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REVEALED: Billion-dollar bill would force TN officials to give contract to politically connected company

Posted: 6:21 PM, Apr 25, 2022
Updated: 2022-07-21 13:44:53-04

NASHVILLE, Tenn. (WTVF) — State purchasing laws are written to try to keep politics out of the process of spending your tax dollars.

But a bill making its way through the Tennessee legislature would inject politics squarely into that process as a favor to one company, Centene Corp. That legislation would force TennCare to give that contract, worth billions of dollars a year, to Centene Corp. after the company recently lost a bid for the job.

"As bad as even doing that one time is, you've literally handed the blueprint to every company that wants to do business in Tennessee on how to do it — just come up here and make a deal," said Rep. Jason Hodges, D-Clarksville.

NewsChannel 5 Investigates asked, "Should taxpayers be concerned about this deal?"

"Yeah," Hodges answered, "I think taxpayers should be very concerned."

Centene was one of four companies that submitted proposals when TennCare, the state's health insurance program for the poor, decided it would pick three managed care organizations — MCO's, for short — to provide services to patients.

TennCare's annual budget: $12 billion.

When Centene lost out to the other three, the company came to the legislature to get a law passed to give them a piece of that $12 billion pie.

"So split that among four providers, and we gave them a $3 billion contract pretty much," Hodges said.

We followed up, "A $3 billion contract because they have connections?"


In fact, of the 99 members of the state House, Hodges has been the only person to seriously question Rep. Charlie Baum's bill, getting the Murfreesboro Republican to acknowledge in one committee that it was designed to benefit just one company.

"I sure didn't think that would be acknowledged in a public meeting like that, that it was being done for one company — so I was a little surprised to be flat-out honest with you," Hodges recalled.

Baum was even more forthright in the House Finance subcommittee.

"TennCare would need to add a fourth MCO, and I think it would necessarily be Centene," Baum said.

The bill would give a contract to Centene in the coming fiscal year, and it prohibits TennCare from even beginning a process to bring in new competitors during that year, effectively turning it into a multi-year contract.

Baum's legislation drew no objections during that hearing.

"This is an attempt to bring in a new MCO. It might add some additional competition to the process. It might add some innovative ideas," Baum told NewsChannel 5 Investigates.

Baum said the Centene bill was brought to him by House Speaker Cameron Sexton's office.

"The legislation would say the fourth MCO would become a fourth part of the MCO contracts," Sexton explained.

NewsChannel 5 Investigates asked, "Why should that not be seen as rigging the process?"

"Well," the Crossville Republican answered. "I don't think it's rigging when you don't even know if the process wasn't rigged when it was started."

Those questions, the House Speaker said, were brought to him by Vanderbilt hospital officials, who stand to profit from a Centene deal with the state.

"What we're really trying to do is to say where is the transparency in these contracts? Was the system cooked? Was it not cooked. Was it fair? Was it not fair?" Sexton said.

The fact is, there's already a system in place to handle those sorts of questions.

Centene filed an appeal, and it lost.

They then appealed to a completely independent state protest board.

A hearing was scheduled earlier this month before that protest board, but had to be postponed for procedural reasons. (NOTE: An earlier version reflected statements from state officials that the hearing was postponed at Centene's request.)

TennCare has told lawmakers that it has learned from experience that having just three providers is the best way to hold down costs.

An analysis developed by the legislature's Fiscal Review staff concludes that the extra administrative costs with having a fourth MCO would lead to increased state expenditures of $30 million a year, along with increased federal expenditures of $60 million.

NewsChannel 5 Investigates asked Baum, "TennCare says the process works best with three providers. Why does Charlie Baum's opinion matter more than the experts?"

"Several reasons," he responded. "First of all, adding more MCOs gives recipients, our TennCare recipients, more choice and more options."

We pressed, "But it costs taxpayers a heck of a lot more money, $90 million a year."

"Well, not quite for Tennesseans," Baum answered.

We noted, "State and federal dollars."

"Right, combined, over a multi-year period of time," he claimed.

"No, per year. $90 million per year additional costs to taxpayers."

"And I understand that," he finally agreed.

And yet, not a single person on the finance subcommittee — the keepers of the purse — questioned the cost to taxpayers.

"There are some folks who suspect that the fiscal note is artificially high because it was largely provided by TennCare, and this is something they don't want to do," Baum argued.

We followed up, "And you don't trust TennCare?"

"I'm not saying that the fiscal note is accurate or inaccurate. I'm just saying that the fiscal note came from responses from TennCare."

As lawmakers prepare to adjourn, they'll be taking up this bill this week to see if they can find the money to fund it.

Still, a search of news headlines reveals Centene has repeatedly been swamped in controversy, setting aside a billion dollars just last year to settle claims of Medicaid fraud.

One of its subsidiaries, Centurion, even faced corruption allegations over how it used inside information to get a Tennessee Department of Correction contract.

NewsChannel 5 Investigates asked Hodges, "Does it surprise you that some of the fiscal conservatives around the Capitol are not crying out about this deal?"

"No," the Clarksville Democrat insisted.

"Most people up here align themselves with staying up here. So they are going to align themselves with lobbyists and groups that can help keep them up here."

Now, after four years in the state House, Hodges is giving up his seat, frustrated about bills like this that, he says, show the grip of special interests on Tennessee's legislature.

"I'm leaving because I am disgusted, and I'm worn out and just disappointed with the process as a whole," he said.

Walking through the hallways of the legislature, NewsChannel 5 Investigates followed up with Hodges, "So are you walking away from this place thinking it's corrupt?"

"Yeah, I would say so."


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