Virgin Islands tied to state system
CHARLESTON, W.Va. -- West Virginia is allowing the U.S. Virgin Islands to piggyback on the multimillion-dollar computer system West Virginia uses to manage its Medicaid program.
An agreement, signed in mid-September between the Virgin Islands and West Virginia, is the first of its kind in the country.
It lets the Virgin Islands avoid having to enter into a multimillion-dollar contract of its own and presumably also helps West Virginia reduce costs.
The deal also marks a new play for market share by California-based Molina Healthcare, Inc., which operates these expensive computer systems.
West Virginia currently pays Molina about $15 million a year to operate the system, known as the Medicaid Management Information System.
The MMIS, as it is known, is a complex system to process claims for the state Medicaid program, which insures about 420,000 low-income West Virginians.
State and company officials said the newly inked deal would not affect who receives a lucrative new contract to run the MMIS. That deal will be worth a few hundred million dollars over the next decade.
Molina CFO John Molina said every state with a Medicaid program has to have such a computer system.
He said the Virgin Islands' partnership with West Virginia would allow the Virgin Islands to have a system for about a third of what it would have paid otherwise.
Molina hopes to expand the use of piggyback deals like the one in the Virgin Islands.
"In an era where everybody is looking — 'How do we save money?' — this is a great example," Molina said.
The deal is also part of a company effort to expand its market share, something Molina mentioned during a recent conference call with financial analysts.
There could be some risks to this approach because the agreement is ultimately between West Virginia and the Virgin Islands, not Molina and the Virgin Islands.
Right now, West Virginia is re-bidding the MMIS contract.
Molina is one of the three bidders. The state Department of Health and Human Resources is "finalizing" its evaluation of the three bids, department spokeswoman Marsha Dadisman said this week.
If Molina loses the West Virginia contract, it will apparently also lose the Virgin Islands business.
Dadisman and Molina both said the arrangement between the state and the Virgin Islands would not affect which company receives West Virginia's contract.
Dadisman said West Virginia's partnership with the Virgin Islands had "no bearing on the selection" of a contractor.
Molina said he thought it could be a "challenge to unwind" West Virginia and the Virgin Islands' partnership, but he also did not think the Virgin Islands' piggybacking was so important to West Virginia that it would swing the outcome of the bidding process.
"I can't believe that is what's going to drive the state to select a new vendor or stay with Molina," Molina said.
Attempts to re-bid the contract, worth about $200 million over the next decade, have faced problems, although all of the problems appear to have come from within DHHR. The new contract has been rebid twice, once because of unrevealed problems and a second time because a conflict of interest DHHR officials failed to recognize tainted the bidding.
Late this summer, the Legislative Auditor's Office expressed concern that DHHR still had not done enough to ensure the state gets a good deal. That's because would-be contractors weren't asked to put up bonds in case they fail to deliver.
The deal between West Virginia and the Virgin Islands started to come together in 2008. That's when then-Gov. Joe Manchin ran into Virgin Islands Gov. John P. de Jongh Jr. at a Democratic Governors Association meeting in the Virgin Islands.
"I can't thank Senator Manchin and current Governor Earl Ray Tomblin enough," de Jongh said in a statement released to Virgin Islands media outlets in mid-October.
"Senator Manchin told me four years ago that West Virginia could help the Virgin Islands attain access to a state-of-the-art system, and he followed through with his promise."
Manchin is now one of West Virginia's two U.S. senators.
The system is expected to be up and running next summer for the Virgin Islands. The territory's claims will be processed using computers based in West Virginia.