Medicaid Contractor Gainwell Spared Probe by Late-Night Stealth

Hours before Ohio legislators voted on the must-pass state budget, top negotiators slipped in a provision to disband a committee probing multi-billion dollar contracts with the nation’s largest processor of Medicaid claims.

The Joint Medicaid Oversight Committee, or JMOC, had spent months seeking information from Ohio Medicaid officials on issues including delayed reimbursements to hospitals, skilled nursing facilities, and other health centers that threatened their ability to pay employees and treat patients.

The provision, which hasn’t been previously reported, leaves oversight of some of Medicaid’s biggest contracts in flux. The panel’s dissolution also occurred as the federal government has pressed to root out fraud and waste, and passed nearly $1 trillion in cuts to the federal-state program providing health coverage for roughly 70 million low-income and disabled Americans.

Ohio remains a major client for claims contractor Gainwell Technologies LLC, a closely held company that has laid off hundreds of US employees as it grapples with almost $6 billion in debt. Gainwell operates in approximately two-thirds of US states, with contracts to do back-end work that includes processing Medicaid claims for states and screening them for fraud or duplication.

“To me, who’s really in charge of oversight now is the question,” said Greg Moody, who directed Ohio’s Office of Health Transformation under former Gov. John Kasich.

In early August, Gainwell’s systems erroneously unenrolled thousands of people from MyCare Ohio, a managed-care program for residents eligible for both Medicare and Medicaid. Ohio Medicaid said it was working to correct the issue, but only after multiple outreach attempts by skilled nursing facilities over several days.

“If we had not been disbanded, we might have gotten a call,” Rep. Adam Holmes (R), JMOC’s former chair, said in an interview. “We could have helped.”

The committee also could have looked into Bloomberg Law’s reporting that Gainwell shifted some work on Medicaid contracts, including Ohio’s, to India, despite contract provisions and a governor’s executive order prohibiting such offshoring without explicit approval.

“We had no idea that we had jobs offshore in India,” state Rep. Jennifer Gross (R), a member of JMOC and chair of the standing House Medicaid Committee, said in an interview. “So in my mind, if that’s there, what else is there that we can’t see?”

Ohio Representative Jennifer Gross

Photo: ohiohouse.gov

The language dissolving the committee, which didn’t appear in any previous versions of the budget, was inserted by Republican House and Senate leadership at around 2 a.m. on June 25, according to JMOC members and other state lawmakers.

Holmes and other committee members said they were unaware of the change before they needed to vote that same day. Legislators’ hands were tied at that point, Gross said.

While it’s not clear who instigated the change, any final decisions on the budget come down to the House speaker, Senate president, and Gov. Mike DeWine’s office, Moody said.

Gross worked a provision into the budget directing the state auditor to probe Ohio Medicaid’s programs, including those for which it contracts with Gainwell. That report, however, doesn’t need to be completed until the end of 2027. By then, the state will have a new governor and legislature left to make sense of it all.

Ohio Medicaid and Gainwell wouldn’t comment on Bloomberg Law’s findings. The governor’s office didn’t respond to multiple requests for comment.

Provider Complaints

At the time it was disbanded, JMOC was seeking information on the performance of Ohio Medicaid’s Next Generation programs, including contracts with Gainwell to expedite claims processing and manage prescription drug claims.

When Ohio Medicaid announced in 2020 it was bringing on Gainwell to help process provider claims and prior authorization requests, the state said the contract would streamline the claims approval process and “strengthen ODM’s ability to assess compliance with Medicaid managed care regulations, review encounter data, and track performance measures.”

But three years since its launch, providers say the system is riddled with delayed payments and errors in claims adjustments that result in Gainwell attempting to claw back more money than it should.

One skilled nursing facility recently received a mass adjustment of Medicaid transactions that was more than 90,000 pages long, and Ohio Medicaid issued an advance notice of recoupments in March that were “incorrect in the millions of dollars per provider,” said Erin Hart, an advocate who works with long-term care providers that have high percentages of Medicaid patients.

While the recoupment error was eventually resolved, the notice had some facilities questioning whether they would have enough money to feed residents or pay staff, Hart said. “The experience we’ve had with the Department of Medicaid is one of very difficult communication and frustration,” Hart said.

Hart said her team contacted Ohio Medicaid three times over a week before getting a response that it was “working toward reenrolling these individuals who have been disenrolled.”

