Politics & Government

Kansas could slap Medicaid contractor with big fines if it misses June 1 targets

Maximus is operating with 40 percent accuracy on financial payments; 98 percent is required. The company is also falling behind on handling applications and cases, the state of Kansas says.
Maximus is operating with 40 percent accuracy on financial payments; 98 percent is required. The company is also falling behind on handling applications and cases, the state of Kansas says. © Royalty-Free/CORBIS

The company that processes Kansas Medicaid applications is days away from potentially facing millions in fines for inadequate performance that has frustrated officials, health providers and patients for years.

In January, Kansas gave its contractor Maximus an ultimatum: Shape up by June 1, or pay retroactive penalties that may exceed $250,000 a day.

The company’s contract calls for 98 percent accuracy on financial payments, but it was achieving only 40 percent. And it was falling behind on its handling of applications and cases.

Maximus says it expects to meet its performance targets by June 1. The Kansas official overseeing the Medicaid program, called KanCare, won’t say whether he expects the company to meet the targets.

Lawmakers and advocates are skeptical. While acknowledging performance has improved recently, they say they are angry about years of missing or wrongly processed applications that have cost providers money and patients time.

Application problems have sometimes caused nursing homes and other care facilities not to receive payments they’re owed. For individuals trying to get on Medicaid, application problems have meant headaches and distractions when they’re trying to focus on their own health.

Rep. Dan Hawkins, a Wichita Republican who chairs the Legislature’s KanCare oversight committee, said he spoke with KanCare officials as the legislative session was wrapping up a few weeks ago.

“They said that although Maximus was doing a little better, they still weren’t meeting the expectations of what they needed to. I know that they have been working on contingency plans if they don’t meet those goals or those targets,” Hawkins said.

House Minority Leader Jim Ward, a Wichita Democrat who sits on the oversight committee, said he hasn’t heard anything that suggests Maximus has made significant improvement.

“I’m not expecting them to meet the mark. They had such a significant gap to close,” Ward said.

Jon Hamdorf, the state’s Medicaid director, on Thursday said that Maximus has “really made a good faith effort” toward improving performance. He said Kansas officials meet with company leadership weekly and have been tracking progress daily.

Will Maximus be held to the terms of its contract if it fall short?

“Oh God, yes,” he said.

Company says it will meet targets

The state will review Maximus’ performance after June 1 to see what penalties the company may potentially owe, Hamdorf indicated. Still, he didn’t want to tip his hand on whether Maximus will miss its targets.

“I don’t know if I can say that yet, since they still have some time left,” Hamdorf said.

He added that if Maximus is found noncompliant, it will not only face retroactive penalties but also penalties going forward.

“Month over month, if they don’t meet their contractual obligations, we will continue to impose damages when necessary," Hamdorf said.

He said in February that an examination of the company’s performance on a single day – Feb. 7 – showed enough shortfalls that the company would have to pay $250,000 or more in fines for that day alone. If that kind of performance is typical, Maximus would face millions in fines.

Maximus insists it will meet its targets by June 1. The company said it has already met the majority of goals and expects to meet the rest over the next week.

Company spokeswoman Lisa Miles said in a statement that Maximus is working with Kansas daily to ensure that applications are processed in a timely and accurate manner, that consumers are treated with courteousness and respect and that “the most vulnerable Kansans receive the immediate support they need.”

“With a week remaining on our compliance achievement plan, we are optimistic and expect that we will meet the requisite compliance targets by June 1. Over the last three months, we have made meaningful progress and have delivered major improvements in application processing and overall program operations,” Miles said.

Slides that Hamdorf showed the KanCare oversight committee in April showed improvement in handling family medical and long-term care applications. The slides showed less progress in the handling of applications for the elderly and individuals with disabilities, however.

Clearinghouse controversial

Kansas set up a “KanCare Clearinghouse” in 2015 to sort through applications and contracted with Maximus to staff the clearinghouse in 2016. Before then, applications had been handled in regional offices.

But rather than streamlining the process, a backlog of unprocessed applications developed, driven both by problems in the clearinghouse and by problems with a new computer system that helped determine Medicaid eligibility. At one point, the backlog was in the thousands.

The backlog caught the attention of federal officials, prompting Kansas to take aggressive action to fight the problem. And while the days of large backlogs are over, advocates for individuals on Medicaid say problems remain.

Sean Gatewood, a co-director of the KanCare Advocates Network, said he still hears anecdotal stories of application problems involving lost paperwork and other issues. He does give state officials credit for promptly taking care of individual problems whenever they are brought to their attention.

But he said the system itself still needs to be fixed and that Maximus has worn out its welcome, even if it has shown a “good faith effort.”

“How many years down the road are we for them to meet a minimum acceptable standard? I just find any of that as disingenuous at best on behalf of Maximus,” Gatewood said.

Cindy Luxem, president and CEO of the Kansas Health Care Association, also credited state officials for working to improve Maximus, but said she still hears complaints. The bottom line is that the application process is never going to work well under a clearinghouse model, she said.

Care providers are still owed money for care they’ve given, she said. Uncompensated care can cause financial difficulties for care providers.

“It affects every piece of our world if we can’t get these applications taken care of,” Luxem said.

What are the alternatives?

If Maximus comes up short on June 1, Kansas will have to decide whether to stick with Maximus, look for a different vendor or have state employees once again process applications.

Ward suggested looking at going back to the state’s previous system of having regional offices that can handle applications.

“I think they made a mistake, which is the premise of the program, which is shutting down all of the local access points where people could enter the system and moving everything to Topeka. Who thought that was going to work?” Ward said.

Hamdorf said officials have been looking at options for the future. Whatever the state does, he wants it to have a low impact on current Medicaid recipients.

But don’t expect any sudden changes.

“We don’t want to go through something as abrasive as when everything went to the clearinghouse model because we know those kind of massive changes all at once really have a negative effect,” Hamdorf said. “So it’s going to be a process. We just want to make sure the individual folks in the program are not negatively affected.”

(FILE VIDEO - 2016) Father Robert Schremmer of Dodge City alludes to the parable of the Good Samaritan to explain why Kansas policymakers should expand Medicaid.

Jonathan Shorman: 785-296-3006, @jonshorman