Yet Again? Kansas Medicaid Department Revolving Door Puts Race for Billion Dollar Contracts Into Question
Healthy Blue unseats Aetna as a KanCare contractor after hiring former Kansas Medicaid Director Sarah Fertig.
In January, we wrote about the competition over new contracts to run the multi-billion dollar Kansas Medicaid program (KanCare).
As a quick recap, the focus of our story was a legal battle between UnitedHealth (UHC) and UCare, a more local insurer, that had hired a man named Jonathan Hamdorf to lead its contract proposal.
Hamdorf previously served as the Kansas Medicaid Director from 2017 to 2019. And between working for the state government and being hired at UCare, Hamdorf served as COO of UHC in Kansas. The non-compete he signed while at UHC gave it legal standing to prevent him from leading UCare’s bid for a contract.
The contracts were awarded in April, and as expected, UHC went on to win, while UCare lost.
But our story missed a character who paralleled Hamdorf's revolving door background. Her name is Sarah Fertig.
Last August, Fertig was managing the unwinding of pandemic-related protections for Kansas’ Medicaid enrollees as director of KanCare, the state’s healthcare program for low-income people. It was a chaotic unwinding, with thousands of Kansans losing eligibility thanks to a confusing renewal process, resulting in plenty of disgruntlement all around.
Some months later, Fertig had a much different job. She was at the helm of the government relations department of Blue Cross and Blue Shield of Kansas (BCBSKS), an insurer for the state’s employers and Medicare members. BCBSKS had not yet penetrated the lucrative Medicaid market, but saw an opportunity in the open competition for a new round of KanCare contracts, with billions of dollars on the table, especially given Governor Laura Kelly’s plans to expand the program.
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Proposals for the new contracts were due in January. Seven companies submitted: the three incumbents, Aetna, UnitedHealthcare (UHC), and Centene, which are among the largest national players in the Medicaid business, as well as some newcomers: Molina (a big vendor), CareSource (a smaller regional company), UCare (an even smaller regional company), and Healthy Blue (a collaboration between big vendors Anthem, BCBS of Kansas City, and BCBSKS.)
Last month, the winners were announced. UHC and Centene were awarded contracts again, but rather than Aetna, Healthy Blue emerged as the third KanCare vendor. Aetna has said it plans to protest.
We don’t know what if any role Fertig played in securing her new employer a contract. It’s not even clear when exactly she joined BCBSKS. All that’s been made public is that her departure from Kansas Medicaid was announced in August, and by March, she was submitting testimony on behalf of BCBSKS to the Kansas House of Representatives.
Nevertheless, Fertig’s new job heading government relations for a company that sought a contract with the department she previously led can reasonably be viewed as a conflict of interest. And it raises questions about an ethical and fair competitive process. While Aetna plans to protest, it’s not clear if this conflict will be cited, or if any other losing bidder plans to object.
Regardless, both Fertig and Hamdorf’s ability to leave powerful government positions and join private companies with major business interests in government, thereby hampering the integrity of procurement processes, suggests the need for stronger oversight of the revolving door and public corruption.