Is DOC's New Healthcare Contract with Centurion a Sweetheart Deal?

No-bid contracts almost always are ripe for charges of overspending, malfeasance and cronyism and the Department of Corrections' latest contract is a case in point.

On Feb. 1 the DOC signed an agreement with Centurion of Florida to run its prison healthcare system in Regions I, II and III after the current contract-holder, or vendor, gave notice in November it was quitting effective May 31, 2016.

The source of the skepticism is Centurion's link to money and power in state government. Centurion is a partnership between MHM Services, a provider of mental healthcare services, and Centene, the company that holds the state's hugely profitable Medicaid managed-care contract. And according to the Division of Elections the company contributed $298,000 to legislative campaigns and political committees just in 2015. Its chief lobbyist is former House Speaker Dean Cannon.

In fairness to the department, DOC officials have insisted Centene never once involved a lobbyist in the contract process.

Corizon Health told the DOC it was quitting on its contract because it was losing $1 million a month providing medical services for 80,000 Florida inmates.

But instead of going through the normal bidding process -- for which the agency had a full six months to act -- DOC Secretary Julie Jones opted to call the situation an emergency, which is her right under Florida Statutes to do. She opted out of the formal bid process and gave the contract to Centurion as a temporary solution. 

But that decision leaves taxpayers with a no-bid contract that could cost them more than $1 billion over five years.

DOC is set to give a Wednesday afternoon presentation on the contract before the Senate Appropriations Subcommittee on Criminal and Civil Justice.

DOC spokesman McKinley Lewis told Sunshine State News Jones did ask other healthcare companies to make proposals to fill the gap Corizon left, just until the agency negotiates a bid with new companies in 2018, But DOC's two other offers -- from Armor and Wexford Health, which currently serves 18,000 inmates in Region IV, "were tens of millions of dollars more expensive than the awarded vendor’s price."

Said Lewis, DOC "as it always does, acted in accordance with the law, in a transparent and accountable manner to secure this temporary contract. Looking forward, the department remains focused on negotiating and securing permanent contracts which prioritize quality care for our inmates at a reasonable and affordable rate for the state of Florida.”

The DOC, meanwhile, is virtually begging budget makers for money to pay for some 730 additional correctional officers. 

Corizon and Wexford Health have fixed-price, or per-diem, contracts under which the vendors bear 100 percent of the financial risk associated with inmate health care. They are also financially responsible for any costs they incur in excess of the fixed annual contract amount. That's the deal.

But the deal Centurion cut is a “cost plus administrative fee” contract. It's the kind of deal that will always be more vendor-attractive. This contract says the state will fully reimburse all costs. 

Said Lewis, "Cost-plus requires the department to review exact expenditures on a monthly basis, reimbursing the vendor for these expenses with an additional fee of 13.5 percent provided for overhead and administrative costs. The fee is dependent on the total dollar amount of expenses, but cannot when added to the expenses total more than the cap figure of $267.9 million. For example, if Centurion’s expenses totaled $260 million, although 13.5 percent would be $35.1 million, the department would not pay more than $7.9 million due to the contract price cap."

Other vendors complain there's no sense of fairness in the contract. Through the administrative fee, Centurion can collect more than $30 million each year over and above its actual expenditures -- profit with no financial risk. 

Also, the now-terminated Corizon contract, like the ongoing Wexford Health contract, requires vendors to give DOC 180 days notice in order to terminate the contract. But Centurion's contract contains only a 60-day termination clause. Why? In theory, in no time at all Centurion could spend close to the $267.9 million maximum and then hand in its 60-day notice before walking away from Florida.

"Why would it do that and ruin its reputation?" asked Lewis. "Centurion currently provides comprehensive health services in five other states and has never walked away from a contract."

Reach Nancy Smith at nsmith@sunshinestatenews.com or at 228-282-2423. Twitter: NancyLBSmith