Department of Corrections seeks to renew controversial contract

Despite pending litigation and a request made by Metro Council last week it not do so, the Tennessee Department of Corrections is in negotiations to renew its contract with First Medical Management to provide health care to the state’s prisoners.

The Department of Corrections sent a letter to Utah-based First Medical Management (FMM) on April 4 stating it would like a one-year extension of its contract, which dates back to 2005.

This comes despite the fact Nashville General Hospital is currently locked in litigation with FMM, which is the health care administrator for the state’s 20,000 prisoners at 25 Tennessee hospitals.

General Hospital alleged in its lawsuit that FMM changed the way it paid for the health care the hospital provides. This played a part in General Hospital asking for an additional $11 million line of credit from Metro earlier this year.

The hospital said $4.1 million of the additional line of credit came from the fact FMM changed its payment policies. FMM countered that it believed the hospital was over-billing.

“They acted in bad faith and made a unilateral decision to change their payment terms,” at-large Councilman Jerry Maynard said of FMM. “So our recommendation is, ‘Don’t renew a contract with such a bad partner.’”

That’s why Metro Council unanimously passed a memorializing resolution at its meeting last week asking the Department of Corrections not to renew the FMM contract.

“We worded the resolution specifically to avoid addressing what was going on in the lawsuit,” said District 28 Councilman Duane Dominy, who sponsored the memorializing resolution. “If [General Hospital] is having to fund this for the benefit of the state, and doing so with taxpayer money, we don’t need to continue the contract.”

FMM confirmed it is currently working with the state to finalize a new contract. The company also said it was “very interested in resolving” its dispute with General Hospital.

“Some issues previously in dispute have already been resolved,” FMM Communication Director Carl Stuart said. “FMM is hopeful all remaining issues can be quickly and equitably resolved.”

Hospital Authority CEO Dr. Reginald Coopwood, who recently said there was no update other than the litigation with FMM is ongoing, also spoke out against the $2 million subsidy reduction proposed by Mayor Karl Dean last month.

General Hospital, which services most of the city’s indigent and uninsured, saw a 30 percent jump in its non-paying patients last year, according to Coopwood. Dean still proposed a $2 million reduction in the subsidy, which would drop to $47 million for next year.

Some Council members, like Maynard, have questioned the proposal, but others like District 4 Councilman Michael Craddock said reduction was in order.

The contract with FMM accounts for about $5 million annually in revenue for the hospital. About 80 percent of the state’s prisoners referred by FMM are treated at General Hospital, according to Stuart.

FMM has contracts with 24 other health care providers, though, and General Hospital was the only one that initiated litigation.