* Veto message…

Today I veto Senate Bill 1446 from the 100th General Assembly, which amends the Illinois Procurement Code to force the Department of Healthcare and Family Services to repeat its request for proposals (“RFP”) for purchase of care contracts with managed care organizations. Enactment of this legislation would needlessly cost taxpayers millions of dollars.

The Department conducted the RFP for statewide managed care contracts over a five-month period in a competitive, transparent process. The RFP was consistent with State procurement law and historical practice. Forcing re-procurement of the RFP under this legislation would prevent nearly one billion dollars in savings and block stronger accountability and performance management in the Illinois Medicaid Program.

The transformation of health and human services to help our most vulnerable citizens has been one of the primary goals of this Administration. In the beginning of this year, the Department began a process to help make the goals of the transformation a reality by improving health outcomes for Medicaid clients while slowing the growth of health care costs and putting the State of Illinois on a more sustainable financial trajectory. The result – after months of rigorous work and evaluation by experienced staff from several different State agencies – is a solution that serves all the people of Illinois.

The Department took steps to ensure the integrity of the procurement throughout the entire process. The process of evaluating managed care providers mirrored traditional procurements, including key components such as soundness of evaluations, transparent communications, and the use of objective measures. In addition, plans were chosen through competitive statewide bidding for the first time, using strict rules to ensure impartiality.

The Department has acted in accordance with the law to deliver improved health care to our most vulnerable citizens and provide value for our taxpayers. We should be commending the Department for its work in service of all Illinoisans. Instead, this bill would needlessly force the Department to repeat a task that has already been successfully completed, to the detriment of our vulnerable citizens and the State’s taxpayers.

* Some background from an August article in Crain’s…

The bill—which would essentially scuttle what could be the state’s largest procurement ever—is now making its way to the governor, whose approval is a long shot. […]

(C)ritics contend the selection process wasn’t transparent enough. Lawmakers still want to know, for example, who reviewed the bids and selected the winners. […]

Koehler’s bill would amend the Illinois Procurement Code, a roadmap of regulations for state contracting. The current code does not include contracts with MCOs. Currently, those are exempt from the state’s traditional route of securing business (as are collective bargaining agreements and contracts between state agencies). Instead, the Illinois Department of Healthcare and Family Services, which implements Medicaid, a health insurance program for the poor and disabled, oversaw the bidding process in-house. […]

The contracts, with initial four-year terms, are significant. Managed care now costs Illinois about $10.5 billion, but the tab is expected to increase to between $12.8 billion and $13.5 billion a year under Rauner’s revamp because enrollment will increase, and health plans are paid a fixed amount of money per enrollee. But the state expects to save around $1 billion over four years partly because the MCOs have agreed to be paid less money. […]

The bill was resurrected quickly—and passed the Illinois Senate with a 38-18 vote two days later—amid fresh concerns that no minority-owned companies won a bid, said Harris, a Chicago Democrat.

Rauner had repeatedly pledged that a minority-owned company would win the bid, but his administration and DHFS both subsequently said he played no hands-on role in the bidding process.

This will be an interesting bill to watch in the veto session.

*** UPDATE ***  Press release…

State Senator Dave Koehler (D-Peoria) sponsored the legislation and issued the following statement after the governor’s veto:

“The governor’s veto truly is a defeat for transparency and accountability in state government. We are talking about billions of dollars of taxpayer money that is being contracted out by the state without any hearings or a framework of procurement rules.

“It is my intention to override this veto in the upcoming veto session. The largest contract in state history deserves the same amount of scrutiny as every other contract.”