The county has fulfilled its obligation and is not required to accept a lower bid or amend its current contracts for providing Medicaid transportation, a representative with the Attorney’s General office said in a response to county officials, who previously expressed fear of a “bidding war” between two local vendors for the service.
The Sampson County Board of Commissioners has awaited a response from the state for the past four months before moving forward with any action on a bid currently on the table from Enroute Transportation Services. Enroute submitted a bid lower than the contracted amount with primary Van-Go Transportation Inc. after contracts were signed.
Dual contracts, a primary contract for Van-Go at $1.85 per mile with no fuel surcharges and a secondary contract for Enroute at $1.95 per mile with surcharges, were officially approved by the board in August 2013, with a stipulation the secondary contract be “operable only in the event that Van-Go is unable to fulfill its obligations.”
That approval came after two bidding processes, a myriad of discussions on the subject that deadlocked the board and contentious arguments amongst commissioners.
Just weeks later, Enroute president Ricky Moore submitted his reduced bid of $1.54, which would be approximately $1.62 with fuel surcharges factored in, undercutting even Van-Go’s initial original bid of $1.65 and a full $1 lower than Enroute’s original bid of $2.55.
With that bid on the table, letters were written by Sampson County attorney Annette Chancy Starling as well as commissioner Albert Kirby to the Attorney General’s Office inquiring about the county’s legal footing in dealing with such a contract situation. The matter was referred to Neal T. McHenry, assistant Attorney General representing the Division of Medical Assistance.
McHenry sent his response last week.
“There is no authority to support a contention that a county may or should even consider a subsequent bid after the bidding process is over, so there is no support for a requirement that the county must enter into a new contract every time a provider approaches with a lower rate,” said McHenry, who stated his response was an advisory letter, and not an official Advisory Opinion of the Attorney General.
He addressed two main questions, including whether the Medicaid manual provision requires the county to amend its contracts and shift primary transportation duties to a provider each time that provider submits a new, lower per mile rate; and whether a lower bid required the county to enter into a new contract with that new bidder.
The answer in both cases was no, McHenry stated. He said a key phrase stating in part that “Medicaid only pays for transportation … by the last expensive mode available and appropriate for the beneficiary” does not refer to bids.
“The Medicaid manual provision cited by the county does not require the county to amend its contracts and shift primary transportation duties to a provider each time that provider submits a new, lower per mile rate,” McHenry stated in his Feb. 11 letter to Chancy, Kirby and others. “The cited Medicaid manual provision does not require the county to amend its contracts because … when read in the larger context … the ‘least expensive means’ phrase refers not to lower bids or the bidding process, but rather to the type of transportation selected for an individual beneficiary.”
Similarly, entering into new contracts with new providers that approach the county with a lower rate is not a requirement.
“The manual provision does not require that the county accept every least expensive bid without regard to the contract bidding process and also because even under a formal bidding process, there are other considerations aside from which bid is ‘least expensive,’” McHenry stated. “Reading the ‘least expensive means’ provision of the manual to say that the county must accept any lower bid, without exception, would be in contravention of the laws that cover the bidding process and would do violence to the intent of the government bid process.”
The UNC School of Government also clarifies that while there are not statutory bidding requirements on service contracts, such as Medicaid transportation, the local county may adopt bidding requirements it has to follow, such as those of lowest responsible bidder, and considerations of quality and performance, McHenry noted.
“It appears that to the extent Sampson County adopted bidding requirements, those requirements were followed here,” McHenry noted. “So even under the more formal rules (which do not apply to service contracts) the governing body is allowed to consider other factors aside from simply looking at the price of the bids.”
Sampson’s dual contracts were to extend from Aug. 1 through June 30, 2015 at Van-Go’s $1.85 and Enroute’s $1.95 rate, with all transportation referrals routed to the lowest cost provider meeting all N.C. Medicaid Transportation policy requirements.
The county attorney said allowing competing providers to continually undercut the other’s contract rates could cause a “bidding war” and disruptions in service, however she noted “there is a policy that could be interpreted as requirements to amend the contract.”
If not concerned about such a disruption, the board could approve the amendment to Enroute’s contract allowing for the lower rate, making it known that the county will, likewise, accept an amended rate from Van-Go, Starling said in October. On the other end, Starling said, the board could elect to deny Enroute’s request to amend their contract and continue utilizing Van-Go as primary provider at the previously-negotiated rate. Starling advised against doing that until the county received a response from the Attorney General’s Office.
With that response now in hand, the county board is expected to address the matter in the near future as to how it wishes to proceed. McHenry stated, statutorily speaking, the county has fulfilled its obligation.
“The county is not required to consider a new bid until the contract ends and the county solicits new bids using its bidding process,” he said.
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at email@example.com.