A coalition of Mississippi hospitals, which formed its own managed care company and tried unsuccessfully to win a contract with the Division of Medicaid, and another insurance company are challenging in Hinds County chancery court the decision of Medicaid to award the contract to California-based Molina and two existing managed care providers.

The existing managed care providers are UnitedHelthcare and Magnolia.

The three contracts together total about $2 billion. Under the terms of the contracts, the managed care providers are obligated to provide health care services to the recipients they cover for a set price. State officials hope through managed care the recipients get a certain amount of preventive care that holds down costs for the Division of Medicaid, which officials say is placing a financial drain on the state budget.

In a written response Monday, Erin Barham, a spokeswoman for the Division of Medicaid, said the contracts were being submitted in September to the Personal Service Contract Review Board at the request of the governor, who has ultimate authority over the division.

“Gov. Bryant believes every contract the state lets should be fair, equitable and transparent,” said Clay Chandler, a spokesman for the governor.

Barham said the contracts were not initially submitted to the Board that has final say on the awarding of various state contracts “because PSCRB staff had previously determined that they did not have purview. As such, DOM simply followed this guidance for the subsequent re-procurements.”

Barham said the Division of Medicaid had reached out to the contract review board on more than one occasion to ask if it should it have input in the awarding of the manged care contracts.

Tara Clark, an executive administrator with the Division of Medicaid said, “it is too early to speculate” what the next step would be should the contract review board find that Medicaid did not follow proper procedure in awarding the contracts. She said the agency followed Personal Service Contract Review Board guidelines.

While the contracts have been awarded by the state, based on “consensus scoring and oral presentations,” they are not finalized until they gain approval from the federal Centers for Medicare and Medicaid Services, according to Barham.

Medicaid is a federal-state program that provides health care for the disabled, poor pregnant women, poor children and a certain segment of the elderly population.

The Legislature created the managed care program. It started in 2011 and now covers about 70 percent of the 709,000 enrolled in Medicaid and the about 48,000 enrolled in the Children’s Health Insurance Program.

Some legislators have complained that the managed care providers are not providing adequate health care to the Medicaid recipients, though, the Legislature expanded the program to a third provider and allowed the state’s hospitals to form their own managed care company.

Sen. Hob Bryan, D-Amory, said the Legislature should have mandated that the Division of Medicaid give a contract to the hospital’s managed care company. He said it would give the hospitals, one of the biggest critics of Medicaid’s managed care system, an opportunity to see if they could provide the services more efficiently.

Medicaid officials have said the awarding of the contracts was based on a fair and equitable process. The contracts were supposed to begin July 1 with a yearlong enactment period. The actual payment of medical bills by the companies is slated to begin July 1, 2018. In the meantime, the two existing managed care contracts remain in effect.

The companies that did not get the contracts are challenging the Medicaid decision on a number of grounds, including that the process should have gone through the Personal Services Contract Review Board.