at its Oct. 15 budget session.
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at firstname.lastname@example.org.