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A computer bid dispute shows size of Medicaid

In 1965, Congress passed a law that changed public health. After 47 years, the federal-state Medicaid program is a $2.6 billion-a-year operation in West Virginia, second in spending only to public schools.

The program serves 420,000 recipients in West Virginia and processes 18 million claims a year.

A $248 million contract to design the computer system and process claims is thus big business as well.

The opportunity attracted the attention of several large computer companies when it was put up for bid last year. Xerox, HP Enterprise Services of Texas, CNSI of Maryland and Molina Medicaid Solutions of California all submitted bids.

Molina, the incumbent company, won the 10-year contract with the lowest bid.

But Xerox is crying foul. The contract, originally bid in 2011 was re-bid after Xerox protested. It is now challenging the results of the re-bid.

"Unfortunately, the state compounded its error by deciding to re-bid the contract, thereby allowing

Molina to be privy to Xerox's proprietary commercial and staffing information in crafting its subsequent bids," Xerox said.

Molina said it immediately recognized that it had information it should not have received, and reported it.

Xerox also complains that Molina had superior

access to DHHR officials. Molina said it's hard to avoid knowing officials when doing business with the agency.

This grappling is just a symptom of the enormity of Medicaid. If this is what is happening in a small state, imagine the battle in the other states that administer Medicaid programs.

Spending less than 1 percent of the state's Medicaid budget on the computer processing of claims seems like a good deal for taxpayers. But it works only if the bidding process is fair to all.

Legislators should keep this dispute on their radar.



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