Email raises questions about administration’s motives behind controversial no-bid API privatization

The Alaska Psychiatric Institute as seen in a Department of Health and Social Services Recruitment video.

How did Department of Health and Social Services Deputy Commissioner Al Wall know the Centers for Medicare and Medicaid Services would uncover an assault at the Alaska Psychiatric Institute before the investigators stepped foot in the facility? And why did he write about the discovery in past tense in an email a week before the finding was made?

That’s what Rep. Ivy Spohnholz, D-Anchorage, wanted to know during a House Health and Social Services Committee meeting Thursday about the administration’s controversial award of a no-bid contract to the for-profit Wellpath Recovery Solutions, a company that has ties to Office of Management and Budget Director Donna Arduin.

The meeting, helmed by Democrats, was frequently combative about the decision and skeptical of the necessity of the emergency contract, the process at which it was reached and the fact that in-state health care providers were not considered in the process.

“I’m going to say that I’ve been led to believe that there was a desire from the very beginning of this administration to privatize API and that that took precedence over any other strategy to invest in API,” Spohnholz said early in the meeting, noting efforts to right the facility were undercut by Gov. Michael J. Dunleavy’s loyalty pledge that led to two psychiatrists resigning. Neither of those positions have since been filled.

Wall defended the decision to bring in the private management of the facility, pointing to a Jan. 29 finding by CMS that revealed institutional failures in a patient-on-patient assault at the long-troubled psychiatric hospital. The assault was classified as a “immediate jeopardy” incident, described in CMS regulations as events where “serious injury, serious harm, serious impairment or death has occurred, is occurring, or is likely to occur to one or more identified recipients at risk.”

“I would say, again, the emergent behavior that occurred on Jan. 29th is what drove a decision for change,” he said.

The date of the assault was not disclosed during the meeting, but there were suggestions that it had occurred in the preceding 30 days.

Later in the meeting, Spohnholz asked why Wall appeared to already know about the incident as much as a week ahead of time, according to department emails. Those emails were made publicly available as part of the justification for the contract (starting on page 6 of this document).

“In reviewing the supporting documents for the procurement, one of the things that I found was something sort of curious around the timeline of the immediate jeopardy episode that we’re discussing right now. There was a Jan. 22 email where you, as deputy commissioner, describe an upcoming CMS survey team site visit that took place the following week, I believe it was Jan. 28 through 30,” she said. “In bullet number four you describe the upcoming visit and in bullet number seven you describe that event, which had not yet taken place, in the past tense. Was there another immediate jeopardy event that I’m not aware of?”

“Madame Chair, I’m not aware of another immediate jeopardy, as I said before,” Wall replied.

“I found it somewhat confusing that in an email dated Jan. 22 you were describing an event in the past tense that happened the following week,” Spohnholz said.

“I’d have to look on the timeline on that,” Wall said.

“Yeah,” Spohnholz said, “it seemed unusual to me.”

We’ll let you know if we hear an explanation.

The email

The Jan. 22 email by Wall was sent to Health and Social Services Commissioner Adam Crum, Deputy Commissioner for Medicaid & Health Care Policy Donna Steward and Assistant Commissioner Sana Efird. The published copy was forwarded to procurement officer Susan Jabal on Feb. 1.

In it, Wall describes the message as “a basic draft of the compelling reasons to sole source an emergent [sic] contract with API.” Again, it’s sent a week before the CMS finding that allegedly “drove a decision for change.”

Wall outlined the upcoming CMS visit intended to investigate whether API was following the plan of correction to address patient treatment issues discovered at a previous visit:

“A CMS survey team will be back at API, at an undisclosed date, between January 23rd and February 1st to follow-up on the Plan of Correction.  If they find that their concerns have not been met in a substantive fashion, or they lack confidence that corrections will be further implemented they will revoke CMS Certification at API.”

He notes that a possible revocation of API’s certification would be a “catastrophic event” for the facility and could result in its closure under state law.

However, as Spohnholz pointed out, Wall also seemed to know the outcome of the visit ahead of time:

“The CMS survey team returned this week for their final look at API concerning this lengthy POC process.  Unfortunately, although the POC was in place, they discovered a series [sic] incident of Immediate Jeopardy which was not properly reported or addressed.  They closed out on Wednesday and I believe that they will recommend decertification.  At this point, the Commissioner’s Office is extremely concerned about immediate patient safety and have taken the following steps.”

Wall then outlines the plan for Crum to issue an emergency declaration to assume control of API, a move that wasn’t made until Jan. 30 (and not announced publicly until early February), the day after the CMS investigators uncovered the “immediate jeopardy” incident.

Again, all of this comes from an email dated Jan. 22.

Wall’s presentation to the House Health and Social Services Committee says, “On January 29th the CMS survey team returned for its final visit and had an Immediate Jeopardy finding on the first day of their visit.”

He never explicitly said during the hearing when the assault occurred, only that it was discovered by CMS investigators on Jan. 29.

That’s a full week between his initial email and the visit.

Why it matters

There’s already been serious questions raised about the process by which the administration reached its no-bid contract with Wellpath Recovery Solutions, which had been lobbying in Alaska since as early as Dec. 13, 2018 under its former name Correct Care.

Wellpath Recovery Solutions was formerly owned by GEO Group, a notorious private prison company that has ties to OMB Director Arduin. Arduin is a former trustee for GEO’s Correctional Properties Trust, and Wellpath’s CEO Jorge Dominicis is the former President of GEO Care.

A 2011 investigative report published by The Center for Media and Democracy detailed how GEO Group interests and favorable legislation seemed to shadow Arduin from state to state as she worked for various Republican governors.

Commissioner Crum denied the connections in an interview with Alaska Public Media, noting he had even gone as far as to get an ethics opinion.

“In the interest of full transparency and making sure Alaskans have trust in our state’s leadership, I asked for an ethics opinion from the Alaska Department of Law on this topic,” he said. “And we have determined there is no ethics violation involving the OMB director as she had no input on the selection of Wellpath.”

Setting Arduin’s presence aside, however, the existence of the email dated Jan. 22 should raise significant questions about this process.

Did the assault happen prior to the Jan. 22 email and Wall correctly assumed that CMS would uncover it, giving an opportunity to launch the privatization effort? What if the assault happened after the Jan. 22 email that predicted it?

Or is the email itself suspect? Was the send date altered? Were the contents altered? If so, why wasn’t any of that mentioned to the committee or when it was forwarded to the procurement officer?

What we do know is the administration was building the case for a sole source emergency contract before the feds officially gave them cause for an emergency.

This was all raised from just a few minutes of the three-hour meeting, where legislators publicly compiled a voluminous body of evidence that the administration has been hell-bent on privatizing API despite a feasibility study that says it wouldn’t be cost effective or improve care.

It seems that legislators have just begun to scratch the surface of this. Hopefully there’s more to come.

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5 Comments on "Email raises questions about administration’s motives behind controversial no-bid API privatization"

  1. Junk yard politics. First you drive it into the ground, then you claim its all broke, then you sell off the parts. Thanks republicans.

  2. Why not pay the 1million per month to hire qualified employees for API instead of giving it to an outside company to take outside of Alaska?

  3. Richard Hurst | March 12, 2019 at 10:45 am | Reply

    There’s no world, free of corruption, where a no-bid contract would make financial sense for the taxpayers of Alaska.

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