PROVIDENCE, R.I. (WPRI) – With just minutes to spare and hundreds of millions of dollars on the line, representatives of Tufts Health Plan unexpectedly found themselves stuck in bread-and-milk traffic.

“Representatives encountered unforeseen traffic impacts during the 0.8-mile trip to the Department of Administration, arising out of the high volume of supermarket customers preparing for the forecasted blizzard,” company officials later explained in state documents reviewed by Target 12.

It was around midday on Jan. 28, and the Tufts team was frantically trying to get out of the Whole Foods plaza on North Main Street in Providence to submit their bid for a massive state contract. They had gone there seeking help from Staples to compile PDFs for a packet of documents that were due by 1 p.m. at the administrative buildings just opposite the State House.

Tufts ended up submitting the material two minutes after the deadline, effectively disqualifying them from bidding to keep a portion of the state’s contract for Medicaid managed care. The entire contract is worth $7 billion over five years, making it one of the most lucrative contracts awarded by Rhode Island’s state government.

“While the Department is sympathetic of the events which led to the proposal being submitted late, the Department is wary of accepting a late proposal and the precedent it would set,” Department of Administration Director Jim Thorsen explained in a Feb. 10 letter rejecting an appeal by Tufts.

Tufts currently provides Medicaid health insurance coverage to roughly 17,000 Rhode Islanders, or about 5% of all residents enrolled in the program. Its current contract is slated to expire in July 2023, and if Tufts remains disqualified from bidding for a renewal, it could lose out on over $400 million in business over five years based on its share of the current contract.

“We are disappointed that our bid will not be considered by the Rhode Island Executive Office of Health and Human Services because it was submitted two minutes past the filing deadline,” said Phil Tracey, spokesperson for Tufts’ parent company, Point32Health.

“We strongly believe that Tufts Health Plan continues to be the plan well suited to meet the health needs and address the diverse challenges of the more than 300,000 Medicaid beneficiaries across Rhode Island,” he added.

Tufts tried to appeal the state’s decision, arguing on Jan. 31 that a “confluence of several unanticipated circumstances” led to the missed deadline, according to procurement documents.

In addition to the pre-blizzard traffic outside Whole Foods, Tufts representatives said they also encountered “unexpected construction barriers at the back entrance” of the state building on arrival. And they pointed out that while they were technically onsite before 1 p.m., they couldn’t reach the second floor where the bids were due before the deadline.

“These delays were in no way anticipated and should be considered non-material and an administrative excusable neglect,” Tufts argued in its appeal, known technically as a “bid protest.”

Tufts’ loss could benefit the four health insurance companies that did submit their bids for the Medicaid work on time: Blue Cross and Blue Shield of Rhode Island; Molina Healthcare of Rhode Island Inc.; Neighborhood Health Plan of Rhode Island; and United Healthcare of New England.

Under the current Medicaid managed care contact, Neighborhood administers coverage for about 174,000 patients, while United Healthcare has 97,000 patients and Tufts has 17,000. The three companies together handle insurance for about 85% of all Medicaid recipients in Rhode Island. (The rest are not in managed care programs.)

“When you miss a deadline like this by such a slim margin, man, that’s not good,” said Anya Rader Wallack, who served as a top state health official under former Gov. Gina Raimondo.

“This is the contract that governs the health insurance coverage for about a third of Rhode Islanders, so it’s really important,” she added. “It’s a big deal in terms of how many Rhode Islanders get their insurance through this mechanism, and what kind of accountability is established through this contract for a big piece of state funding and state spending.”

Late submissions for state contracts are so potentially damaging to businesses that rely on governmental contracts that they don’t happen too frequently. But Tufts isn’t alone.

For example, last year Doctors Test Centers submitted a proposal to run COVID-19 testing on behalf of the R.I. Department of Health. State procurement officials said they received Doctors Test Centers’ proposal four minutes after the 10:30 a.m. deadline set for June 8, and subsequently denied the submission.

But the decision was later reversed after a top company executive – Ashley Kalus, now a candidate for Rhode Island governor – provided a receipt showing a front-desk security guard signed for a FedEx delivery containing the company’s proposal at 10:27 a.m., three minutes before the deadline.

“This acceptance by the Department’s agent, acting on behalf of the Department and located within the Department, constitutes acceptance of the proposal prior to the submission deadline,” Thorsen wrote in his decision last year.  

Doctors Test Centers went on to win a $7.9 million testing contract.

State officials declined to comment on the specifics of the new Medicaid contract, noting that the procurement is still ongoing. While Tufts is out for now, there is also a possibility procurement officials will decide to cancel the bid and start for any variety of reasons, which could open the door for Tufts to try again.

Tufts could also file a legal challenge over the state’s decision, and in its protest over being disqualified, the company offered several legal examples from other cases around the country in which late bid submissions were accepted.

“A decision to foreclose [Tufts] from consideration because of its inadvertent and unanticipated two-minute delay, we believe, would unfairly jeopardize the health and welfare of a significant percentage of the State’s residents,” the company argued.  

Medicaid managed care programs often attract lawsuits, since the deals represent billions of dollars in business for health insurers across the country, and many are willing to fight to get footholds in the various programs.

In Pennsylvania, for example, the state has tried multiple times since 2015 to award its Medicaid budget, worth about $65 billion over five years, but various companies have protested along the way, and the deals have fallen apart in court. In recent years, similar legal challenges have popped up in North Carolina, Ohio and Oklahoma, according to local news reports.

Tracey declined to comment on whether Tufts plans to file any type of legal challenge in Rhode Island, and state spokesperson Derek Gomes said he’s unaware of any lawsuits so far. Both the state and Tufts also pointed out that its current contract doesn’t expire until July 1, 2023, so Medicaid recipients receiving services through Tufts shouldn’t expect any immediate changes.

“We remain committed to providing our 17,000 Rhode Island Medicaid members with the high-quality health care coverage they have known and will work closely with them through the current contract period ending in July of 2023,” Tracey said.

Tufts – which has a West Exchange Street office in downtown Providence – also provides health insurance to about 10,000 Rhode Islanders who receive coverage through their employers. Tracey said those services will not be affected by the missed deadline.