Pa. ordered to restart bidding for Medicaid long-term care contracts after appeals court finds the process was “arbitrary.”

A Pennsylvania appeals court ordered the state’s Department of Human Services to restart the bidding process for Medicaid contracts to manage billions in long-term care benefits for nearly 400,000 people.

The program, expected to cost Pennsylvania more than $7 billion in the coming fiscal year, pays for nursing homes, home care, and other long-term services for low-income seniors and disabled people who qualify for both Medicare and Medicaid.

Commonwealth Court’s April 2 decision — in favor of losing bidders Highmark Wholecare and UnitedHealthcare of Pennsylvania — said that the human services agency’s 2024 selection of five other applicants for further negotiations was “arbitrary, capricious, and contrary to law,” because of how it scored the bids.

“We are evaluating the ruling,” the human services department said Tuesday. The agency noted that winners of earlier contracts — AmeriHealth Caritas, PA Health & Wellness, and UPMC for You — continue providing services. The appeals prevented the agency from awarding new contracts.

The long-term care program, called Community HealthChoices, divides the state into five zones. Medicaid managed-care companies could bid for all five, as did the eight companies that submitted applications.

The procurement rules require the agency to evaluate and score the bids separately for each zone. Overall company scores varied, but each of the eight applicants received the same scores — down to the second decimal place — in each of the five zones.

“This outcome is statistically implausible considering the unique composition of each zone,” the decision said, citing the fact that the Southeastern Zone, home to Philadelphia, has twice the population of the Northwestern Zone.

“If an applicant submitted the same or similar technical information for each zone, the scoring should have varied to reflect the zone-specific criteria,” the ruling said.

The agency offered no explanation for the uniformity in scoring across zones, the opinion said.

In addition to Highmark and United, Geisinger Health Plan was also left out of the winner’s circle in 2024, but it did not participate in the appeal. Commonwealth Court’s ruling was for Highmark, but it also applied to a separate appeal by United.

The winners in 2024 included Jefferson Health’s Health Partners Plans. That would have given Jefferson’s Medicaid insurance arm a chance to expand statewide from its base in Philadelphia.

The top scorer in 2024 was UPMC for You. Other companies that made it through that contest were Aetna Better Health; PA Health & Wellness, which is part of Centene, the nation’s largest Medicaid-managed care company; and AmeriHealth Caritas, which is majority-owned by Philadelphia’s Independence Health Group.