Transport companies clash at state hearing

By Tim Hoover

Source: KCS
Credit: The Kansas City Star
Wednesday, November 17, 2004
Edition: METROPOLITAN,
Section: METROPOLITAN, Page B8

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JEFFERSON CITY - Two companies fighting over a state contract to provide transportation to hundreds of thousands of Missourians on Medicaid sparred at a hearing Tuesday.

One of the companies, LogistiCare Solutions LLC, based in Atlanta, said the state's newest specifications for the contract had set up a "monopolistic" environment. LogistiCare said it was impossible for anyone but the company that holds the current contract, Medical Transportation Management Inc., of Lake St. Louis, to win.

At stake is millions of taxpayer dollars that will be spent on the contract for the next three years to transport more than 400,000 poor and elderly Missourians to medical appointments.

Medical Transportation Management has provided the service to the state for the last six years, receiving $35.6 million last year. The company finds transportation through its network of subcontractors across the state.

In an attempt to reduce costs, the state Department of Social Services rewrote the contract specifications last summer and took competitive bids.

The state awarded the contract to LogistiCare, which bid $22.9 million a year, $1.6 million less than Medical Transportation Management's bid.

But in June, state officials voided the contract, which was to take effect in July, after Medical Transportation Management officials complained about irregularities in the bid process. LogistiCare sued the state, saying the state's action was based on a technicality that shouldn't void a contract won through fair bidding.

In late June, the state hired Medical Transportation Management to provide transportation services until the contract is rebid and awarded.

In August, the state paid the company $3.8 million, or an average of $121,647 a day. In September the company received $100,000 a day.

Under the contract with LogistiCare, the state would have paid $72,328 a day, based upon the most recent count of eligible clients.

On Tuesday, officials with the two companies appeared at a hearing held by the Division of Medical Services and the Division of Purchasing and Materials Management.

LogistiCare officials argued that language the state added to the new request for proposals was unfairly tilted toward Medical Transportation Management. The new specifications require the successful bidder to submit a list of all its subcontractors and the rate it is paying them.

It also requires that the bidder furnish copies of all letters of intent to do business that it may have from potential subcontractors.

The state put out the new bid specifications Nov. 4. On Nov. 5, Medical Transportation Management sent out a letter to its subcontractors saying that it would increase their payments if they signed exclusivity agreements pledging not to do business with the company's competitors.

Harvey Tettlebaum, an attorney for LogistiCare, argued that no subcontractors were willing to sign letters of intent with LogistiCare because of the exclusivity agreements. "If you don't take this (language) out," Tettlebaum said at the hearing, "no one else is going to be able to competitively bid."

Peg Griswold, who with her husband, Lynn, owns Medical Transportation Management, said no subcontractors were forced to sign the exclusivity agreement. She said the agreements were necessary to protect her company's network of transportation providers.

"That is our personal product," she said. "That is what we developed. Any bidder is free to create their own product. This is ours."

Sandra Levels, director of program management for the Division of Medical Services, said the language was added to address the concerns of the subcontractors, who were worried about getting a fair rate. The audience in the hearing room mainly consisted of transportation service providers, several of whom said that their livelihoods were at stake. One man said they had heard "horror stories" about LogistiCare.

LogistiCare officials suggested that Medical Transportation Management officials may have had a hand in motivating their subcontractors to seek new language.

Griswold said it was "totally 100 percent untrue" that her company had orchestrated the effort.

The state now is considering whether there will be any changes to the request for proposals. The companies have until Dec. 14 to submit their proposals, but the awarding of the contract might not come for months after that.

To reach Tim Hoover, call 1-(573) 634-3565 or send e-mail to thoover@kcstar.com.

First glance

LogistiCare Solutions LLC says the state has set up a "monopolistic" environment favoring its competitor, Medical Transportation Management Inc.