August 31, 2005

Confirmed: Bredesen Friend Lobbied for Tripling of TennCare Contract for Poorly-Performing Contractor

Tennessee's Commissioner of Finance & Administration has confirmed that a powerful lobbyist who is a friend of Gov. Phil Bredesen played a role in helping a company get a huge contract expansion with TennCare despite a record of poor performance.

The details are in an excellent story by John Spragens in this week's Nashville Scene. The story recaps information I brought to you in two posts on July 7 and July 8. An excerpt follows...

Historically, First Health’s poor performance has caused some expensive headaches for TennCare officials. Citing a failure to live up to its contract, the state withheld several payments early in First Health’s tenure as pharmacy benefits manager, a relationship that began in January 2004. In December 2004, the company mistakenly shipped thousands of pounds of unopened, returned patient mail to TennCare’s offices, setting off a flurry of exasperated emails that eventually wound up as court evidence. The next month, state officials complained that First Health was continuing to pay insurance benefits for dead people—after repeated notices from the state that they were dead. "[First Health’s] failure to [stop paying claims] has cost the state money, this is unacceptable," wrote Darin Gordon, TennCare’s chief financial officer, in an email to a colleague that was introduced at trial. TennCare officials had such a hard time dealing with the contractor, according to the court testimony of chief medical officer Wendy Long, that they considered terminating its then-$15 million contract.

But instead, they moved to triple it. In March 2005, TennCare Deputy Commissioner J.D. Hickey said First Health was having its contract expanded to a maximum of $45 million—which was later reduced to $38 million—because even though it hadn’t won any friends in Tennessee, it was performing well in other states.

... As it turns out, First Health has plenty of friends in Tennessee: the company was recently purchased by Coventry Health Care Inc., the health care outfit founded in the 1980s by Phil Bredesen himself. Longtime Bredesen friend Dick Lodge lobbies for First Health on Tennessee’s Capitol Hill. Nashville attorney Byron Trauger, another friend of the governor, served as Coventry’s chairman in the mid-1990s. In a March 2005 Tennessean article, both denied helping First Health get the $30 million contract boost, and at the time the governor, through a spokeswoman, said he had no role in the process.

Long, TennCare’s medical chief, testified in federal court that she was aware that First Health had a lobbyist by the name of Dick Lodge; Goetz testified that Lodge had "advocated with the administration on behalf of First Health." But in a recent interview with the Scene, Goetz said that Lodge played only a small role in securing the contract amendment. "That was all done directly with First Health," he said. "Dick had very little involvement in that, almost none."

Let's recap: A TennCare contractor performed so badly that it cost taxpayers millions and the head of TennCare wanted to cancel the contract. Somehow, after a friend of the governor's lobbies the adminstration, the contract is nearly tripled in value.

And the governor has a task force (of mostly political insiders) looking at proposals for ethics reform for the legislature.

Your tax dollars at work.