“The communication we got was that it was a system issue with the fiscal intermediary in the Ohio benefit system,” Hart said, referring to Gainwell. She has yet to receive any additional updates from Ohio Medicaid, but has learned from managed care entities that about 70% of beneficiaries had benefits restored as of Aug. 21.

Single Point of Oversight

JMOC, created in 2014, was a central point of contact between the legislature and the Medicaid department, as well as a de-facto help desk for providers. The committee had an executive director and staff member to help build extensive knowledge on the Medicaid system, which panel members say was a necessity in a state where elected officials are term-limited.

“With JMOC, you could grow a competency and awareness and subject matter expertise inside the legislature,” Holmes said.

The move to disband it, House leadership says, was intended to clarify oversight of Ohio Medicaid, where spending reached nearly $32 billion in fiscal 2023. The provision effectively transferred oversight of one of the country’s largest Medicaid programs from the more than 10-year-old JMOC to two younger standing committees.

“For the first time in recent memory, both the Ohio House and Senate have standing Medicaid committees, which gives more elected members a voice in the oversight process,” Olivia Wile, press secretary for the Ohio House Majority Caucus, said in an emailed statement.

“The goal of the change was to make oversight of one of the state’s largest agencies more streamlined and more efficient by consolidating the process,” Wile said.

But Moody, who helped form JMOC, said the bicameral panel’s very purpose was to serve as a single point of oversight.

Up until the budget vote, Holmes was working with Ohio Medicaid Director Maureen Corcoran on a revised mission statement for JMOC outlining how its work differed from the standing committees.

Wile didn’t address questions on whose idea it was to add the provision. The office of Senate President Rob McColley (R) didn’t respond to a request for comment.

Ohio Representative Adam Holmes

Photo: ohiohouse.gov

Asking Questions

As Ohio Medicaid spending continues to increase annually, lawmakers have struggled to get an explanation for why providers keep facing problems getting reimbursed.

“How do we justify continued increased spend with no transparency?” Gross said.

In March 2024, JMOC mentioned in a letter to the Medicaid department that the online provider network management portal operated by Gainwell lacked a function to check on the status of claims submitted to Ohio Medicaid.

Members of the Ohio Hospital Association continue to encounter issues similar to those highlighted in the letter, said John Palmer, director of media and public relations.

At a March meeting with a health professional advisory group, a state Medicaid official said Gainwell’s centralized claims payment system was automatically denying claims that should have been approved.

Ohio Medicaid in 2021 awarded Gainwell a separate contract worth more than $150 million to replace multiple companies that previously ran its prescription drug coverage. State leaders claimed the program would help save more than $200 million per year. 

But actual spending on the new pharmacy benefits system outpaced projections by $585 million over the first nine months, Moody testified to the joint committee earlier this year. Instead of cutting costs, Moody said, Ohio Medicaid added $84 million to its monthly budget and then claimed millions in savings based on this higher projection.

Hart said anytime the skilled nursing facilities she supports encountered issues with Gainwell’s systems, they were discouraged from reaching out to JMOC.

“We tried really hard not to let things get to the level that we needed to involve JMOC, because it made Medicaid very upset,” Hart said. “They never gave us any indication of why, but I imagine it was that they felt possibly that we should be able to resolve things without doing that, which we always attempt to do.”

Sen. Beth Liston (D), ranking member of both JMOC and the Senate Medicaid Committee, said she believes part of the issue JMOC had with getting information out of Ohio Medicaid was the “number of different committees that were asking Medicaid to come and provide information.”

Eyes on the Audit

The language Gross got into the budget requires a performance and fiscal audit looking at Ohio Medicaid’s pharmacy benefits program, claims processing, and issues related to late payments to providers, among other items.

David Roorbach, press secretary for the Ohio Auditor of State, said in an email that the audit is “still in the planning phase,” but said the main goal is to “evaluate the efficiency, effectiveness, and fiscal integrity of the Next Generation system.”

Hart said she hopes the audit will put providers and patients at the forefront, saying they bear the brunt of system errors or deficiencies. Without timely payments and coverage, she said, patients are forced to go without care.

“If you aren’t able to make your payroll because you didn’t get your vendor payment, you are putting at risk residents’ lives because we need those care providers to come in and care for our people,” Hart said.