State awards new Medicaid contract to LogistiCare

JEFFERSON CITY, Mo. -- The state awarded a new contract Wednesday for medical transportation services for the poor, choosing a company that won the business last year but had it taken away after protests by another bidder.

Comparing costs

The Office of Administration said it chose Atlanta-based LogistiCare Inc. for the new contract to provide Medicaid patients with non-emergency rides to places such as doctor's offices. The contract will cost the state $25.6 million a year and takes effect in mid-November. It runs only through the fiscal year ending June 30, but could be extended.

That compares to $40.4 million the state paid in the last fiscal year to the current contractor, Lake St. Louis-based Medical Transportation Management Inc., or MTM.

The administration said the new contract calls for better customer service and more accountability. A change in the payment method also will bring Missouri more federal money than the old contract allowed for, the office said.

"This is a win-win situation for taxpayers and Missourians who depend on these services," Commissioner Michael Keathley said.

Buying the best value

Other bidders actually offered lower costs than Logisticare, but Keathley said other factors outweighed the difference, such as a customer call center available 24 hours a day, a shorter time window for patients to be picked up and less lead time needed to schedule a trip.

"You don't buy the cheapest thing, you buy the best value," he said.

MTM's bid was $24 million, while another company, ARCHS of St. Louis, bid about $25 million.

The new contract also pays the company a regional fixed rate per person per month, regardless of how many trips the person takes.

Addressing concerns

Keathley said that change addresses concerns raised by State Auditor Claire McCaskill that under the old system, people took trips for nonmedical purposes or used a more expensive form of transportation than needed.

The new contract will no longer take people to pharmacies unless they live in an area where they can't have medications delivered by a pharmacy or through the mail. Also, people will be expected to pay $3 per trip, but if they cannot do so, the trip can't be denied, he said.

Last week, the attorney general's office announced that Medical Transportation Management was paying $2.4 million to resolve a state investigation. Attorney General Jay Nixon said he looked into the company over concerns about Medicaid fraud, contract problems and antitrust violations.

MTM said its contract had been a good deal for the state, which paid it a flat monthly rate even as the people served and the number of trips grew.

In 2004, the Department of Social Services rewrote the contract and sought bids to try to lower the state's costs. The state awarded that contract to LogistiCare, which bid $22.9 million a year. But it was voided in June 2004 after Medical Transportation Management protested, alleging irregularities in the bid process.

Medical Transportation Management then was hired to continue providing transportation service on a monthly basis. The state had said it was ending its contract with the company effective Aug. 1, citing cost concerns. But it remained in place on a monthly basis while new bids were sought.

Officials at MTM did not immediately return a telephone call late Wednesday.