Idaho’s $70 million Medicaid transport contract to end early after disputes

BOISE – A controversial $70 million state contract to drive Idaho Medicaid patients to non-emergency doctor and therapy appointments will end early, amid disputes between the state and the provider, Veyo, about the firm’s Uber-style business model.

“We will continue to work with Veyo to ensure that Medicaid participants receive safe and reliable transportation services that meet their health needs,” Matt Wimmer, state Division of Medicaid administrator, said in a statement. He said the state plans to transition to a new provider on March 5, 2018, without any service disruptions.

Sen. Mary Souza, R-Coeur d’Alene, vice-chair of the Senate Health and Welfare Committee, said, “I’m glad that both sides of this issue realize that it wasn’t working out the way that they thought it would, and it’s better for the people who need this service that we get it right.”

In Veyo’s Sept. 6 termination letter to the state of Idaho, exercising an early out on its three-year contract, Veyo President Josh Komenda complained that the state placed “significant, non-contractual restrictions on Veyo’s model, at great expense to Veyo.”

The state released the letter pursuant to the Idaho Public Records Law, but redacted several sections dealing with Veyo’s business model that were deemed trade secrets.

Komenda wrote that his firm told Idaho its “proven, next-generation model would use a mixture of Independent Driver Providers (IDP) and traditional third-party providers to achieve substantial efficiencies,” resulting in lower costs and better service compared to traditional medical transportation providers.

Veyo began brokering all non-emergency Medicaid rides in Idaho on July 1, 2016, after winning the contract over several other bidders, including the previous provider, AMR. AMR didn’t use independent drivers.

When the Idaho House and Senate Health and Welfare committees held a joint public hearing on health and welfare issues six months later, people flocked from all parts of the state to complain about Veyo. Local medical transportation companies, care providers and clients all showed up at the hearing, saying rides were late or no-shows, vulnerable patients were left sometimes in the wrong place or alone for hours, and providers weren’t getting the business they need to get by, in part because Veyo sends independent drivers to take some of the patients, following an Uber-type model.

“It makes me mad when I drive through town and I see these Veyo drivers, yet I send two of my single moms home because I don’t have enough work to give them any more,” said Kleeta Newby, owner of KDN Transport in Boise. Jenna Dewitz, a social work intern with a Boise agency, told the lawmakers, “We have clients who are picked up and taken to the wrong place. We have refugee clients who can’t speak English and they are basically lost for hours. … We have had clients including children walk 2 to 5 miles home because they didn’t want to wait for Veyo any longer. … We recently had a refugee client from Afghanistan who had a 1:30 appointment and who wasn’t picked up until 7 p.m. and her family thought that she had been kidnapped.”

Darren Talley of White Tail Transportation in Priest River said his state reimbursements have fallen sharply since 2009. “Most businesses in Idaho cannot withstand a 31 percent cut in funding,” Talley said. “Just give us back the funding we had in 2009 before the brokerage system went into place.”

Komenda also spoke at the hearing. “We know there’s much improvement to be made,” he said. “We’re making great strides in that direction. Every single issue is investigated.”

Wimmer told the lawmakers the Department of Health and Welfare had asked Veyo to stop assigning independent drivers to patients with special health needs, and the company had agreed.

In his Sept. 6 letter, Komenda said constraints on its service include a prohibition on having its independent, Uber-style drivers transporting any patient with developmental disabilities; he said those drivers transport those passengers in other markets “with industry leading service standards and with an outstanding level of satisfaction from its customers.”

He also wrote that complaints and on-time ratios since January of 2017 have been nearly identical between the independent drivers and the traditional providers that Veyo has used in Idaho.

Komenda said he’d like to renegotiate the restrictions, but absent that, “Veyo finds itself in the unfortunate position of having to issue this termination letter.”

Souza said, “I do think that there have been so many concerns and complaints from users of that system. … The state wanted to look around and try to get the best contract that they could. But it is really important that this kind of service is specialized, and the people that provide that service have to really be trained and ready to give complete service, and compassionate service, to those that they’re dealing with.”

“I’m not saying that some of the Veyo drivers weren’t wonderful,” she said. “Just their system, their business model, wasn’t set up for this, especially in a rural state.”

House Health and Welfare Committee Chairman Fred Wood, R-Burley, said the state has learned lessons both from the Veyo contract and from the previous one, which he said saw some costs rise when payment based on time, rather than distance, created some perverse incentives.

“People with disabilities have special needs, and transporting them is also a special category of transport,” Wood said. Plus, he said, “Idaho is geographically very large and our population, although there are some population centers … we almost still have frontier areas in some places in Idaho. And the model that you use in the Treasure Valley is not going to work for those areas.”

“Those are the kinds of things that are going to have to be taken into account when a new contract is let,” Wood said. “I think that the department plans on doing exactly that.”

The contract covers about 100,000 non-emergency medical transport trips for Idaho Medicaid clients each month.