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DHHR agrees to Medicaid system

After a months-long saga, the state Department of Health and Human Resources agreed this week to pay up to $248 million over the next decade for a complex Medicaid computer system.

The contract goes to the lowest bidder, California-based Molina Medicaid Solutions, which handles the existing system for the state.

The deal, signed earlier this week, apparently ends a DHHR bidding process that created unflattering headlines for much of the year. (Losing bidders have a few days to challenge the bid, but it was unclear Thursday if any would choose to do so.)

The contract had already been rebid twice. DHHR has never given a public reason for the first failure. The second bid was scrapped in March after it became tainted by a conflict of interest.

The system, known as a Medicaid Management Information System, or MMIS, will process claims for the state Medicaid program.

Medicaid insures about 420,000 West Virginians now and will insure thousands more if Gov. Earl Ray Tomblin agrees to expand the program as part of the national health care reform effort. Currently, Molina processes nearly 18 million claims a year.

"As the current contract holder, we have years of knowledge, experience and familiarity in operating this system in West Virginia," Ruth Ann Panepinto, the executive account manager of Molina Medicaid Solutions in West Virginia, said in a statement.

Panepinto is a former DHHR secretary who left the department in the early 1990s.

On a scale of 100, low bidder Molina won the contract - one of the most expensive in state government - with 97 points.

The lowest bidder automatically gets 30 out of 100 points for having the lowest bid. Other companies get a percent of that 30 points based on how far away they are from the lowest bid. The other 70 points go to companies based on the quality of the work they promise to do.

The second-place finisher, with 91.95 points, was Texas-based HP Enterprise Services.

HP received a higher technical score than Molina but lost points because it bid $317 million - nearly $70 million more than Molina.

Atlanta-based Xerox and Maryland-based CNSI both overbid Molina. Both also received worse technical scores.

MMIS contracts are a considerable business proposition for states and for companies. Some have run significantly over budget.

A government council in New Hampshire voted this week to give nearly $16 million to Xerox to finish its MMIS project in the state, according to a report this week in the New Hampshire Union Leader and Sunday News.

The project, which is years behind schedule, was originally supposed to cost $61 million in New Hampshire. Now, that state's government is set to pony up about $92 million.

Earlier this year, West Virginia's legislative auditor worried DHHR has not asked would-be MMIS contractors to put up bonds in case the companies fail to deliver.

Instead, the department planned to withhold a portion of payments until it is satisfied Molina has done good work. Auditors worry this isn't enough to protect the state's interest on a massive contract.

Besides Panepinto, Molina has a few other revolving-door representatives: Jane Cline, the former state insurance commissioner who left government last year, has lobbied for Molina this year. She picked up Molina as one of her clients when she joined Spilman Thomas & Battle after the sudden death last year of Randy Cox, one of the law firm's most respected lawyers and lobbyists.

Marsha Morris, the former head of the Medicaid program, has also been involved with Molina.

Some of Molina's competitors partnered with prominent lobbyists and other familiar faces during the bidding process as well.

Contact writer Ry Rivard at or 304-348-1796. Follow him at


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